The United States has seen a boom in clean energy projects, representing more than $200 billion in new investment since President Biden signed an expansive climate bill more than a year ago. However, the election and the possibility of a Republican takeover raise concerns that key parts of the law could be overturned.
Former President Donald J. Trump, the Republican front-runner, has repeatedly attacked central elements of the anti-inflation law, including tax credits for buying electric vehicles. As a result, business executives have begun to face questions in recent weeks about whether the legislation could be repealed or changed in ways that could affect their clean energy investment decisions.
Republican lawmakers have tried, unsuccessfully, to repeal much of the law since it was passed with an all-Democrat vote in 2022. Company officials and energy researchers say a broad repeal of the law remains unlikely, given that many new projects are creating jobs. and create investments in Republican districts.
But a Republican administration would likely try to affect the programs in other ways, such as through regulatory changes that wouldn’t require an act of Congress. That could have a significant impact on which companies and industries benefit from the programs and could hinder 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, everything will be on the block.”
The Inflation Reduction Act includes various tax credits and other subsidies to incentivize companies to develop more clean energy projects. It also includes tax breaks for consumers to offset the costs 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 likely be on Republicans’ “target list.”
For example, a new administration could impose stricter requirements on the types of electric vehicles that qualify for the $7,500 tax credit, Mr. Pyle said. Some Republican lawmakers have already pushed for tighter limits on electric vehicle components in an effort to boost domestic manufacturing and reduce the country’s reliance on China. That could reduce the number of eligible vehicles, potentially hindering progress toward the Biden administration’s goal of electric vehicles making up half of new car sales by 2030.
Kevin Book, managing director of ClearView Energy Partners, said a Republican administration could also try to limit the locations eligible for tax credits that offset the cost of installing electric vehicle charging stations. The Biden administration issued guidelines that would allow a wide range of locations, covering much of the country outside of major cities, to qualify.
Mr Trump attacked key 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 demand all electric cars despite the fact that they don’t go far, they cost a lot and whose batteries are made in China,” Mr Trump said at a rally in New Hampshire last month.
He has also targeted wind power, arguing that natural gas is a much cheaper option and that wind farms are “destroying our plains and our fields”.
The Trump campaign did not respond to repeated requests for comment.
Questions about a potential repeal of the law have begun to permeate corporate earnings calls. In January, John Ketchum, CEO of NextEra Energy, an energy company that develops and operates renewable energy projects across the country, was asked about the viability of the law’s deflationary provisions in the event of a “Republican trifecta.” In response, Mr. Ketchum said he considered any repeal unlikely because many of the benefits flowed to Republican states and rural communities.
“It’s certainly beneficial for obvious reasons for Democrats, but it’s also a big benefit 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 the deflation law was passed, more than half of announced major clean energy projects and 67 percent of all announced jobs associated with them have been in Republican districts, according to an analysis by E2, an environmental non profit organization.
“It’s not like it’s going to be a cakewalk 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 businesses to access lucrative tax credits for hydrogen production, said Sasha Mackler, the executive director of the energy program at the Bipartisan Policy Center. Biden administration officials have proposed tight restrictions on the credit intended to encourage hydrogen production with the least impact on carbon emissions. Most hydrogen today is produced from natural gas, through a process that produces greenhouse gases. Environmental groups and some hydrogen manufacturers praised the rules, but other companies and industry groups criticized the proposal.
David Carroll, the head of renewable energy at Engie North America, an energy company that builds and operates utility-scale solar, wind and battery storage projects, said in an interview that officials were watching potential reversals “very, very closely.” While he acknowledged there was a chance the law could be overturned or amended, he said the number of jobs it had brought to Republican-led states like Indiana and Texas would likely play a big role in lawmakers’ decisions. .
“If you really look at our development portfolio and where we’ve invested, it’s primarily benefited Republican districts,” Mr. Carroll said.
White House officials have made the same point in warning of Republican efforts to amend the climate law.
“Extreme Republicans in Congress would hurt their own constituents by repealing the De-Inflation Act, which would have gutted more than 100,000 jobs already created in their districts while raising prices for prescription drugs, health care and utility bills,” said Michael Kikukawa, a White House spokesman. he said in a statement.
But there is an expectation among energy researchers and business groups that Republicans will try to repeal parts of the law, in part because lawmakers will try to offset the costs of extending the Trump tax cuts, which are set to expire in 2025. The estimated cost of the Inflation Act’s energy incentives has essentially doubled since it was passed, largely because forecasters believe the legislation will be more popular than originally expected.
Lori Esposito Murray, chair of the Economic Development Committee at the Conference Board, said the issue is reminiscent of Republicans’ repeated efforts to repeal the Affordable Care Act, which has undergone some changes but has largely remained a “viable program.”
“Business leaders need to think that policies can change,” Ms Murray said. “How significant these changes will be remains to be seen.”
Jeanna Smialek contributed to the report.
