How a Trump presidency could threaten Biden’s signature climate achievement

Democrats’ sweeping Inflation Reduction Act (IRA) has fueled significant progress in the fight against climate change since its passage in 2022. But if former President Trump wins back the presidency in November, he’s likely to undermine those gains — or help a Republican Congress do away with the law entirely.

The IRA includes a suite of tax credits for carbon-friendly energy sources and electric vehicles as part of an effort to protect the climate. It also includes money for grants that subsidize climate-friendly or pollution-cutting projects and a program to punish oil and gas companies for leaks of planet-warming methane.

The law has been in Republicans’ crosshairs ever since it passed. If they win the White House and both chambers of Congress in the upcoming election, they’re likely to aim for at least a partial repeal.

If they win the presidency but don’t get both houses of Congress — or need time to work out the specifics of a repeal — a second Trump administration could also use executive action to curtail the law’s reach. And some conservatives are already urging such action.

“We need a strategy for Day One, thinking about how we can put the American taxpayer first,” said Oliver McPherson-Smith, director of the Center for Energy and Environment at the America First Policy Institute, a right-wing nonprofit that includes several Trump administration alumni.

“I think an America First administration should scour every single IRA program and question ‘how can we save the American taxpayer dollars?’ in each and every one of them, and ‘how can we prevent the flow of money to the [Chinese Communist Party]?'”

One key tool for curtailing the programs could be found in tax credit guidance issued by the Treasury Department.

In several cases, the Biden administration has offered a broad interpretation of the tax credits, maximizing the number of entities eligible for them — especially when it comes to those for electric vehicles (EVs).

Asked about what a future Trump administration would do about the IRA, Trump campaign national press secretary Karoline Leavitt said in an email that Trump “will repeal Joe Biden’s radical EV mandates and cut costs to reduce inflation and get our economy booming again.”

She specifically described the bill’s subsidies for electric vehicles as “a gift to China and a death sentence to the American auto industry.”

Diana Furchtgott-Roth, director of the Center for Energy, Climate, and Environment at the conservative Heritage Foundation, noted that these subsidies “could be scaled back with new Treasury interpretation without changing the law.”

The Biden administration put forward guidance that allowed crossover vehicles to count as SUVs, rather than sedans, under the credit — meaning that purchases of more expensive electric crossovers would still garner the $7,500 consumer tax credit.

The administration also issued separate guidance creating an exemption to a provision in the law that excludes EVs whose battery parts come from North Korea, China, Russia or Iran. It said that vehicles can still be eligible for the credit if their batteries contain “non-traceable” materials — low-value components that can come from multiple places and are not typically tracked in the way that more expensive minerals are.

Trump has been an ardent critic of the Biden administration’s push for electric vehicles. His administration recently released a plan that says he would “stop the flow of American tax dollars that are subsidizing Chinese electric vehicle battery companies through Joe Biden’s so-called Inflation Reduction Act.”

Furchtgott-Roth, meanwhile, pointed to the Treasury Department’s 2022 statement that leased vehicles could qualify for the tax credits, describing it as a “giant loophole” in the law’s requirements for battery material sourcing.

However, the department has argued that this point in particular is prescribed by law.

“Eligibility for the commercial vehicle credit is a straightforward reading of the Inflation Reduction Act as written by Congress and application of longstanding tax law regarding leased assets,” spokesperson Ashley Schapitl told The Associated Press last year. “There was no room for Treasury interpretation.”

The department did take a broad approach to subsidies for electric vehicle chargers in rural areas. In that guidance, it defined “non-urban” as any census tract where at least 10 percent of blocks have not been designated as urban areas, making the charger tax credit available in places where most Americans live.

Beyond EVs, executive action could also be used to limit tax credits for climate-friendly energy production. Travis Fisher, the director of energy and environmental policy studies with the libertarian Cato Institute, said that a future administration could issue guidance with more restrictions on when the same project can become eligible again for the credits.

How a conservative administration would handle tax credit policy for hydrogen energy, meanwhile, is less clear.

The Biden administration has proposed guidance that would restrict tax credits for hydrogen energy to projects that meet certain climate standards. Some Republicans, including Sen. Shelley Moore Capito (R-W.Va.), have said this credit should apply more broadly, while other conservatives oppose the credit entirely.

Some proponents of the IRA have also raised concerns that an administration hostile to the law could actively look for additional ways to undermine it beyond official executive actions or legislation.

“Defunding, refusing to staff, firing lots of staff, just hollowing out the administrative capacity of these agencies can really slow things down,” said Mike O’Boyle, senior director for electricity at Energy Innovation, an energy and climate think tank.

When it comes to Congress, Republican leaders have already tried to repeal provisions of the law. Certain parts of those efforts met pushback from some party members — as lawmakers from Iowa, for example, pushed to preserve credits for ethanol.

However, some who support a legislative rollback say that even if the law isn’t repealed in full, it could be significantly altered.

“I would bet against the Inflation Reduction Act being repealed, even if there were a Republican Congress, but I would bet that it would be very substantially changed,” said Furchtgott-Roth, of the Heritage Foundation.

Despite Republicans’ stated intentions to restrict IRA programs, proponents of the incentives offered by the law had some optimism: Restricting opportunities for Americans to receive a tax credit could have political blowback, they noted.

“In general, it is less popular to take things away that people like than to stop them from being implemented in the first place,” said Albert Gore, executive director of the Zero Emission Transportation Association and son of the former vice president.

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