Assessing the long-term impacts of volatile US policy on the energy transition, including trade tariffs and other policy items, is near-impossible, says Roman Boner, portfolio manager of Robeco’s Smart Energy Equities strategy. “The energy transition is a very long-term structural development, while policy decisions currently change every other day.”
The strategy does not invest in the traditional energy sector, but in clean energy solutions, the electrification and decarbonisation of the energy value chain and energy-efficiency solutions.
“We have observed that negative impacts have been quickly priced-in and are partly reversing following the announcement of the tariff pause,” says Boner in an April 11 note. “We are closely monitoring the Federal Reserve, potential fiscal stimulus announcements outside the US, Trump's first major trade deal and his pro-growth agenda, including tax reductions and deregulation.”
One of the bigger concerns for the “clean energy theme” centres around the tariff impact on batteries, not just for electric vehicles (EVs) but also for utility-scale energy storage, Boner adds.
“Planned renewable energy projects (solar or wind) often include an energy storage component, and additional tariffs may increase battery costs by 30% or more per kilowatt-hour (kWh),” he writes. “The US battery market had good momentum last year but is highly dependent on imports with Korea and China being the largest importers.”
Localisation of production using Inflation Reduction Act (IRA) battery production tax credits is an option, especially for South Korean battery-makers, says Boner. These credits are likely to remain in place, though the market is also awaiting certainty around that, he adds.
See also: Sembcorp’s subsidiary signs agreement for potential import of green electricity from Sarawak
The US supply chain for solar and onshore wind requires fewer imports than the battery value chain. Inventories, especially on solar modules imported before tariffs were announced, are estimated to be 50 gigawatts (GW).
EVs are “more impacted” by the 25% tariff on imported finished vehicles, already announced ahead of “Liberation Day”, notes Boner. Those tariffs already came into effect on April 3.
“It’s worth noting that these tariffs are not additional to ‘reciprocal’ country-specific tariffs. These auto tariffs do remain in place and have not been paused,” he adds.
Boner thinks the overall impact on EV sales in the US, which have been relatively low, should be limited. “Chinese EV-makers were already facing a 100% tariff imposed under the Biden administration and had no exposure to the US. Traditional OEMs (be it US, European, Korean or Japanese car makers) face the bigger impacts with a lot of production in Mexico or Canada or home markets.”
