Donald Trump’s election victory puts the future of President Joe Biden’s landmark climate plan in uncertain territory. While programs and tax credits funded by his 2021 Inflation Reduction Act (IRA) have already spurred a shift toward clean energy, experts say Trump could slow progress through budget cuts and deregulation.
Since 2022, Biden’s IRA has mobilized hundreds of billions of dollars for clean energy projects. It allocated US$105 billion to climate grants, awards, and funding for federal agencies, and created tax incentives valued [pdf] between $244 billion and $1 trillion. And, in an unprecedented federal commitment to environmental justice, the IRA advances an initiative to deliver [pdf] 40% of the overall benefits of climate, clean energy, infrastructure, and other investments to disadvantaged communities—a priority that could be jeopardized by Project 2025, the Heritage Foundation’s plan for Trump’s first 200 days.
To date, the Biden administration has awarded $61 billion from the IRA for climate programs—not counting loans, direct government spending, and tax credits. The money kickstarted efforts like the Greenhouse Gas Reduction Fund for clean energy projects, and Climate Pollution Reduction Grants for emissions reduction planning at local and regional levels of government.
“The good news is for a lot of grant programs within the IRA, that money has already gone out the door and been distributed to states,” Adrian Keller, program manager at Arizona-based Solar United Neighbors (Arizona SUN), told The Energy Mix.
For a non-profit like Arizona SUN, which has spent two years using IRA funds to help low-income communities, schools, and small businesses navigate federal processes to obtain solar panels, an IRA repeal would hurt—but not halt—their energy justice work, Keller said.
A Rocky Road to Repeal
Completely repealing the IRA would require a filibuster-proof majority in Congress. Republicans have a Senate majority, but the House of Representatives remains undecided, with Republicans on the brink of control. A repeal, however, may be less popular for “red state” politicians than Trump’s agenda assumes, Reuters reports. Some IRA provisions—like domestic manufacturing incentives—align with Trump’s goals, and almost 60% of IRA-related projects, 85% of investments, and 68% of jobs are in Republican districts. In August, 18 Republican lawmakers urged [pdf] House Speaker Mike Johnson to defend IRA tax credits from repeal.
Many major conservative donors are also invested in cleantech companies that have benefitted from IRA tax credits.
Clawing back allocated funding would be difficult, and canceling earmarked grants could leave the White House vulnerable to legal challenges. But Trump could slow things down by hindering federal agencies that deliver IRA grants and loans, or by reducing federal leasing for technologies like offshore wind, Reuters writes.
Tax Credits, Regulations at Risk
Congress could also direct the Internal Revenue Service (IRS) to halt tax credit regulations still in development, or those developed in the last months of Biden’s presidency. Claiming tax credits without IRS regulations is nearly impossible.
Even if IRA tax credits stay in place, organizers and legal experts worry that political uncertainty could dissuade investors from participating in projects. Smaller companies, cities, and organizations can’t afford the risk of funding projects without sure reimbursement. Politico reports that the majority of IRA tax breaks have not been finalized, leaving them vulnerable to disruption.
“If the IRA were to be repealed, or parts of were to be repealed…. I think overnight, we would see a significant decline in solar installations, just especially from that tax credit going away,” Keller said.
The IRA primarily uses incentives and contains few regulations, but existing ones could be at risk. Project 2025 plans to dismantle U.S. Environmental Protection Agency (EPA) rules limiting greenhouse gas emissions from power plants and vehicles.
Deregulation and increasing subsidies for fossil fuels could unleash four billion tons of U.S. emissions by 2030, say Carbon Brief analysts.
Environmental Justice At Stake
Mandy Gunasekara, a former EPA chief of staff under the Trump administration and Project 2025 author, told Mother Jones that a second Trump administration would dismantle environmental justice offices and grants, many of which are run by the EPA. Cutting off EPA funding would disproportionately underfund community-based groups, which have already struggled to make use of IRA funds.
If IRA funding runs out, Keller says Arizona SUN would go back to what it was doing before: advocating for solar-friendly policies at the state level to power rural small businesses and low-income communities affordably and sustainably.
