Framing: The Inflation Reduction Act and its importance for Swedish companies 

Over the past four years, the US has made significant strides towards the green transition through policies such as the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA). Together, these initiatives support a greener economy with unprecedented investments in renewable energy, climate tech, and decarbonisation. 

The IIJA, launched in 2021 with USD 550 billion, funds infrastructure to support a sustainable future. It includes financing for EV charging networks, grid modernisation for renewable integration, and support for early-stage technologies like carbon capture and hydrogen. 

The IRA, enacted in 2022, marks the largest climate-focused investment in US history. Initially estimated at USD 369 billion, its total may now approach USD 800 billion due to high demand for uncapped tax credits in green tech sectors like solar, wind, and battery manufacturing. With goals to reduce US emissions by 40% by 2030, the IRA provides extensive incentives for clean energy production and industrial decarbonisation. 

Swedish companies with US operations have benefited from these incentives, utilising tax credits and grants that support renewable R&D and US-based production. Additionally, demand for solutions provided by Swedish companies has grown as US partners and customers leverage IRA incentives to scale. While domestic content requirements create challenges for some sectors — particularly EV manufacturing — most incentives remain universally accessible, offering Swedish firms substantial growth opportunities. 

With Trump’s re-election, however, uncertainties arise regarding the future of these policies, posing potential risks for international companies reliant on IRA provisions.

The future of Trump’s energy policy and scenarios for IRA repeal  

Under a second Trump administration, the US energy policy will likely shift back to a fossil fuel focus, prioritising domestic oil and natural gas production while reducing federal support for renewable energy initiatives. Announced nominations in key roles such as Department of Energy, EPA and the newly formed National Energy Council provide further evidence of the clear direction towards more deregulation and support for the fossil fuel industry and a strong focus on US energy independence. This potential policy shift creates uncertainties for industries aligned with green energy, as federal support for renewable infrastructure, EV deployment, and decarbonisation efforts could decline. 

Given these expectations, there is considerable uncertainty regarding the future of the IRA. President-elect Trump has famously criticised it as “the green new scam”.  While a full repeal is unlikely, potential scenarios include partial rollbacks or amendments to specific provisions. Although significant portions of the IRA have already been distributed and awarded, there are also considerable funds left, and the IRA includes several uncapped tax-credits including the important Advanced Manufacturing Production Credit, Clean Electricity Production Tax Credit and Clean Vehicle Tax Credit.  

Potential scenarios:  

  • Full repeal: A complete repeal would eliminate all climate-focused funding and incentives introduced by the IRA. Although some experts argue that it would be possible — given Republican control of the House and Senate — the complexity of rolling back the legislation and potential backlash from key stakeholders in Republican-led states benefitting from the law make this scenario less likely. 
     
  • Partial repeal: This scenario involves reducing or restructuring specific provisions within the IRA. For example, tax credits for green hydrogen, EV incentives, or renewable project funding could be removed, weakened, or revised. This scenario is more likely as it allows for more compromise between different political interests. The incentives most likely to face cuts are those perceived as costly while offering limited emphasis on US manufacturing or job creation.  

    • The Congressional Budget Office (CBO) estimates that the IRA’s clean energy tax credits alone could cost around USD 216 billion over 10 years, making them a target for cost-cutting. 
    • Direct investments, such as those administered by the Departments of Agriculture, Energy, or the Environmental Protection Agency, may also face cuts if not yet allocated to specific programs. 
    • Other credits under scrutiny include the 30D and 45W EV tax credits, although Trump’s relationship with Elon Musk may influence their status.
              
  • Administrative and regulatory delays:  Without formal legislative action, the administration could delay or reallocate IRA funds, slowing their release and implementation. This scenario is highly likely, as it requires fewer political hurdles and aligns with Trump’s stated goals of reducing government spending. For example, the Department of Energy’s Loan Program Office, which uses innovative clean energy technologies, could see reduced funding. 

  • Status quo: Despite the political rhetoric, some believe the IRA could remain largely intact due to the complexities of repealing established legislation and the potential economic backlash in states that have benefited from significant private sector investments in climate technologies (e.g., USD 40 billion in new clean energy projects since its passage). However, given the Trump Administration’s consistent opposition to the IRA and its stance against subsidising specific technologies or green sectors, it is unlikely that the policies will remain entirely unchanged.  
How Swedish companies should act

Given the potential scenarios, Swedish companies should consider the following recommendations to navigate the uncertainty and continue expanding in the US market: 

  • Stay informed and prioritise scenario planning 
    Maintain close ties with industry associations, trade organisations, and policymakers to monitor evolving legislative developments, especially those impacting renewable energy and green tech incentives. Develop scenario-based contingency plans that outline responses to possible IRA revisions or repeals. For example, assessing which business units rely on tax credits or subsidies can help prioritise response strategies if federal support changes. Proactive measures will enhance your ability to respond swiftly and mitigate potential disruptions 
     
  • Strengthen state-level partnerships for policy stability 
    Focus efforts on states with robust, independent climate policies and incentives, such as California, New York, Massachusetts, and Washington. These states have ambitious renewable energy targets and strong “stick policies” (like emissions limits) to drive climate action, even if federal support wanes. For instance, California aims for 100% clean electricity by 2045 and has implemented measures to phase out gas-powered vehicles. Engaging with local regulators and policymakers in these states can help Swedish companies secure stable, long-term opportunities and capitalise on incentives aligned with their climate tech and renewable energy solutions. 
     
  • Consider US-based manufacturing and diversify supply chains  
    Expanding US-based manufacturing enables Swedish companies to meet potential “Buy American” provisions and access localised incentives. Establishing or scaling facilities for EV components, grid modernisation equipment, or batteries increases likelihood of eligibility for incentives, even with strict domestic content requirements. Additionally, reducing reliance on Chinese suppliers can mitigate risks, as trade tensions or restrictions, particularly in battery production and solar technology, may lead to new tariffs. Shifting supply chains away from China safeguards against potential disruptions and aligns with growing US investment trends. 
     
  • Broaden market focus beyond green tech to include traditional energy 
    Companies with adaptable technology should consider diversifying into traditional energy sectors. Trump’s administration may prioritise natural gas projects and potentially support nuclear energy initiatives. Swedish firms with expertise in grid resilience or efficiency solutions could find opportunities in these areas, capitalising on increased investment. This strategic pivot allows Swedish companies to build resilience by tapping into a broader array of energy-focused clients. 
Conclusion 

While the potential repeal or modification of the IRA under the Trump administration introduces uncertainty, Swedish companies have viable options to navigate these changes and maintain growth in the US market. By staying informed and preparing for multiple scenarios, companies can swiftly adapt to policy shifts. 

Building strong partnerships in climate-progressive states like California, Washington and New York can offer stability and continued access to local incentives for clean energy. Additionally, localising production in the US, particularly in critical sectors such as battery manufacturing, grid technology, or EV components, mitigates risks posed by “Buy American” provisions, strengthens market presence, and aligns with US regulatory expectations. Finally, focusing on targeted use-cases with advantageous TCO and business case, not relaying on a “green premium”, for clean energy products should be prioritized in the US strategy.  

Through these actions, Swedish companies can reduce risks, leverage state-led climate initiatives, and align their strategies with evolving US energy priorities, enhancing their long-term market positioning.