The future of President Joe Biden’s pivotal climate legislation, the Inflation Reduction Act (IRA), now hinges on the incoming Republican-led administration, with Donald Trump assuming the presidency and Republicans controlling both the Senate and the House of Representatives.
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At the White House, President-elect Trump has already nominated three key figures to his administration, whose roles will likely be crucial in shaping the fate of the IRA. These nominees include Scott Bessent, a hedge fund executive, as Treasury Secretary; Chris Wright, CEO of Liberty Energy, to head the Department of Energy; and Doug Burgum, the governor of North Dakota, for the Interior Department. Their confirmation by the Senate will determine the direction of their influence.
To fully repeal the IRA, both chambers of Congress would need to approve such a move. However, Republican lawmakers have shown hesitation in dismissing the legislation’s benefits outright. House Speaker Mike Johnson, R-La., emphasized a careful approach, stating in September that he would wield “a scalpel and not a sledgehammer” when addressing the IRA.
This cautious strategy is not without reason. A Washington Post analysis using data from MIT and the clean energy think tank Rhodium Group revealed that as of late October, approximately 75% of clean energy investments funded by the IRA have benefited congressional districts that supported Trump in the 2020 election.
However, Tanuj Deora, a former director for clean energy at the Biden administration’s Office of the Federal Chief Sustainability Officer, noted that the decisions made by Trump’s Cabinet nominees could play a “profoundly important” role in the IRA’s trajectory. Federal agencies have significant authority over how the IRA’s provisions, such as tax credits and business loans, are interpreted and implemented.
Renewable Energy Tax Credits Likely to Remain
A top priority for Republicans entering 2025 is extending provisions from the 2017 Tax Cuts and Jobs Act. Trump has pledged to prioritize this extension within his first 100 days in office, which the Congressional Budget Office estimates would add $4.6 trillion to the deficit over the next decade.
Adding to this, Keith Martin, co-head of projects at the law firm Norton Rose Fulbright, highlighted Trump’s campaign promises of an additional $7–8 trillion in tax cuts. To fund these measures, experts suggest that provisions within the IRA might become targets for cost-cutting. In a Financial Times interview last October, Bessent referred to the IRA as a “Doomsday machine for the deficit,” indicating that dismantling it might be necessary to curb spending.
The IRA includes targeted tax incentives aimed at fostering clean technology and energy production. Among these, renewable energy tax credits—particularly for carbon capture technologies, domestic manufacturing, and green job transitions—are broadly supported by Republicans and are expected to be preserved. Nonetheless, experts predict that the phase-out dates for these credits could be accelerated. Furthermore, Trump’s transition team is reportedly considering eliminating the $7,500 consumer tax credit for electric vehicles entirely.
While most rules governing the implementation of the IRA’s tax credits are either finalized or nearing completion, concerns remain about whether funds might be rescinded, frozen, or reallocated under new administrative priorities. Julie McNamara, deputy policy director at the Union of Concerned Scientists, warned that a future Treasury Department could potentially reinterpret the provisions, though such a move would be time-consuming and legally challenging.
Challenges for Business Loan Programs
The immediate threat to the IRA lies with the Department of Energy’s Loan Programs Office (LPO), which finances green energy projects. While Chris Wright, the nominee for the Department of Energy, has yet to state his stance on the LPO, several Republican lawmakers have advocated for scaling it back or even abolishing it.
As of November, private companies had submitted funding applications worth over $300 billion to the LPO. The program’s beneficiaries include Tesla, whose CEO Elon Musk is co-leading Trump’s external advisory council, the so-called Department of Government Efficiency. The IRA had expanded the LPO’s lending authority and eligibility for green projects, which many in the private sector now view as crucial. Claire Broido-Johnson, co-founder of Sunrock Distributed Generation, remarked that developers are rushing to finalize projects before the new administration takes office.
An “All-of-the-Above” Energy Approach
The United States is grappling with surging energy demands due to the growth of AI data centers, domestic manufacturing, and electrification. Frank Macchiarola, chief policy officer at the American Clean Power Association, suggested that meeting this demand would require an “all-of-the-above” energy strategy. Trump has vowed to slash energy prices by 50% within his first year, which aligns with this approach.
Trump’s nominees for key energy roles reflect this philosophy. Doug Burgum, known for his broad support of various energy investments, has a track record of promoting energy infrastructure development. Deora commended Burgum’s business acumen and governance experience, suggesting he would likely endorse deploying diverse technologies quickly. North Dakota, where Burgum serves as governor, already derives over a third of its electricity from wind power, making it a leading state in renewable energy utilization.
Chris Wright, despite his skepticism about the climate crisis, has professional experience in both the solar and oil and gas sectors. Deora described Wright’s approach as selective, supporting specific technologies over others rather than opposing clean energy outright.
However, critics argue that an all-inclusive energy strategy could undermine the goals of climate policy. Deora cautioned that addressing climate change is not solely about increasing solar panel installations but about significantly reducing carbon dioxide and methane emissions. The core question remains whether fossil fuel production will continue to rise under the new administration.
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