Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Economy

The Dealmakers Aren’t Fretting About the IRA’s Future

Not even under Trump.

President Biden.
Heatmap Illustration/Getty Images

Almost every day, Donald Trump attacks clean energy and climate action. He assails electric vehicles, offshore wind, and calls climate change a hoax. He’s also up a little bit in the polls.

Everyone in and out of the clean energy and environmental movement knows this. So why, over two days at a conference hosted by the American Council on Renewable Energy this week, did clean energy bankers, investors, lawyers, and operators seem pretty optimistic about much of the Inflation Reduction Act and other Biden energy policies surviving into 2025 and beyond?

Pretty simply: Because there’s a lot of money being made — including in Republican-controlled states.

“Money is money,” Gina McCarthy, the former Environmental Protection Agency director and White House climate advisor, said during an on-stage interview. “Honestly, who is going to pull the plug on the investments from the Inflation Reduction Act without huge blowback from each of the individual states and governors?”

“I’ve been telling my clients that it’s very unlikely that we’re going to see substantial changes,” Mona Dajani, a partner at Baker Botts, told me. “There’s a lot of clean energy in traditionally Republican states. So do I see anything very material happening? No, I don’t. I think it’d be very unlikely”

It’s not surprising that lawyers and investment bankers would be optimistic about the Inflation Reduction Act. Much of the bill’s spending is channeled through tax credits, which require lawyers and investment bankers to arrange and write up deals between developers and investors.

Whether this optimistic consensus will bear out in 2025 remains to be seen (obviously), but that it exists at all in the present is a testament to a deliberate strategy. The legislation, along with the Bipartisan Infrastructure Law, gave a wide cross section of industries, and regions a stake in the energy transition.

Even if it wouldn’t make these various elected officials and business leaders Democrats — Georgia Governor Brian Kemp, for instance, seems to be opening a new battery plant every week and is not supporting Biden’s reelection — it may turn them into supporters of climate policy, or at least give them a second thought about killing it.

At the core of the IRA are tax credits that, while they will soon be “technology neutral,” will still largely benefit and are modeled on tax credits for wind and solar. Those credits, the Production Tax Credit and the Investment Tax Credit, are decades old, and have historically been affirmatively extended under both Democratic and Republican presidents when the status quo would have meant their demise. To undo them under a second Trump administration would require Congress and the White House to agree affirmatively to toss them out.

“When I look at the composition of Congress, even with a new administration, I think it will be difficult to repeal it,” said Mit Buchanan, managing director of energy investment at JPMorgan Chase, speaking of the IRA during a panel at the conference. “There’s been good support on both sides of aisle in respect to renewable energy in red and blue states. Job creation means a lot.”

Texas and Florida are two of the standouts in clean energy investment, with Texas surpassing California in deploying utility-scale solar and leading the leading the country in wind generation. Florida, meanwhile, has the third-most solar installed among U.S. states.

Between the Inflation Reduction Act and the Bipartisan Infrastructure Law, though, there’s spending that goes beyond wind and solar, including subsidies for oil industry darlings like carbon capture and sequestration, as well as hydrogen energy development.

“Carbon sequestration and hydrogen brings in industries that were traditionally hostile to renewables,” said Jordan Newman, a managing director and renewables investment banker at Wells Fargo, at the conference. A number of carbon sequestration infrastructure projects have popped up in Republican-voting states, including a carbon dioxide pipeline project in Iowa, while the sizable planned investments in hydrogen include a hub in Houston, of which Chevron and ExxonMobil are partners.

But the Biden administration and regulatory agencies run by Biden appointees are certainly acting as if large swaths of the administration’s climate policy are at risk. The Treasury Department, the Environmental Protection Agency, and the Federal Energy Regulatory Commission have put out a flurry of rules and guidance before self-imposed deadlines at the end of this year and to attempt to front-run the ability of a Republican Congress and White House to undo regulations through the Congressional Review Act.

“Our mission and what we continue to do is seek to get as much of the guidance done right and done effectively on the most reasonable timeframe that we can, and we’ll continue to do that all the way through the end of this year,” Ethan Zindler, climate counselor at the Treasury Department, told the audience.

Even if much of the energy tax credits and subsidies for specific technologies like hydrogen and carbon sequestration could survive a change in administration, other parts of the IRA may be at greater risk, especially wind and especially especially offshore wind, for which Trump seems to have a special distaste.

“Offshore wind is challenging,” Meghan Schultz, the chief financial officer of Invenergy, which won a contract for an offshore wind project off the coast of New Jersey earlier this year, said on a panel.

She previewed a message for a potential second Trump administration, focusing on the industrial and job benefits of offshore wind: “If he were to be elected, it will be important that we’re working as an industry to educate this administration on the value these projects will bring, in clean energy and job creation and infrastructure.”

No matter what happens, business people tend towards the optimistic. Said Thomas de Swardt, chief commercial officer at D.E. Shaw Renewable Investments: “If it happens, we’ll sit around table and talk about how we restructure and reprice deals.”

Blue

You’re out of free articles.

Subscribe today to experience Heatmap’s expert analysis 
of climate change, clean energy, and sustainability.
To continue reading
Create a free account or sign in to unlock more free articles.
or
Please enter an email address
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Climate

AM Briefing: How Clean Energy Fared in Q1

On earnings, a DOJ memo, and flying cars

How Clean Energy Fared in Q1
Heatmap Illustration/Getty Images

Current conditions: Yosemite could get 9 inches of snow between now and Sunday Temperatures will rise to as high as 104 degrees Fahrenheit in Ashgabat, Turkmenistan, as Central and Southeast Asia continue to bake in a heatwave Hail, tornadoes, and severe thunderstorms will pummel the U.S. Heartland into early next week.

THE TOP FIVE

1. Tariffs, uncertainty were the themes of the week in clean energy Q1 calls

It was a busy week of earnings calls for the clean energy sector, which, as a whole, saw investment dip by nearly $8 billion in the first three months of the year. Tariffs — especially as they impact the battery supply chain — as well as changes to federal policy under the new administration and electricity demand were the major themes of the week, my colleague Matthew Zeitlin wrote.

Keep reading...Show less
Yellow
Sparks

The First Sign the U.S. Oil and Gas Sector Is Pulling Back

Three weeks after “Liberation Day,” Matador Resources says it’s adjusting its ambitions for the year.

Money and an oil rig.
Heatmap Illustration/Getty Images

America’s oil and gas industry is beginning to pull back on investments in the face of tariffs and immense oil price instability — or at least one oil and gas company is.

While oil and gas executives have been grousing about low prices and inconsistent policy to any reporter (or Federal Reserve Bank) who will listen, there’s been little actual data about how the industry is thinking about what investments to make or not make. That changed on Wednesday when the shale driller Matador Resources reported its first quarter earnings. The company said that it would drop one rig from its fleet of nine, cutting $100 million of capital costs.

Keep reading...Show less
Yellow
Climate Tech

Rise and Grind Through the Apocalypse

At San Francisco Climate Week, everything is normal — until it very much isn’t.

San Francisco.
Heatmap Illustration/Getty Images

San Francisco Climate Week started off on Monday with an existential bang. Addressing an invite-only crowd at the Exploratorium, a science museum on the city’s waterfront, former vice president and long-time climate advocate Al Gore put the significance and threat of this political moment — and what it means for the climate — in the most extreme terms possible. That is to say, he compared the current administration under President Trump to Nazi Germany.

“I understand very well why it is wrong to compare Adolf Hitler’s Third Reich to any other movement. It was uniquely evil,” Gore conceded before going on: “But there are important lessons from the history of that emergent evil.” Just as German philosophers in the aftermath of World War II found that the Nazis “attacked the very heart of the distinction between true and false,” Gore said, so too is Trump’s administration “trying to create their own preferred version of reality,” in which we can keep burning fossil fuels forever. With his voice rising and gestures increasing in vigor, Gore ended his speech on a crescendo. “We have to protect our future. And if you doubt for one moment, ever, that we as human beings have that capacity to muster sufficient political will to solve this crisis, just remember that political will is itself a renewable resource.”

Keep reading...Show less
Green