Donald Trump’s presidency poses many challenges for Ireland, not least the threat of tariffs and his pledge to “reshore” the manufacturing activities of US multinationals. But Trump’s White House agenda could also have significant implications for Ireland’s attempt to reduce carbon emissions.
On the day of his inauguration, the US president outlined his energy policy as being “drill, baby, drill.” One of his first decisions was to suspend Joe Biden’s Inflation Reduction Act , which had incentivised investors to put their money in US green energy projects through the use of lucrative tax breaks.
Initially, it had been hoped that the suspension of the the act would persuade investors to divert funding to green projects in the EU, but instead there has been a general reduction in funding for the sector. A case in point is the announcement by BP at the end of February that it would slash investment in renewables and focus on oil and gas.
The Irish Government has launched a series of ambitious off-shore projects, which could potentially deliver 37 GW of wind energy by 2050. Ireland could achieve its carbon reduction targets if it reached this level of wind energy capacity.
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But if Ireland is to fulfil its wind energy potential, it will need billions in investment and that will be a difficult ask in the current environment, with investment funds looking elsewhere.
One initiative which could help involves the European Commission and EU member states following through on their commitment to create an EU Capital Markets Union. This has been on the EU agenda in one form or another over the past decade, but key decisions have been stalled. It has now gained a new urgency amid Trump’s economic nationalist policies.
Europe’s response needs to include the creation of a deep and liquid, single capital market. In turn, this could provide an important source of funding for carbon reduction projects.
It would not solve everything, but at least Ireland would not be so reliant on US investors who are now moving in a different direction.
