Trump’s Efforts to Dismantle the Inflation Reduction Act
President Trump has consistently targeted climate efforts and the shift to green energy since taking office. The Sabin Center for Climate Change Law at Columbia University has documented numerous actions by his administration to diminish or eliminate federal climate change mitigation and adaptation measures since late January.
A primary target has been the Inflation Reduction Act (IRA), a significant investment in climate and clean energy, for which the Trump administration quickly suspended funding.
This action has created instability in the clean energy sector. David Victor, a professor at UC San Diego, notes that the primary impact of the Trump administration on clean energy has been the introduction of significant uncertainty.
What is the Inflation Reduction Act?
The IRA, passed by Congress in 2022, aimed to lower the national debt while investing in American energy production and manufacturing. It represented the largest climate investment in U.S. history, allocating $369 billion to clean energy and climate projects. The goal was to achieve net-zero emissions by 2030 and simultaneously enhance American industrial output.
While some funds supported established clean technologies like solar and wind, others were directed towards emerging technologies, such as carbon capture and storage, which might not have been economically viable without government support.
Victor explains that the bill significantly reduced the cost of clean energy and greatly accelerated the adoption of clean energy technologies in the U.S. Ewing adds that the government’s initial capital reduced risk, making large infrastructure projects more feasible and attracting substantial private investment.
The IRA also aimed to improve the United States’ global competitiveness in clean energy industries. Joanna Lewis from Georgetown University states that the investments would have allowed the U.S. to compete with China in crucial sectors like energy storage batteries and electric vehicles. She warns that failing to make these investments soon could result in ceding these industries to China and other nations.
How Has the Trump Administration Targeted It?
On his first day, Trump signed the “Unleashing American Energy” executive order, calling for the repeal or revision of several Biden-era climate initiatives. The order halted the release of IRA funds for clean energy and the bipartisan infrastructure law, both of which allocated hundreds of billions to energy technologies like wind, solar, and electric vehicles. In late January, a federal judge ordered the administration to resume payments, though it was later found they continued to freeze funds despite the ruling.
Ewing suggests that the Trump administration is likely to target energy efficiency standards for appliances and a methane emission fee next.
However, much of the funding, particularly that allocated through tax credits, may remain unaffected, as it largely benefits Republican districts. Victor believes that much of the IRA will ultimately survive because it provides subsidies to technologies being deployed in areas the Trump administration values.
Of the $289 billion invested in clean tech manufacturing facilities since late 2022, $223 billion (almost 80%) went to districts currently represented by Republicans.
Jackson Ewing from Duke University notes that the extent of the Trump Administration’s rollback efforts remains unclear, but their intentions are fairly obvious: to deprioritize the energy transition in favor of expanding oil and gas production in the U.S. for both domestic use and export.
Expanding fossil fuel production has been another administrative goal. On Feb. 14, Trump issued an executive order to establish a new “National Energy Dominance Council” aimed at increasing the country’s oil and gas production, which is already at a record high under the Biden Administration.
What Happens Next?
Ewing suggests that reversing congressionally allocated funding will not be simple. He anticipates lawsuits from project developers if the Trump administration attempts to reclaim existing grant money.
Even if these initiatives survive, government pullback could cause clean energy projects to struggle in the coming years as private investors become hesitant.
Ewing notes that the message conveyed by the executive orders is already impacting markets, causing more hesitation to invest in energy transition and climate-focused sectors. The political environment is now clearly less favorable for these investments compared to the Biden administration a year or six months ago.