Beneath the Surface
The Inflation Reduction Act’s Uncertain Future
November 13, 2024 • 3 minute, 1 second read
James West, The Midas Letter
Trump’s stance on renewable energy and climate change is clear: Climate change is a hoax and any barriers to growth at any cost of the US oil and gas industry will be eliminated.
But one has to wonder, with the recent nuptials of bros Trump and Musk now consecrated in victory, how does that jive with the electric car business of the First Laddie?
One might assume that, among the victims of Trump’s newly sharpened axe, would be the Inflation Reduction Act of 2022 – Joe Biden’s signature accomplishment in the clean energy sector.
Within the Act are numerous projects that are funded by the Energy Infrastructure Reinvestment Program, which has $5 billion earmarked for clean energy projects that re-vitalize existing energy facilities that have passed out of service, with a total zero percent loan guarantee program of $250 billion available.
Matthew Daly, in a comment to PBS stated, “Basically everything that President Biden has tried to do, President Trump is going to try to undo. And you mentioned the Inflation Reduction Act, which is a terribly named law, but it’s a very wide reaching law that basically tries to spend hundreds of billions of dollars to promote clean energy and has a lot of tax credits in there.”
Never a nation to dilly dally when the federal government is handing out free money, numerous projects have already been approved and are underway. Most of these are in Republican jurisdictions, so there will be significant internal resistance should Trump wish to unilaterally cancel the Act.
Trump is more likely to dismantle pieces of the Act that benefit Democratic sponsored projects while leaving the Republican beneficiaries unscathed. You might think there is no way to do that legislatively, but Trump has demonstrated a persistent ability to rewrite the rulebook when it comes to targeting his enemies.
The Economic Case for Preservation
The IRA has spurred significant investment and job growth in the clean energy sector, with over $500 billion in planned investments and a growth rate twice that of the overall US employment market ¹. Repealing the law would undermine private investments and halt ongoing development, ultimately costing taxpayers billions of dollars.
Harry Godfrey, head of Advanced Energy United’s federal investment and manufacturing working group, notes that the IRA’s tax incentives align with Trump’s goals of energy independence and onshoring manufacturing.
Arguments Against Repeal
- Bipartisan Support: 18 House Republicans have expressed opposition to repealing the IRA’s clean energy and manufacturing tax credits, citing the law’s benefits in their districts ¹.
- Economic Interests: The IRA has driven economic growth in states with significant Republican representation, making a full repeal politically challenging
- Global Competition: The US needs to maintain its competitive edge in the clean energy sector to counter China’s dominance
Arguments For Repeal
- Trump’s Campaign Promises: Trump has pledged to repeal the IRA and halt offshore wind development ;
- Ideological Opposition: Some Republicans may seek to dismantle the law due to ideological differences ;
- Alternative Priorities: The GOP may redirect funds allocated to clean energy toward other priorities, such as tax cuts ¹.
The Way Forward
While the IRA faces uncertainty, experts like Gina McCarthy, former national climate advisor, remain optimistic: “The shift to clean energy is unstoppable… Our coalition is bigger, more bipartisan, better organized, and fully prepared to deliver climate solutions”.
So its pretty clear that, despite Trump’s idealogical opposition to anything to do with clean energy, he may find more immediate gratification for his revenge porn fantasies tea-bagging on the foreheads of less popular policies. We will have to wait and see what happens on January 6th….if he even makes it to that date.
