Can clean energy manufacturing survive under Trump?

Northwest Georgia is churning out solar panels like never before. Detroit automakers are constructing billion-dollar battery factories to supply electric vehicle production. Pittsburgh steelworkers are forging torque tubes for massive solar plants.

The U.S. has succeeded in kicking off a new era of clean energy manufacturing, thanks to Biden-administration policies that incentivized domestic production to rebuild communities and reduce reliance on China. Now that Donald Trump has won a second term in the White House, he could use his power to crush this fledgling industrial resurgence, or embrace it.

Trump campaigned on boosting American manufacturing and pushing back on China. It would serve the incoming administration’s stated interests, then, to continue policies that boost American manufacturing and push back on China. The Solar Energy Manufacturers for America (SEMA) coalition made that point explicitly in a post-election statement that spoke favorably of Trump’s earlier solar tariffs, and looked ahead to future cooperation.

But Trump has professed a consistent distaste for clean energy writ large, and vowed to cut government spending on it. If that were to happen, it could undermine the business case that attracted at least $100 billion in private investment for clean energy factories in the last two years. Announced factories may never get built; ones that have already broken ground may find they can no longer compete.

The question facing clean energy factories, and the communities they enrich, is which impulse will win out in Trump’s energy regime: the will to score points by unraveling Biden’s climate legacy, or the desire to strengthen American industry?

“On a substantive level, everybody agrees that we should manufacture the critical energy technologies in the United States, full stop,” SEMA coalition executive director Mike Carr told Canary Media Tuesday. He believes the material benefits conferred by the new wave of factories will carry the day as Republican lawmakers decide what to focus on next year.

“Ideologically, there are people who want to have the victory and say, ​‘We repealed the IRA,’” he noted. ​“But push comes to shove, they’re still politicians at the end of the day. It is pretty tough to run a campaign if you just voted to close factories in your district.”

The direct federal support for the factory buildout falls into a few main categories: tax credits for domestic manufacturing; demand-side tax credits for power plants and electric vehicles that use domestically produced components; grants and loans for factories administered by the Department of Energy. The Trump administration has levers to pull if it wants to attack any of these, but each area would be politically fraught.

Canary Media has been criss-crossing the country to track the on-the-ground buildout of these factories. Here’s the best information available on what this next chapter could bring.

IRA could be repealed, but it would be a political quagmire

The new clean energy factories depend on tax credits to buy down the initial premium for domestic production; these were funded for a decade in the 2022 Inflation Reduction Act. The hope was that these credits help American-made products find customers in the near-term, until the factories build up enough scale to compete with more mature manufacturing bases overseas. Any wholesale repeal of the IRA, or targeted repeal of the relevant tax credits, would therefore jeopardize the viability of the infant industry, threatening the jobs and factories that have already materialized — largely in districts represented by Republicans.

Democrats passed the Inflation Reduction Act through budget reconciliation, a parliamentary maneuver that can only be executed once per year to pass tax-and-spending legislation with a simple majority vote; the tactic was necessary to dodge a Senate filibuster, which requires 60 votes to clear.

Republicans don’t control enough Senate seats to overcome a filibuster, so repealing IRA would require budget reconciliation. Republicans have already signaled that they want to use that maneuver to rapidly pass an enormous tax cut geared toward large corporations that could expand the federal debt by an estimated $9 trillion. If they wanted to gesture at fiscal responsibility, they could tap the IRA allocations for a few hundred billion dollars to buy down this tremendous pricetag.

That’s when the size of the potential Republican majority becomes vitally significant. One week after the election, Republicans were on track to clinch a scant five-seat majority, close to what they had in the chaotic last session. With a margin that tight, representatives who have seen solar or battery factories spring up in their districts will have a chance to say no to endangering those breadbaskets.

“We’re seeing demonstrated private commitment to pick up the tax credits and use them,” said Holly Reuter, who oversees policy implementation at the Clean Air Task Force, a climate NGO. ​“That makes a difference in their durability: It’s translating into jobs and local economic development growth.”

Indeed, 18 Republican members of Congress published a letter to House Speaker Mike Johnson this summer opposing a full IRA repeal based on the damage it would inflict on their districts. Not coincidentally, many of them became locked in the most competitive House races across the country. Every clean energy advocate I spoke with has been closely tracking their performance.

More than a week after the election, 13 of those signatories have won reelection, one more is leading in a race that has yet to be called, and one, John Curtis of Utah, won a seat in the U.S. Senate. Two signatories lost their seats in New York, and another is trailing in Oregon. All told, this anti-repeal bloc will be larger than the likely Republican majority in the House, meaning they could effectively veto an IRA repeal, if they stay true to their convictions.

On the Senate side, the Republicans have a bigger majority than what the Democrats had to work with. But at least two of the new members have a personal connection to clean energy manufacturing. One is Curtis, who founded the Conservative Climate Caucus in 2021; that group aims to reduce carbon emissions with more market-based approaches than what it describes as ​“radical progressive climate proposals that would hurt our economy.”

West Virginia’s newly-elected Senator Jim Justice personally worked with startup Form Energy as the state’s governor to bring the company’s long-duration battery factory to the former steel town of Weirton. He visited the new facility in September to celebrate the start of production; if Form delivers on its commitments to the state, it will become West Virginia’s biggest new employer in years. Form’s business plan factors in the 45X manufacturing credit, the credits for developing projects using domestic content, and direct grants from the DOE.

There are enough Republicans in the House and Senate who like the clean energy factories in their jurisdictions that a widespread repeal effort wouldn’t happen easily. If they hold firm, they could limit the unraveling of the IRA to more symbolic measures that don’t throw off manufacturing and the demand for domestic clean energy equipment.

Changes to DOE funding streams

Short of effecting legislative change that would torpedo manufacturing jobs in Trump-voting districts, the incoming administration could wield executive powers to disrupt the funding streams laid out in the IRA — or simply stop spending the money.

That threat is especially pressing for the companies that have received conditional approvals for loans from the DOE’s Loan Programs Office, but have not yet completed the multi-month diligence and legal paperwork necessary to finalize their loan.

The LPO has extended conditional loans to numerous companies, including: 

• Plug Power, $1.66 billion for a clean hydrogen facility in New York 

• Eos, $400 million to expand its unconventional battery factory outside Pittsburgh

• Qcells, $1.45 billion to open solar cell and wafer manufacturing in Georgia

• $9.2 billion for BlueOval SK, the joint venture between Ford and a South Korean battery maker in Tennessee and Kentucky

• Kore Power, $850 million for battery manufacturing near Phoenix 

• Rhyolite Ridge, $700 million for a critical minerals project in Nevada

• Redwood Materials, $2 billion for the battery recycling startup based in Reno, Nevada

Lithium battery recycler Li-Cycle had been sitting on the conditional loan list since February 2023, but finalized the $475 million agreement with the DOE on Thursday. Last fall, the company paused construction of its recycling plant in Rochester, New York, citing ballooning costs, and ultimately shifted plans to focus on a smaller set of initial products. That required going back to the LPO with new engineering studies, market analyses, and legal vetting, which happened to wrap up two days after the election.

“Now it’s a binding commitment: If we meet the conditions, we can draw the money,” CEO Ajay Kochhar told Canary Media on Friday. ​“This is much better than us just having the conditional commitment before.”

First up, Li-Cycle needs to raise additional private investment for a reserve fund to gain access to the loan facility. Then the company will assess expected construction costs for each financial quarter, and draw down the loan funds based on that, to be paid out monthly. The plan is for this loan to sustain Li-Cycle through construction until it becomes cash-flow positive.

Those other winners of conditional loans now have about two months to turn their opportunities into legally binding contracts before Biden leaves the White House. For Li-Cycle, ​“This took months and months and months of legal docs,” Kochhar said. This will no doubt become a primary focus for the LPO in the waning days of the Biden era.

But that’s not to say the finalized grants and loans are risk-free under Trump. That general structure is common across DOE loans and grants for clean energy factories: The recipients don’t get a lump sum in their bank accounts, they get access to funds on a periodic basis for meeting contractual requirements. That means that it will be up to the incoming Trump DOE to ensure the payments keep flowing.

If the administration tried to cut off funds, it would violate basic tenets of contract law, an area of jurisprudence which has thus far been spared the creative reinterpretation of long-settled precedent that conservative judges lately have brought to bear on other legal matters.

“There’s some core precedent that you have to pay it, if you have a contract,” Carr said.

Other tranches of DOE grant funding came from the Bipartisan Infrastructure Law, which passed with Republican votes. These are seen as less vulnerable for that reason, especially given the shared bipartisan interest in goals like improving domestic production of critical minerals.