According to a research report released by HTSC, they are bullish about investment opportunities under the global nuclear energy policy shift and nuclear energy is the energy consensus direction of the two parties in the United States. American electric power demand has rebounded from a ten-year low, with a 4.2% YoY increase in the first half of the year, and natural gas and electrical utilities are expected to play an important role in meeting the growing demand. If the Republican Party governs or the oil and gas production is released, it will be bullish for gas turbine orders. If the IRA is weakened and follows market-oriented development ideas, there is still an opportunity for breakthrough in the new energy market, such as distributed energy, which may be the first to improve its fundamentals under the tight supply and easing interest rate expectations of the US electricity market.

Compared to the Democratic Party, the Republican Party's energy policy is more focused on oil and gas development and nuclear energy revival, which is the consensus of the two parties.

"Making the U.S. the world's largest energy producer to date" is one of the twenty core commitments of the Republican Party's latest platform. HTSC believes that if the Republican Party takes power, the U.S. energy policy may change in the following ways:

1. Republicans support oil and gas production first. Oil and gas is a competitive advantage industry for U.S. energy and also a vital support for the Republican Party and Trump. Reference is made to the "Lower Energy Costs Act of 2023" (H.R.1) passed by the House Republicans, which includes measures such as promoting land leasing, pipeline construction, and refining permits related to oil and gas exploration and development. The U.S. has become the world's largest producer of natural gas (25% share in 2023), and HTSC believes that further relaxation of U.S. natural gas production may have an impact on global prices, but will also benefit local gas and electrical utilities development.

2. Under Republican rule, the electricity environmental protection regulations tended to be relaxed, with reference to Trump's previous measures, which may further tighten approval and financial support for renewable energy projects, weaken the Environmental Protection Agency's (EPA) regulation of fossil fuel power plant emissions, and devolve it to the states, further marginalizing the institutional support for new energy development.

3. Nuclear energy is currently the only transformation and security program that both parties agree on, and the passage of the Accelerating the Deployment of Clean Energy and Advanced Nuclear Technology Act in both houses of Congress with high votes in June of this year (Senate 88/2, House 393/13) marks the consensus of both parties on nuclear energy development. HTSC expects that if the Republican Party takes power, it will continue to push for measures such as extending the life of existing nuclear power plants and funding new nuclear technology demonstrations.

What is the prospect for the development of clean energy if the Republican Party takes power and weakens the Biden inflation reduction bill (IRA)?

64% of the $437 billion budget for the IRA bill is allocated to clean energy investment. Trump pledged to "terminate clean energy policies" during his campaign. HTSC points out that the actual degree and speed of weakening the IRA bill depend on the legislative protection, the composition of the Congress, and interest related factors:

1. Legislative protection provides for a certain amount of time buffer for amending the bill. The modification of U.S. legislation and budget requires congressional approval, taking several months to several years; executive orders can be issued directly by the president without congressional approval, taking several months.

2. The composition of the Congress determines the probability of amending the bill. If the Republican Party successfully wins the presidency and controls both houses, the new government may modify the distribution of funds, tax reductions and exemptions, and federal fiscal budgets through presidential proposals and congressional approval; if the Republican Party takes power but the House and Senate are divided between the Democrats and Republicans, the new government will face greater congressional resistance to amending the IRA bill, making it more likely that it will delay disbursement of funds and tighten tax reductions and exemptions through presidential administrative orders, weakening the effectiveness of the IRA bill.

3. Red states protect some IRA clauses that serve the common interests of both parties. As of March 2024, 86.5% of the cumulative clean energy and industrial production investments driven by the IRA have been concentrated in red and swing states, which are in line with the Republican Party's platform of promoting manufacturing and job creation, so completely terminating the IRA will face political resistance. On the other hand, Musk's recent announcement of support for Trump's reelection may influence the government's attitude towards the electric vehicle industry, but not its attitude towards incentives.

If we enter the "2.0 era" of Trump, the new energy industry will need to "cultivate its own power" to achieve a "comeback against the wind." During Trump's first term in office, the United States added installations at a rate 33% higher than in Obama's second term. Looking ahead, even if institutional thrust weakened, the economic growth of new energy, the RPS targets for renewable energy in various states, and the demand for clean electricity from technology giants are all expected to drive the market-oriented development of new energy.