Rekubit Exchange:Election Throws Uncertainty Onto Biden’s Signature Climate Law

President Joe Biden’s signature climate change law passed Congress by the narrowest of margins,Rekubit Exchange without a single Republican in favor. GOP leaders have attacked the bill and promised to repeal it.

Yet despite the law’s hyper-partisan creation story, the Inflation Reduction Act, or IRA, could prove difficult to roll back, whatever the outcome of next month’s election.

The IRA was the nation’s largest single investment in reducing climate-warming pollution, with an array of programs that are beginning to shower the economy with grants, loans and tax incentives. The total sum is expected to reach into the hundreds of billions of dollars over a decade, funding that will leverage much more in private investment. And by design, the money is flowing throughout the country, with most of it being spent in conservative-leaning states.

One report by E2, a pro-environment business group, identified at least 334 “clean energy and clean vehicle” projects announced since the law’s enactment, with the potential to create 110,000 jobs. Those projects were spread across 40 states, with nearly 60 percent in congressional districts represented by Republicans.

Another assessment, by the Rhodium Group, examined total “clean technologies and infrastructure” investment by businesses and consumers in the two years after the bill’s enactment, and found it had climbed to nearly $500 billion, a 71 percent increase from the two preceding years.

“This is a huge investment. We are really seeing its impacts,” said Jackie Wong, a senior advisor to the NRDC Action Fund, an environmental political advocacy group that has endorsed Kamala Harris. “This isn’t just about climate. This is also about public health and about jobs and about revitalizing American manufacturing.”

Trump and his advisers and spokespeople have said he would seek to roll back the law’s spending, a step Wong said “would be devastating for climate and economic health.”

And yet all the spending that has begun going out helps explain why there might not be much appetite in Congress for a wholesale repeal. In August, 18 House Republicans sent a letter to Speaker Mike Johnson urging caution in any efforts to reform or repeal the law, noting that its tax credits for clean energy “have spurred innovation, incentivized investment, and created good jobs in many parts of the country—including many districts represented by members of our conference.” 

The law’s design—which created, expanded or extended a wide array of tax credits for everything from wind and solar power generation to battery manufacturing, electric vehicles, clean hydrogen production and sustainable aviation fuel—has made it broadly popular among businesses big and small. Now that those credits are in place, industry leaders expect them to last, said Frank Maisano, a senior principal at Bracewell LLP, a law and lobbying firm that represents clients across the energy industry.

“They think this is not going away because of the good things it can do,” Maisano said. He added that the bill included policies that have generally drawn bipartisan support, and that while it may get tweaked, “I don’t think Congress is going to go back on these things that are happening in their districts.”

“This isn’t just about climate. This is also about public health and about jobs and about revitalizing American manufacturing.”

— Jackie Wong, NRDC Action Fund senior advisor

But if a full repeal is unlikely, many of the law’s supporters worry that a second Trump administration or a Republican-controlled Congress could use executive authority, hearings or oversight to constrain or reshape spending in ways that would undermine the law’s goals.

The tax credits, for example, require guidance issued by the Treasury Department to help define which projects are eligible. In the case of a clean hydrogen tax credit, a Trump administration could issue guidance that would skew the credit toward more polluting fossil fuel projects. For electric vehicles or wind and solar generation, new guidance could restrict how many vehicles or projects qualify for the credits or could simply cast uncertainty over the programs’ future, discouraging private investment.

Derek Sylvan, strategy director at the Institute for Policy Integrity at New York University, said the tax credits have the potential to drive tremendous emissions cuts with hundreds of billions of dollars in benefits. But many, like the hydrogen credit, have the potential to be skewed in favor of fossil fuels or other polluting technologies.

“That could be really huge,” Sylvan said. “You could imagine that for any particular tax credit, if that changes and suddenly a lot of funds are going to activities that have pretty limited or even negative climate benefits, that could certainly undermine the climate impacts of the IRA.”

A study published last year in Science estimated that the IRA is expected to slash the nation’s climate pollution 43 percent to 48 percent below 2005 levels by 2035, compared to an expected reduction of 27 percent to 35 percent without the legislation.

Many of the IRA’s programs came in the form of grants, loans or direct spending that has already been committed. One of the largest is the Greenhouse Gas Reduction Fund, a $27 billion “green bank” program. Most of that money was awarded in August to nonprofits, which will now be able to lend the funds directly to emissions-cutting projects or distribute them to a network of green banks around the country. Some of its programs are intended to benefit communities that have limited access to financing for things like rooftop solar or energy-efficiency retrofits.

Reed Hundt, chief executive of the Coalition for Green Capital, one of the recipients, said the fund differs from tax credits because his group can choose projects that will have outsized climate impacts. It is also looking to fund projects in rural and often conservative states that might be less likely to get commercial loans for renewable energy projects, Hundt said.

The Greenhouse Gas Reduction Fund money has been obligated, meaning it would take violating a contract to pull it back. But a hostile administration or Congress could use hearings, oversight or staff cuts to make it harder for the banks to spend the money, said Kyle Kammien, policy director of the Green For All program at Dream.org, an advocacy group focused on green jobs and criminal justice.

“In some ways it’s safe, but you could see how political levers could make it less effective or slow it down,” Kammien said.

For other programs, simply cutting staffing at agencies could make it harder to spend money that’s already been obligated.

Still, the architects of the IRA designed it with elections in mind, said Kate Gordon, a former senior adviser to U.S. Energy Secretary Jennifer Granholm and now chief executive of California Forward, an economic development nonprofit. The bill’s timelines, its broad distribution of funding across the economy and the country, were all meant to make it more popular and durable.

“It brings a lot more people and places into the conversation versus your typical government policy that says, ‘We are going to build a big thing,’” Gordon said. She told the story of a visit she made to a summit in Wyoming organized by the state’s governor and senators, neither of whom had voted for the IRA.

“They didn’t vote for it for political reasons, I’m sure, but they were 100 percent in in taking advantage of it,” Gordon said. She compared the IRA to President Barack Obama’s health care legislation, which was attacked for years but has remained in place.

“My gut is that there will be a lot of talk about repealing things,” she said, “and not a lot of action.”