Trump could save Biden’s energy credits but still defeat the IRA

The fate of President Joe Biden’s landmark climate bill, the Inflation Control Act, rests in the hands of the incoming Republican-controlled White House, Senate and House of Representatives.

At the White House level, President-elect Donald Trump has already nominated three people to positions within his administration who, if confirmed by the Senate, are likely to hold the key to the IRA’s future: a hedge fund executive for secretary of the treasury; Scott Bessent of Oilfield Services Company liberty energy CEO Chris Wright will lead the Department of Energy, and the Department of the Interior will be headed by North Dakota’s governor. Doug Burgum.

A complete repeal of the IRA would require approval by both houses of Congress, but Republican lawmakers have so far been reluctant to completely deny the law’s benefits. House Speaker Mike Johnson (R-Louisiana) told CNBC in September that he intended to use “a scalpel, not a sledgehammer” against the IRA.

There are good reasons for this approach. As of late October, roughly three-quarters of clean energy investments made with IRA funds benefited congressional districts that supported Trump in the 2020 presidential election, according to one report. Washington Post analysis Data from Massachusetts Institute of Technology and clean energy think tank Rhodium Group.

But Tanuj Deora, a former director of clean energy in the Biden administration’s Office of the Federal Chief Sustainability Officer, said what future Trump Cabinet members do is “very important” to the future of the massive bill. ”, he said. These agencies have significant authority over the interpretation and implementation of IRA programs and incentives, such as tax credits and business loans.

The priorities for the Republican Party heading into 2025 are: Extends expiring provisions of the 2017 Tax Cuts and Jobs Act. President Trump is considering extending tax cuts by the end of the year his first 100 days He will take office next year.

The extension would cost $4.6 trillion over a 10-year budget period. According to estimates From the Congressional Budget Office.

“Additionally, President Trump promised an additional 7 trillion to 8 trillion in tax cuts in the final weeks of the presidential campaign. [presidential] campaign,” said Keith Martin, project co-director at legal and lobbying firm Norton Rose Fulbright.

But the money for all of this has to come from somewhere, and experts say IRA provisions are the best candidate for potential cost savings. In an interview with financial times Last October, Bessent called the IRA a “deficit doomsday device” and suggested President Trump might dismantle it to cut spending.

An IRA includes: Various targeted tax incentives It is designed to promote clean technology and energy production across the country.

Among them, renewable energy tax credits, particularly those for carbon capture technology, domestic manufacturing, and job transitions to the green economy, are popular with Republicans and are likely to survive potential repeal efforts. Martin said.

But experts say the current phase-out deadline for the IRA tax credit will likely be moved forward, and the Trump transition team is already negotiating to completely eliminate the $7,500 consumer tax credit for electric vehicles. I expect it to be in.

Most of the final regulations governing the implementation of the IRA tax deduction have been finalized or are expected to be finalized by the end of the year.

But Julie McNamara, deputy policy director at the Union of Concerned Scientists, said the remaining funding could be withdrawn, frozen or “awarded in a manner consistent with changing priorities” in the new administration. He said there remains considerable concern.

“While it is theoretically possible that a future Treasury Department could change course on interpretation and implementation, it would take a long time and would need to be justified and defensible if challenged in court. Yes,” he added.

A more pressing concern, experts say, is the future of the Energy Department’s Loan Program Office, which provides financing for green projects. Although Mr. Wright has not yet expressed his opinion on the LPO, several republicans They are calling for it to be scaled back or abolished entirely.

As of November, private companies had applied for more than $300 billion in funding from LPOs. Beneficiaries of the loan program include: teslaThe company’s CEO, Elon Musk, co-chairs President Trump’s external advisory board, the so-called Department of Government Efficiency.

The Inflation Control Act expanded LPO lending authority and project eligibility requirements.

“I think a lot of the private sector is very concerned about this financing program,” said Co-Founder and President of Sunrock Distributed Generation, a financier and developer of commercial-scale solar projects. said one Claire Broidy-Johnson. “Everyone is trying to get as many projects into this process as possible before the administration changes.”

With a boom in AI data centers, domestic manufacturing and electrification, the U.S. faces “significant challenges in meeting growing energy demands,” says the chief policy officer at the U.S. Clean Power Association, which represents renewable energy stakeholders. said Frank Macchiarola. Washington.

Martin said that could only be met by an energy policy that is “all of the above,” especially if President Trump intends to cut energy prices by 50% within his first year in office. as he promised.

Macchiarola and Deora said Trump’s energy cabinet nominees also echoed that message.

“Mr. Burgum has a clear track record of supporting energy investments of all types, and given the practical need for expansion of all types of energy infrastructure, we are highly recommending his background, business and governance capabilities. It seems hard to imagine that a well-prepared person would do something like this.”We should try to restrain reasonable technology from being introduced as soon as possible,” Deora said.

North Dakota is one of them. take the lead Wind energy powers the state, with more than a third of the state’s electricity coming from wind power.

As for the lights, he has them; rejected Trump’s statement announcing his nomination said he worked in the solar industry as well as oil and gas during the climate crisis.

“He’s not necessarily against any technology, just for certain technologies,” Deora said.

Ultimately, all of the above approaches to energy, even though they may sound reassuring for sectors adversely affected by targeted attacks on renewables, effectively defeat the purpose of climate policy. .

“Climate change is not about how many solar panels we install. Climate change is about the amount of carbon dioxide and methane we don’t acknowledge,” Deora said.

“The concern is not whether we will stay in business and keep solar developers happy. The question is whether we will produce more fossil fuels.”