European clean energy companies are reconsidering their expansion plans and bracing for lower sales amid fears that a potential election victory for Donald Trump could negatively impact their sector. Trump has criticized President Joe Biden’s climate policies, labeling them a “green new scam,” and is expected to undo much of Biden’s work, including the Inflation Reduction Act (IRA).
Uncertain Future for Clean Energy Investments
The IRA, passed in 2022, has provided significant incentives for European companies to expand their presence in the U.S. However, the prospect of a second Trump presidency is causing hesitation. Peter Roessner, CEO of Luxembourg-based hydrogen firm H2Apex, expressed concern over investing in the U.S., noting Trump’s unpredictability.
Under the IRA, H2Apex could have built a hydrogen tank production plant in the U.S. at a third of the cost, but Roessner canceled the plan due to fears of Trump’s re-election. Market speculation about Trump’s return to the White House intensified after he survived an assassination attempt and secured the Republican nomination. Polls show a narrowing gap between Trump and likely Democratic candidate Kamala Harris, whose climate policies align with Biden’s.
Impact on Key Players and Investments
Wood Mackenzie estimates that a Trump presidency could jeopardize $1 trillion in low-carbon energy investments by 2050. While a full repeal of the IRA is unlikely, a Trump administration could still undermine incentives for electric vehicles, solar power, and energy efficiency.
German solar firm SMA Solar issued a profit warning, citing the potential U.S. government change as a risk factor. The company, the world’s largest maker of solar inverters, has delayed choosing a location for a new U.S. factory due to the uncertain election outcome. SMA Solar’s hesitation mirrors the broader reluctance among clean tech firms to invest in renewable energies under a possible Trump administration.
The RENIXX index, which tracks the world’s 30 biggest renewable firms, has underperformed global stocks since the assassination attempt on Trump. Orsted, the largest offshore wind farm developer, has been particularly affected after Trump threatened to target the sector if re-elected.
Strategic Shifts and Delays
Some companies remain undeterred. German wind turbine maker Nordex announced plans to resume production at a mothballed plant in Iowa, emphasizing the long-term importance of the U.S. market. However, others are experiencing delays due to hesitant partners.
Thyssenkrupp Nucera, a hydrogen firm, reported delays in final investment decisions for U.S. projects, prompting an outlook cut. The company is closely watching how the IRA program might change post-election. Norwegian rival Nel is also awaiting demand clarity before proceeding with a planned Michigan facility.
Beyond clean tech, other industries are feeling the impact of U.S. political uncertainty. German machinery firm Trumpf reported a 12% drop in U.S. sales, attributing the decline to geopolitical uncertainties.
The global managing director at Roland Berger, Marcus Berret, noted that the growing complexity of the international business environment is causing “analysis paralysis” in investment decisions. The potential return of Trump to the presidency is creating significant boardroom headaches, leading many companies to tread cautiously as they navigate these turbulent times.
Source: Reuters
