Trump has an opportunity to adopt a realistic clean energy strategy

The Biden era of clean energy policy is over. Not only has President Trump already started dismantling his predecessor’s programs, but core assumptions that went into them are also dissolving.

Biden relied on subsidies and mandates to drive clean energy forward. That approach was based on two basic ideas: First, the climate emergency is extreme, and therefore we must reach net-zero emissions by 2050 or the world will collapse. That in turn implies the second idea: that we must amplify, immediately and maximally, funding to every available option for cutting emissions as fast as possible.

Both ideas are fundamentally mistaken.

Yes, there is a climate emergency to address, and yes, net zero has been a useful meme to mobilize action. But a meme is not a strategy. Reducing greenhouse gas emissions to zero is a goal, but only one among many government priorities, and not even the most pressing one (as the election clearly demonstrated).

Perhaps more important, the climate is global, so clean energy must work on a global scale. Even if the U.S. were to somehow (miraculously) reach the fabled net zero by 2050 with a combination of enormously costly subsidies and mandates, emissions in Asia, Africa and the Middle East would continue to grow rapidly. Lower-income countries cannot afford to subsidize or regulate their way to clean energy. India and China have already shown that while they would like cleaner energy, they won’t sacrifice growth for green.

Clean energy technologies will be adopted at scale worldwide only when they reach price-performance parity with fossil fuels. And the hard truth that many net zero advocates fail to recognize is that many of the existing technologies that we have been showering with federal funds — such as green hydrogen — can never reach price-performance parity.

So, it’s time to reset. The primary objective and organizing principle for U.S. clean energy policy should now be getting to price-performance parity. We need to focus on developing new technologies that are better than fossil fuels in cost-value terms, without long-term subsidies or mandates. Then and only then will market forces spur a sustainable green transition.

This is a moment of opportunity for the Trump administration. It can clean up many of the excesses that culminated in the Biden era and realign U.S. strategy in the right direction. But it should not throw the baby out with the bathwater. The objective should remain cheap clean energy technologies, and the government must make key investments to shepherd their development.

The Biden administration’s net zero-driven approach was enormously expensive. The clean energy tax credits in the Inflation Reduction Act are projected to cost $800 billion through 2031, or $1.1 trillion through 2033, based on the Congressional Budget Office’s latest outlook.

Subsidizing production and demand at that scale, for that length of time, with the crude tools of tax credits, was an unsustainable mistake. The administration and Congress should walk this back.

There are other significant targets for cuts as well, such as the $7 billion earmarked in a quixotic bid to spur a domestic clean hydrogen sector by launching seven regional “hydrogen hubs.” Clean hydrogen is nowhere close to a path toward price-performance parity, so those should go.

After cutting unnecessary and misdirected funding, the administration and Congress can then redeploy resources to a more cost-effective strategy that focuses squarely on developing the new technologies we need to provide cheap clean energy.

The proposed research and development budget for the Department of Energy in 2025 is $23.4 billion. That’s a pinprick in comparison both to those previous Inflation Reduction Act subsidies and — perhaps more importantly — what’s needed going forward to make the breakthroughs we will need.

Better government support is going to be key because these technologies will need more than private investment will support. Energy takes too long to pay off, and there are too many risks that new technologies will fail somewhere along the winding path from research and development to commercialization.

So, the government must help with investments in basic and applied research; technology-development infrastructure; pilot projects and testing; technical and commercial demonstration projects and, critically, scaleup, which technologies will need to get to price-performance parity.

These investments get more expensive as energy technologies get closer to market so it’s critical to apply the P3 standard with greater scrutiny as the cycle progresses. For example, we don’t know yet whether fusion power will reach a pathway to P3. But we do know that green hydrogen won’t (at least with existing technology).

Other technologies are at different stages of development. Overall, though, the Trump administration should redirect some of the savings from cutting back subsidies into substantial new research and development investments. We will need them.

There are also other policy tools that the U.S. so far has failed to use in lieu of unlimited production subsidies and mandates — for example, to fund clean energy demonstrations and first-of-a-kind commercial plants, there are tools such as contracts for difference, risk tranching, and stakeholder collaborations. The Trump administration should break out of the existing box and explore them.

And the good news is there are existing assets the administration can leverage to carry out a strategic pivot, such as the Energy Department’s Office for Clean Energy Demonstrations and its loan office. The administration should reorient them to pursue a price-performance parity strategy, not eliminate them.

We are on the verge of a new era in clean energy, and the administration can seize the moment by cutting the excesses of the past, doubling down on key investments in new technologies, and ensuring that all its policies are tuned to making clean energy competitive.

Robin Gaster is the research director of the Center for Clean Energy Innovation at the Information Technology and Innovation Foundation.

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