Editor’s note: This year's election will impact companies in every industry. That’s why Harvard Business School’s Institute for Business in Global Society (BiGS) is launching its first-ever election guide for business leaders, offering insights from experts to help you navigate. In the coming weeks, we’ll publish a series showing how the Harris and Trump agendas will affect everything from trade and labor to diversity and environmental regulations. After the election, we’ll package these insights into a comprehensive guide showing what to expect in the months ahead. We hope you enjoy it.
BOSTON — The 2024 presidential election is a pivotal moment for U.S. climate policy. Though the candidates say little on the topic, November’s showdown will affect how America approaches issues ranging from oil and gas exploration to emissions targets to international climate treaties.
The contrasting views held by Donald Trump and Kamala Harris foretell significantly different potential futures for clean energy, decarbonization investment, and the relationship between government and business. At stake are billions of dollars in tax incentives, financing, and loan programs; U.S. competitiveness in new industrial sectors; and the future growth model for the world’s largest economy.
“This is and will continue to be the most consequential election for the climate transition,” said Harvard Business School professor Gunnar Trumbull, author of the forthcoming book, A Concise Business Guide to Climate Change, in an interview with The BiGS Fix.
Perhaps most importantly, the sharply different views of the presidential candidates will shape how and to what extent the federal government engages companies on climate matters.
Harris and her party are pushing for aggressive action to address climate change, including investing in renewable energy, punishing polluters, and helping communities affected by climate change (though she now supports fracking to extract oil and natural gas, a practice opposed by many environmentalists). A Harris administration is likely to make it harder and costlier for fossil fuel companies to expand quickly, while encouraging the rapid buildup of clean energy technologies, with the goal of building a greener, more technologically advanced economy.
By contrast, Trump has referred to climate change as a "hoax," often denying that it poses a significant threat beyond hindering the extraction of more fossil fuels to generate cheap, abundant energy. He has repeated the Republican refrain, “drill, baby, drill.” A second Trump administration is likely to go all-in on fossil fuels, making it easier for older technologies to rapidly expand and quickly drive down energy costs as a means of increasing economic production and living standards.
A new competitive landscape
While the U.S. stands at a political turning point, corporate attitudes toward climate change have also shifted. Many companies opposed climate policies in decades past, however, changes in technology and the competitive environment have led to a sea change in the way many business leaders view the issue, Trumbull said.
Since 2020, decarbonization technologies such as wind and solar batteries, and green hydrogen and electric vehicles, have moved to the center of global industrial competition, with China taking a significant lead in many areas. China, Europe, India, and the U.S. are competing in these markets by providing state subsidies, supportive regulations, and tariff protections for domestic firms.
“New decarbonization technologies are at the forefront of economic competition in the world,” Trumbull said.
Future of the Inflation Reduction Act
The centerpiece of those efforts in the U.S. is the Inflation Reduction Act (IRA) of 2022, the largest global policy initiative to reduce greenhouse gas emissions, promote renewable energy, and enhance climate resilience. It passed Congress on party-line votes, with Harris casting the deciding vote in the Senate.
The IRA is the first seeding of the United States as a major clean energy producer, and it is vulnerable to change by the next administration, said BiGS Climate Fellow Jonas Meckling.
“If these early sprouts are killed through a rollback of many policies, it could have very long-term effects on the trajectory of clean energy in the U.S.,” Meckling told The BiGS Fix.
Harris has praised the IRA for supporting a greener economy and increased job creation. Her administration would likely pursue rapid implementation of the legislation and defend it against dismantling by Congress.
Trump has criticized the IRA as wasteful spending and pledged to rescind further spending if re-elected. For example, Trump has criticized tax incentives encouraging the purchase of electric vehicles, though he later softened his rhetoric after receiving the endorsement of billionaire Elon Musk. He could instruct the Treasury Department to change or rescind regulations that made it easier for manufacturers to take advantage of the existing $7,500 tax credit. Similarly, he has criticized rules that push manufacturers to make more hybrid or fully electric vehicles. A new Trump administration would have the power to roll those back.
No matter who wins, the next president will be constrained by Congress. Though it is not clear which party will control the House and the Senate, Congress could moderate radical action by the administration.
Despite early GOP opposition to the IRA, tax incentives for clean energy and decarbonization could survive political shifts, due to their popularity among Republican-favored businesses.
“The Biden administration developed the IRA as both a climate policy and a political strategy to make it more durable,” Meckling said.
Oil and gas exploration
Growing energy demand ensures that both Trump and Harris would allow continued expansion of fossil fuel extraction and energy production.
“Regardless of who comes into office in 2025, you're going to continue to see lots of oil and gas development on federal lands,” said Daniel Raimi, director of the Equity in the Energy Transition Initiative at Resources for the Future, a nonprofit research institute in Washington, D.C.
Yet the two candidates differ on how much these industries should be regulated.
A Harris administration might try to implement policies asking oil and gas companies to pay more royalties for drilling on federal lands, according to research by ING, a Dutch multinational banking and financial services company. She also might toughen the rules for the collection of an IRA-imposed fee on the emission of methane, a “super pollutant” that the Biden administration sought to limit in the climate change law.
Trump is expected to make it easier and less expensive to drill while going lighter on greenhouse gas emission regulation. He has pledged to reverse 2023 Environmental Protection Agency regulations that reduce pollution from fossil fuel-fired power plants.
Energy and economic competitiveness
Trump and Harris also offer contrasting energy policies for job creation and economic competitiveness. Trump emphasizes fossil fuel jobs, promising increased production and lower energy costs. Harris focuses on clean energy opportunities, linking climate initiatives to new investments, manufacturing jobs, and a stronger global position for U.S. advanced manufacturing and emerging technologies.
The debate reflects tensions between maintaining current energy sector jobs and creating new ones in emerging industries, such as clean energy and those fueled by energy-hungry artificial intelligence (AI). The debate also highlights regional economic concerns, as fossil-fuel-dependent areas may not immediately benefit from clean energy investments.
The IRA has largely directed projects toward Republican states to build support for the energy transition.
“The theory of change is that you want to embed clean energy industries across the country so that the constituency becomes larger and more geographically diverse in the years to come,” Raimi told The BiGS Fix.
Paris Agreement and net-zero carbon targets
The first Trump administration withdrew from the Paris Agreement, a 195-nation pact that set voluntary emissions targets to limit global temperature rise and achieve net-zero emissions. The administration said the accord favored U.S. economic competitors.
The Biden administration rejoined the pact, and the Democratic Party platform continues to support the accord and the goal of net-zero emissions by 2050. Trump said he will withdraw from the agreement again if he is elected this year.
Many businesses support U.S. engagement in the agreement. By 2023, more than 8,300 companies worldwide set science-based emissions reduction targets aligned with it.
"Even though the Paris Agreement doesn't bind the United States to do anything, it has a very important symbolic role," Raimi said.
Fossil fuels vs. clean energy
Harris and Trump offer differing approaches to almost every aspect of energy policy, with Trump often supporting fossil fuels and Harris generally championing clean energy technologies. For example:
Energy security. Fluctuating fuel prices since Russia's invasion of Ukraine have prompted debates on inflation and energy security. Trump, who criticized Biden for depleting the Strategic Petroleum Reserve, said he would have supported even greater increases in fossil fuel production. Harris emphasizes transitioning to diverse energy sources and moving away from fossil fuels.
AI-driven demand. AI and data centers are major new consumers of energy. Goldman Sachs research predicts their power use will more than double, to 3%-4% of global consumption, by 2030. This surge could drive once-in-a-generation power growth in the U.S. and Europe, regardless of its source. Trump promotes increased fossil fuel production to lower prices and increase productivity, while Harris promotes renewable energy infrastructure to meet AI-driven energy needs.
Climate finance. The U.S. climate finance market is growing rapidly, reaching $300 million in new financing in 2023, according to BloombergNEF. Meanwhile, according to Generation Investment Management’s Sustainability Trends Report, global clean energy financing increased from $1.2 trillion in 2020 to $2.2 trillion in 2024. The IRA's tax incentives have fueled the domestic investment boom. While Trump threatens to halt IRA spending, broad business support makes a full repeal unlikely. A Harris administration would likely accelerate the implementation of the IRA. Elements of the law requiring annual approval, such as loan programs and subsidies, would depend on which party controls Congress.
Disclosure. The Securities and Exchange Commission issued regulations in 2024 requiring companies to disclose climate-related risks to their business strategy or finances. While a Harris administration would likely maintain this direction, a Trump-appointed SEC might revisit these requirements. The SEC is an independent agency, but the president appoints its members.