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The US head of Siemens has urged companies to sell voters on the benefits of the Biden administration’s industrial policy, warning that a change of government could imperil the tax breaks and subsidies needed to modernise the American economy.
Barbara Humpton said measures including the Inflation Reduction Act, which has a $369bn package in sweeteners for clean energy, should be a “non-partisan and transcendent issue” and that it was in the interests of all Americans that they survive next year’s US elections.
“We’ve got to get stories out to help paint the pictures to voters,” Humpton told the Financial Times in an interview. “So that whoever is sitting in the White House or whoever’s legislating on Capitol Hill knows the importance of this to American workers, to American families, and frankly, to our national security.”
Siemens, which counts the US government as its largest global customer, has already moved some component manufacturing for the solar industry from Germany to the country as a result of the IRA, which president Joe Biden signed into law last year.
The comments by Siemens’ US chief executive come amid growing calls by Republican presidential candidates for the repeal of the IRA — Biden’s signature climate and energy policy — if they win next year’s elections.
The law provides a 10-year framework for incentives to help green the world’s largest economy and build out a domestic manufacturing base. Investments in clean energy are up 37 per cent this year, surpassing $200bn, according to an analysis by Rhodium Group, a research firm.
Last month, Republican presidential candidate and former South Carolina governor Nikki Haley vowed to repeal the IRA, describing it as a “communist manifesto filled with tax hikes and green subsidies that benefit China”. Rivals including former president Donald Trump and Florida governor Ron DeSantis have also slammed the legislation.
At a Republican presidential primary debate last week, former vice-president Mike Pence said he would “get rid of the mandates and subsidies that are driving American gasoline automotive manufacturing into the graveyard”.
The rightwing Heritage Foundation’s Project 2025 playbook calls on a potential future Republican administration to roll back IRA funding.
The growing political attacks on the IRA are alarming energy executives, who fear that the loss of tax credits will undermine their projects’ profitability and stall the country’s emissions reductions.
“Whipsawing back and forth between presidential parties is really as stark and severe as it’s ever been. That is very, very difficult for a long lead time, long-term horizon investment-based industry,” said Dustin Meyer, senior vice-president of policy, economics and regulatory affairs at the American Petroleum Institute. “We really, really would benefit from having some consistency and some stability and predictability.”
The IRA included subsidies to help commercialise carbon capture and clean hydrogen, the main focus of US oil majors’ decarbonisation strategies.
While the law was enacted without Republican support, the private sector dollars it has helped stimulate are flowing disproportionately to Republican areas. More than three-quarters of clean energy manufacturing projects headed to Republican-controlled congressional districts, according to an FT analysis.
South Carolina, home to two Republican presidential candidates who said they would repeal the IRA in office, is the top state for clean energy manufacturing projects. Half of the top 10 states for solar installations in 2022 were Republican-led.
Biden has been quick to point out instances of Republican districts welcoming clean energy investment despite their lawmakers voting against his climate agenda in Washington.
Last month, the president cited a new project from South Korean manufacturer CS Wind to expand wind power production in Colorado and pointed out that the plant was located in the district of GOP firebrand Lauren Boebert, who he said “railed against” the IRA’s passage.
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The president’s actions on climate have been slow to trickle down to voters. More than half of Americans disapprove of Biden’s handling of climate change and are unaware of the IRA’s clean energy tax credits, according to a July poll by the Washington Post and the University of Maryland.
Business leaders such as Humpton hope that regardless of who is in office, the growing concentration of clean energy projects in Republican states will ensure the survival of the IRA’s tax credits.
Humpton said there would be a lot of debate about US industrial policy during the current “hot political season”, but most politicians understood that business needs “stability and predictability”. It was not inevitable that “President Trump” would rip up the IRA, she added.
Humpton said Biden’s flagship industrial policy measures — the IRA, the Chips Act and the Infrastructure Investment and Jobs Act — were boosting employment and manufacturing in the US. They were also attracting new industries such as battery manufacturing to the country, she said.
“We’ve never had battery at this scale, so it’s not exactly reshoring. It’s literally just establishing a foothold,” Humpton said.
Pedro Pizarro, board chair of the Edison Electric Institute, which represents all investor-owned utilities, said the clean energy transition “is not going away”.
“I hope that a lot of the political rhetoric gives way to actual economic sanity.”
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