The Times Australia
The Times World News

.

A reversal in US climate policy will send renewables investors packing – and Australia can reap the benefits

  • Written by Christian Downie, Professor, Australian National University

President Donald Trump is trying to unravel the signature climate policy of his predecessor Joe Biden, the Inflation Reduction Act[1], as part of a sweeping bid to dismantle[2] the United States’ climate ambition.

The Inflation Reduction Act, or IRA, is a A$530 billion suite of measures that aims to turbocharge clean energy investment and slash emissions in the US. Once hailed as a game-changer for the global clean energy transition, it set in train a fierce international competition for renewable energy investment.

But the policy is now hanging by a thread, after the US House of Representatives last month narrowly passed a bill to repeal many of its clean energy measures[3].

Should the bill pass the Senate, billions of dollars in renewables investment once destined for the US could be looking for a new home. Now is the time for the Albanese government to woo investors with a bolder program of climate action in Australia.

People walk by a projection of flames and commentary on the side of the Trump International Hotel
The Trump administration is seeking to wind back Biden’s signature climate policy. Jemal Countess/Getty Images for Climate Power 2020

What is the Inflation Reduction Act?

The Inflation Reduction Act passed US Congress in 2022. It legislated billions of dollars in tax credits for solar panels, wind turbines, batteries and geothermal plants, among other technologies.

It included around A$13 billion in rebates for Americans to electrify their homes, tax credits of almost A$11,000 to electrify their cars, and billions more to establish a “green bank[4]” and target agricultural emissions.

The money flowed. Last year, almost A$420 billion[5] was invested in the manufacture and deployment of clean energy – double that in 2021, the year before the legislation passed.

Even in the first quarter of this year, under a Trump presidency, A$103 billion was invested in clean energy tech – an increase on the first quarter results of 2024. Electric vehicle manufacturing projects, especially batteries, were standout performers.

a man wearing a suit smiles in front of small crowd
Then US president Joe Biden in August 2023, celebrating the first anniversary of the Inflation Reduction Act. The policy aimed to turbocharge the clean energy transition. Win McNamee/Getty Images

But then came the proposed repeal. The Trump administration wants to gut tax credits for clean energy technologies. The measures passed the House of Representatives and must now clear the US Senate, where the Republicans have a margin of three votes.

Initial modelling[6] suggests the bill, if passed, could derail clean energy manufacturing in the US – including in Republican states where new projects were planned[7].

The potential economic damage has sparked concern even among Trump’s own troops. Some Republicans last week reportedly urged the scaling back[8] of the cuts, despite voting for the bill in the House.

Opportunities for Australia

After the IRA was enacted, many countries followed the US’ lead – including Australia’s Albanese government, which legislated the A$22.7 billion Future Made in Australia package[9].

So how will Trump’s unravelling of the policy affect the rest of the world?

The economic impacts are still being modelled. Some studies suggest[10] the US could cede A$123 billion in investment to other countries.

The US axing of tax credits for battery and solar technology paves the way for nations such as China and South Korea to capitalise – given, for example, they already dominate battery manufacturing.

Two workers wearing white clothes working on a solar panel.
China is well-placed to capitalise on US moves to axe tax credits for solar and battery technologies. CHINATOPIX

Australia should be doing its utmost to attract investors that no longer see the US as an option. Our existing policies are a start, but they are not sufficient.

In February this year, Labor increased the investment capacity[11] of the Clean Energy Finance Corporation – Australia’s “green bank” – by A$2 billion. But more will be needed if the government is serious about crowding-in private investment in low-emission technologies exiting the US.

The government would also be wise to remove incentives that increase fossil fuel use. This includes the diesel fuel rebate, which encourages the use of diesel-powered trucks on mine sites. Fortescue Metals this week announced[12] a push for the subsidy to be wound back – potentially providing the political opening Labor needs.

A worker stands in front of a steel furnace.
Australia needs to double down on its clean energy policies to attract investment once destined for the US. Dean Lewins/AAP

What about nuclear?

Trump has also promised a “nuclear renaissance”, signing four executive orders[13] designed to reinvigorate the US nuclear energy industry.

But those measures are likely to fail, just as Trump’s 2016 promise to revive the coal industry[14] never eventuated.

In fact, his cuts to the Loan Programs Office[15] – which helps finance new energy projects including nuclear – threaten to undermine the viability of new nuclear plants. The office has been the guarantor[16] for every new US nuclear plant this century, bar one.

If the US is struggling to scale up its existing nuclear industry, this does not bode well for the technology’s hopes in Australia. Here, the prospect of a nuclear energy policy still appears alive in the Coalition party room[17], even though the technology remains politically unpopular[18], and the economics[19] don’t stack up.

What’s next?

Predicting US climate and energy policy is a fool’s errand, given the potential IRA repeal, flip-flopping tariff announcements[20] and daily social media tirades from Trump, including a social media bust-up with former ally Elon Musk[21] over the merits of the repeal itself.

Stepping back from the politics, we cannot ignore the climate harms flowing from a walk-back on US climate action.

The US is the world’s second-largest emitter[22] of greenhouse gases. As climate change reaches new extremes[23], the policy vacuum created by Donald Trump must urgently be filled by the rest of the world.

References

  1. ^ Inflation Reduction Act (theconversation.com)
  2. ^ sweeping bid to dismantle (www.cnbc.com)
  3. ^ many of its clean energy measures (insideclimatenews.org)
  4. ^ green bank (www.spglobal.com)
  5. ^ almost A$420 billion (www.cleaninvestmentmonitor.org)
  6. ^ Initial modelling (electrek.co)
  7. ^ new projects were planned (subscriber.politicopro.com)
  8. ^ reportedly urged the scaling back (www.nbcnews.com)
  9. ^ Future Made in Australia package (treasury.gov.au)
  10. ^ Some studies suggest (www.netzeropolicylab.com)
  11. ^ increased the investment capacity (www.cefc.com.au)
  12. ^ announced (www.afr.com)
  13. ^ four executive orders (www.energy.gov)
  14. ^ 2016 promise to revive the coal industry (www.nytimes.com)
  15. ^ cuts to the Loan Programs Office (www.ans.org)
  16. ^ the guarantor (heatmap.news)
  17. ^ alive in the Coalition party room (www.theaustralian.com.au)
  18. ^ politically unpopular (www.theguardian.com)
  19. ^ economics (www.csiro.au)
  20. ^ tariff announcements (time.com)
  21. ^ social media bust-up with former ally Elon Musk (www.abc.net.au)
  22. ^ world’s second-largest emitter (www.carbonbrief.org)
  23. ^ new extremes (wmo.int)

Read more https://theconversation.com/a-reversal-in-us-climate-policy-will-send-renewables-investors-packing-and-australia-can-reap-the-benefits-258388

Times Magazine

Headless CMS in Digital Twins and 3D Product Experiences

Image by freepik As the metaverse becomes more advanced and accessible, it's clear that multiple sectors will use digital twins and 3D product experiences to visualize, connect, and streamline efforts better. A digital twin is a virtual replica of ...

The Decline of Hyper-Casual: How Mid-Core Mobile Games Took Over in 2025

In recent years, the mobile gaming landscape has undergone a significant transformation, with mid-core mobile games emerging as the dominant force in app stores by 2025. This shift is underpinned by changing user habits and evolving monetization tr...

Understanding ITIL 4 and PRINCE2 Project Management Synergy

Key Highlights ITIL 4 focuses on IT service management, emphasising continual improvement and value creation through modern digital transformation approaches. PRINCE2 project management supports systematic planning and execution of projects wit...

What AI Adoption Means for the Future of Workplace Risk Management

Image by freepik As industrial operations become more complex and fast-paced, the risks faced by workers and employers alike continue to grow. Traditional safety models—reliant on manual oversight, reactive investigations, and standardised checklist...

From Beach Bops to Alpine Anthems: Your Sonos Survival Guide for a Long Weekend Escape

Alright, fellow adventurers and relaxation enthusiasts! So, you've packed your bags, charged your devices, and mentally prepared for that glorious King's Birthday long weekend. But hold on, are you really ready? Because a true long weekend warrior kn...

Effective Commercial Pest Control Solutions for a Safer Workplace

Keeping a workplace clean, safe, and free from pests is essential for maintaining productivity, protecting employee health, and upholding a company's reputation. Pests pose health risks, can cause structural damage, and can lead to serious legal an...

The Times Features

Tricia Paoluccio designer to the stars

The Case for Nuturing Creativity in the Classroom, and in our Lives I am an actress and an artist who has had the privilege of sharing my work across many countries, touring my ...

Duke of Dural to Get Rooftop Bar as New Owners Invest in Venue Upgrade

The Duke of Dural, in Sydney’s north-west, is set for a major uplift under new ownership, following its acquisition by hospitality group Good Beer Company this week. Led by resp...

Prefab’s Second Life: Why Australia’s Backyard Boom Needs a Circular Makeover

The humble granny flat is being reimagined not just as a fix for housing shortages, but as a cornerstone of circular, factory-built architecture. But are our systems ready to s...

Melbourne’s Burglary Boom: Break-Ins Surge Nearly 25%

Victorian homeowners are being warned to act now, as rising break-ins and falling arrest rates paint a worrying picture for suburban safety. Melbourne residents are facing an ...

Exploring the Curriculum at a Modern Junior School in Melbourne

Key Highlights The curriculum at junior schools emphasises whole-person development, catering to children’s physical, emotional, and intellectual needs. It ensures early year...

Distressed by all the bad news? Here’s how to stay informed but still look after yourself

If you’re feeling like the news is particularly bad at the moment, you’re not alone. But many of us can’t look away – and don’t want to. Engaging with news can help us make ...