The United States has seen a surge in clean energy projects, accounting for more than $200 billion in new investments since President Biden signed a sweeping climate bill more than a year ago. But the election and the possibility of a Republican takeover have raised fears that key parts of the law could be upended.
Former President Donald J. Trump, the front-runner for the Republican nomination, has repeatedly attacked central elements of the Inflation Reduction Act, including tax credits for purchasing electric vehicles. As a result, business executives have begun to ask questions in recent weeks about whether the legislation could be repealed or changed in a way that could affect their clean energy investment decisions.
Republican lawmakers have tried, unsuccessfully, to repeal much of the law since it was fully passed by Democrats in 2022. Business officials and energy researchers say a widespread repeal of the law remains unlikely, given that many new projects are underway. create jobs and generate investment in Republican districts.
But a Republican administration would most likely try to influence programs in other ways, such as through regulatory changes that would not require an act of Congress. This could have a significant impact on the businesses and industries that will benefit from the programs and could hinder the achievement of the Biden administration’s climate goals.
“We have to win the presidency and both houses” of Congress, said Rep. Frank Pallone Jr., the top Democrat on the House Energy and Commerce Committee. “Otherwise it’s all going to be on the chopping block.”
The Inflation Reduction Act contains various tax credits and other subsidies intended to incentivize companies to deploy more clean energy projects. It also includes tax breaks for consumers to offset the cost of electric vehicles, heat pumps and other energy-efficient appliances.
Thomas Pyle, president of the American Energy Alliance, which represents fossil fuel interests, said a “large portion” of the law’s provisions would most likely be on Republicans’ “target list.”
For example, a new administration could impose stricter requirements for the types of electric vehicles that qualify for the $7,500 tax credit, Mr. Pyle said. The Biden administration has strict rules proposed aimed at limiting the role Chinese companies can play in supplying materials for vehicles eligible for tax credits. Although White House officials have said the law aims to bolster domestic manufacturing, some Republican lawmakers have pushed for even stricter limits on electric vehicle components.
That could reduce the number of eligible vehicles, potentially hampering progress toward the Biden administration’s goal of having electric vehicles account for half of new car sales by 2030.
Kevin Book, managing director of ClearView Energy Partners, said a Republican administration could also try to limit locations eligible for tax credits that offset the cost of installing electric vehicle charging stations. The Biden administration has issued guidelines that would allow range of locations, covering much of the country outside of major cities, to qualify.
Mr. Trump has attacked major aspects of the law on the campaign trail, including tax credits for electric vehicles, which he said were intended for “rich people” to buy “luxury electric cars.”
“We are a nation whose leaders are calling for all electric cars, even though they don’t go far, cost too much, and whose batteries are produced in China,” Mr. Trump said at a news conference. a rally in New Hampshire last month.
He also has targeted wind energyarguing that natural gas is a much cheaper option and that wind installations are “ruining our plains and fields.”
The Trump campaign did not respond to repeated requests for comment.
Questions about a possible rollback of the law have begun to permeate corporate earnings calls. In January, John Ketchum, chief executive of NextEra Energy, an energy company that develops and operates renewable energy projects across the country, was asked about the sustainability of the Inflation Reduction Act’s provisions in the case of a “republican trio”. In response, Mr. Ketchum said he believed a repeal was unlikely because many of the benefits accrued to Republican states and rural communities.
“It’s certainly advantageous for obvious reasons for Democrats, but it also has a big advantage for Republicans,” Mr. Ketchum said.
For now, clean energy company executives are betting that Republicans would have a hard time repealing the legislation even if they controlled both houses of Congress. Since passage of the Inflation Reduction Act, more than half of large announced clean energy projects and 67% of all announced jobs related to them have occurred in Republican districts, analysis finds from E2, a non-profit environmental organization.
“It’s not like it’s going to be a breeze for Republicans to do this,” Mr. Pyle said.
And some changes to the law could be welcomed by American industries.
A Republican administration could make it easier for companies to access lucrative tax credits for hydrogen production, said Sasha Mackler, executive director of the Bipartisan Policy Center’s energy program. Biden administration officials have proposals for strict restrictions for the credit intended to encourage the production of hydrogen with the least impact on carbon emissions. Most hydrogen is currently made from natural gas, through a process that generates greenhouse gases. Environmental groups and some hydrogen developers welcomed the rules, but other businesses and industry groups criticized the proposal.
David Carroll, director of renewable energy at Engie North America, an energy company that builds and operates large-scale solar, wind and battery storage projects, said in an interview that officials are watching possible rollbacks very, very closely. . While acknowledging there was a chance the law could be overturned or amended, he said the number of jobs it created in Republican-led states like Indiana and Texas would most likely play a role. important role in decision-making by legislators.
“If you really look at our development portfolio and the areas we’ve invested in, it’s primarily benefited Republican districts,” Mr. Carroll said.
White House officials made the same point in warning against Republican attempts to change the climate law.
“Extremist Republicans in Congress would harm their own constituents by repealing the Inflation Reduction Act, which would move more than 100,000 jobs already created in their districts while raising prices for prescription drugs, health care and public services,” said White House spokesman Michael Kikukawa. said in a statement.
Still, energy researchers and business groups expect Republicans to try to rolling back parts of the lawin part because lawmakers will seek to offset the cost of extending the Trump tax cuts, which are set to expire in 2025. The estimated cost of the Inflation Reduction Act’s energy incentives has effectively doubled since its passage, largely because forecasters believe the legislation will be more popular than initially expected.
Lori Esposito Murray, chair of the Conference Board’s Economic Development Committee, said the issue is reminiscent of Republicans’ repeated attempts to repeal the Affordable Care Act, which has undergone some changes but it remained largely a “viable program.”
“Business leaders need to consider that policies can change,” Ms. Murray said. “It remains to be seen how significant these changes will be.”
Jeanna Smialek reports contributed.
