The Uncertain Future of Climate Legislation
As the Republican-controlled White House, Senate, and House of Representatives take office, the fate of President Joe Biden’s landmark climate legislation, the Inflation Reduction Act (IRA), hangs in the balance. The new administration’s nominees for key positions will play a crucial role in shaping the future of the IRA.
A Shift in Priorities
President-elect Donald Trump’s nominees, including Scott Bessent as Treasury Secretary, Chris Wright to lead the Department of Energy, and Doug Burgum at the Interior Department, will have significant influence over the implementation and interpretation of the IRA’s programs and incentives. Their priorities may differ from those of the previous administration, potentially leading to changes in the law’s benefits.
The Importance of Agency Power
The agencies hold considerable power over the IRA’s tax credits and business loans. A priority for Republicans is extending the expiring provisions of the Tax Cuts and Jobs Act of 2017, which would cost $4.6 trillion over the 10-year budget window. To fund this, provisions of the IRA may be targeted for cost-savings.
Targeted Tax Incentives
The IRA contains targeted tax incentives designed to drive clean technology and energy production. While some of these incentives, such as renewable energy tax credits, are likely to be safe from repeal efforts, others may be accelerated or dismantled. The Trump transition team is already in talks to rescind a $7,500 consumer tax credit for electric vehicles.
The Future of the Loan Programs Office
The Department of Energy’s Loan Programs Office (LPO) provides financing for green projects, but its future is uncertain. Several Republicans have called for scaling it back or doing away with it altogether. With private companies seeking over $300 billion in funding applications, the LPO’s fate is a pressing concern.
An All-of-the-Above Energy Policy
The U.S. faces a significant challenge in meeting growing energy demands, which can only be met by an “all-of-the-above” energy policy. Trump’s potential Cabinet officials in the energy space, such as Burgum and Wright, may support this approach, but it could ultimately defeat the purpose of climate policy.
The Bottom Line
The future of the IRA is uncertain, and its fate will depend on the priorities of the new administration. While some provisions may be safe, others may be targeted for cost-savings or dismantled. The concern is not about keeping business and solar developers happy, but about reducing carbon emissions and addressing climate change.
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