by Chloe Aiello
Columbia Business School climate economist Gernot Wagner highlights the DOE Loan Programs Office, which offers “debt financing for high-impact, large-scale energy infrastructure projects,” as having been particularly beneficial for climate tech solutions that are still too nascent or costly to attract more traditional forms of investment. If that program comes under question, the fate of these technologies is less certain, Wagner says.
“There’s certainly going to be a chilling effect on anything and everything that smells like it has something to do with climate,” he says.
Should funding programs disappear overnight, it could spell brain drain for U.S climate technology, says Columbia’s Wagner.
“That same entrepreneur with that same idea is now going to go to Europe or to China or somewhere else,” he says. “Europe was losing some of these companies to the US because of tax credits here and loan office loans and so on. Well, suddenly that entrepreneur might think twice.”
It isn’t just renewable energy companies that stand to benefit from these incentives. Columbia’s Wagner forecasts oil and gas companies profiting from green technologies including the more expensive, nascent innovations like carbon removal and green hydrogen.
“There is no reason to suck CO2 out of thin air unless you do it for the climate. Except for the one exception: you do it for the money,” he says, adding: “Trump may want to stop these things. For the most part, he is not going to.”
And pulling 10 years of tax credits out from under major projects on which construction has already begun and for which financing was secured (with those incentives in mind), Wagner says, would “of course, be bad.”
“That is one of the reasons–the other one being that most of the projects are actually in red states–that I don’t believe the IRA is going to disappear,” he says, adding that limiting funding or incentives moving forward could be one possible mechanism of weakening the legislation.
Quoted in: “What Trump’s Win Could Mean for Climate Innovation, Renewable Energy, and More” by Chloe Aiello, Inc. (15 November 2024).
Related:
Wagner, Gernot. “What Will Trump’s Victory Mean for the Climate?” Project Syndicate (9 November 2024).