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As Republicans’ budget priorities stack up, the numbers are starting to turn against America’s landmark climate law.

Since Donald Trump was reelected president, the climate community has retained a kind of fragile optimism about the Inflation Reduction Act, the historic climate law enacted in 2022 that Trump has vowed to repeal. The oft-repeated mantra is that the IRA is stimulating billions of dollars in investment in red districts, so why would Republicans want to put that at risk? Even if parts of the legislation were killed, surely some of it would remain intact.
But recent events have shifted the calculus. The ballooning price tag of Trump’s tax cut wishlist and preliminary budget negotiations on the Hill are pointing toward a budgetary showdown in which many of the law’s benefits could become fiscal casualties. D.C. veterans, including former GOP Hill staff, say that even the most bipartisan parts of the IRA could be sacrificed.
The reason has to do with the rules of budget reconciliation, the process Republicans in the House and Senate will use to carry out Trump’s agenda over the next several months and the same process Democrats used to pass the Inflation Reduction Act. One of Trump’s biggest legislative priorities is extending the 2017 Tax Cuts and Jobs Act, much of which expires at the end of this year. He also wants to make good on campaign promises to eliminate taxes on tips, overtime pay, and Social Security, and remove the cap on the state and local tax liability deductions.
To do this through the normal legislative process would subject the bill to a potential filibuster in the Senate, which would require 60 votes to override, a margin Senate Republicans lack. Budget reconciliation, however, requires only a simple majority. But there’s a catch: The bill can only contain policies that modify federal spending or revenues. It cannot contain a single provision that doesn’t pertain to the federal budget. And before lawmakers can decide what policies to put in it, they must agree on how much the bill will affect the federal budget. Once they set that topline number, they can’t change it.
“Reconciliation math is at least as important as the merits of reconciliation policies,” Alex Flint, executive director of the Alliance for Market Solutions, told Heatmap. Flint was previously a Republican staff director on the Senate Energy and Natural Resources Committee and top government affairs executive at the Nuclear Energy Institute. “I think a lot of people with specific interests in the tax code fail to look at the scale of the issue that tax writers have to deal with,” he said, adding that whether IRA money has been spent in a given district will probably be a “second or third order factor” in that representative’s vote.
Congress is still at the beginning of the reconciliation process. The next step is for the House and Senate to negotiate a topline number and issue instructions to the committees that will write the final bill on the levels of spending they’re allowed to include. That’s where the punishing math for the IRA comes in. The Congressional Budget Office, as well as third-party groups like the Tax Foundation and the Penn Wharton Budget Model, have estimated that an extension of the 2017 tax cuts would cost between $3.7 and $4.5 trillion through 2034. If all of Trump’s additional proposed tax cuts were enacted, the cost would jump to $6.8 trillion, according to Penn Wharton.
The dollar amount assigned to each committee is a ceiling, and it’s calculated on a net basis. So if the Ways and Means committee, which oversees tax legislation, is assigned a $4.5 trillion deficit ceiling, as it was in the version of the reconciliation instructions that recently passed the House, it’s going to have to find several trillion dollars worth of spending programs to cut. Fully repealing the Inflation Reduction Act’s green energy tax credits — which, according to new modeling from the nonpartisan Tax Foundation, would raise about $850 billion — will start to look harder to avoid.
In a recent talk hosted by the American Enterprise Institute, Jason Smith, a representative from Missouri and Chairman of the Ways and Means Committee, indicated that his party was committed to achieving Trump’s entire agenda through reconciliation. “These are items that he campaigned on, and these are items that will be addressed in any tax package that we move forward on,” he said.
Tax credits related to electric vehicles and green buildings are already almost certainly on the chopping block, but cutting those would raise just $300 billion, according to the Tax Foundation. Lawmakers have other options to achieve significant deficit reductions without fully eliminating the IRA, however. The Tax Foundation’s analysis found that Congress could preserve the nuclear power production tax credit and the carbon capture tax credit — two IRA provisions many Republicans support — as well as a stripped-down version of the renewable energy production tax credit and still raise a respectable $750 billion.
Alex Brill, a former Republican chief economist to the Ways and Means Committee and current fellow at the American Enterprise Institute, told Heatmap that we might see efforts to “rightsize” or “reform” certain tax credits rather than repeal them. Lawmakers could keep the clean electricity tax credits in place for a few more years as an apparent compromise, for example, but phase them out in 2029 or 2030, which is when the Congressional Budget Office estimates they’ll start to be more heavily utilized, and therefore more expensive.
“There’s this possibility that they may be looking at the timing and the duration of some of these provisions,” Brill said.
The IRA prescribes no end date for those credits, which as of now will stay in place until U.S. electricity emissions fall to 25% of their 2022 levels. Jason Clark, the former chief strategist at the American Clean Power Association, told Jael in October that an earlier phase-out would drastically undercut U.S. renewables deployment. “I don’t think a lot of folks appreciate just how long-range some of this planning is — how long it takes to permit something, how long it takes to figure out the interconnection queue. Companies aren’t just thinking, what are we going to build this year? They’re thinking, what will be put online in 2035? So if the government changes the stability of that, companies start to pull back.”
There is another scenario on the table that could save a significant chunk of the IRA, but it would come with its own nontrivial drawbacks.
Republican leaders in the Senate are trying to change the baseline against which all of these budget calculations are made. They argue that the tax cut extensions should be viewed as avoiding a tax increase, not enacting a new tax cut. By this logic, the extensions don’t cost anything, and $6.8 trillion in total tax cuts looks more like $2.8 trillion. That would give Republicans more room to increase spending on a range of other priorities, including defense and immigration enforcement, without having to make tough trade-offs.
This has never been done before, and to call it controversial would be an understatement. Deficit hawks on both sides of the aisle oppose the maneuver, calling it a “gimmick” and “magic math.” A recent Politico article declared that moving to a current policy baseline approach would “break the Senate, upend the federal budget process and explode the national debt.”
Before Republicans can move ahead, they need guidance from the Senate Parliamentarian, an advisor to the Senate tasked with interpreting the rules that govern the body. If the Parliamentarian doesn’t approve, the Senate is technically allowed to ignore or fire her. But this would create a new political firestorm.
Flint said that however this baseline debate plays out will tell us how much danger the IRA is facing. Brill had a slightly different perspective. He said he would expect Congress to set the topline budget resolution numbers lower if it moves ahead with this fuzzy math. But he agreed that assuming the IRA will be saved by its Republican beneficiaries fails to see the whole picture.
“They will be looking at the revenue consequences of changes, and they’ll be looking at the efficiency of these policies,” Brill said. “Are they operating as intended? Are they the size and scope and scale that seem reasonable and appropriate to lawmakers? I think they’re going to be thinking about this in a lot of different dimensions.”
While some oil and gas majors such as Exxon and Occidental have lobbied the Trump administration to keep at least some of the IRA in place, other fossil fuel industry players are trying to convince lawmakers that the clean energy tax credits do more harm than good. More than two dozen energy executives penned a letter to House and Senate leaders last week asking for a full repeal, arguing that the subsidies encourage “less efficient production,” raise costs for consumers, and increase the national debt.
But renewable energy researchers at the Rhodium Group and Energy Innovation published modeling last week making the opposite case. Rhodium found that rollbacks of power plant and vehicle emissions rules, combined with repeal of the IRA tax credits, would increase annual household energy costs by $111 to $184 in 2030, compared to keeping the law as it is. The modelers also found that energy spending throughout the industrial sector would increase by $8 billion to $14 billion from 2030 to 2035. Energy Innovation, which also modeled repeal of key tax credits, found this would lead to higher energy bills, as well as nearly 800,000 job losses in 2030.
Some D.C. figureheads are still bullish that full repeal of the IRA is unlikely. Xan Fishman, senior managing director of the energy program at the Bipartisan Policy Center, told Heatmap he’s heard the argument that Republicans’ magic math could help the IRA, but he’s not sure there’s much there, there. “I do think that there’s strong momentum for keeping the tax credits, and honestly, I think that’s true regardless of whatever budgetary baseline they use,” he said.
Earlier this month, 21 House Republicans came out in bold, public defense of the law. This likely does not reflect the level of support latent in the party, however. Fishman said that many of the tax credits in the law historically had bipartisan support, before the Inflation Reduction Act “painted them with a partisan brush.”
“I think at the end of the day, that is actually really relevant — the fact that so many members have co-sponsored or sponsored some version of these tax credits in the past,” Fishman said.
It’s too soon to judge whether Republican support for the IRA means anything, Josh Freed, senior vice president of the climate and energy program at Third Way, told Heatmap. “IRA is uncertain until the dust settles,” he said. “It is hard to know what trade-offs are going to be asked for by the authors and by different factions within the Republican caucus until decisions on whether there needs to be pay-fors, and how much, are made.”
The timeline for when the Republican caucus will make those decisions — and set the rules of the game — is hard to predict. In that talk hosted by the American Enterprise Institute, Congressman Smith said the plan was to get the final reconciliation bill on Trump’s desk before Memorial Day.
Editor’s note: This story has been updated to correct the emissions reduction target for the clean electricity tax credit in the IRA.
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According to a new analysis shared exclusively with Heatmap, coal’s equipment-related outage rate is about twice as high as wind’s.
The Trump administration wants “beautiful clean coal” to return to its place of pride on the electric grid because, it says, wind and solar are just too unreliable. “If we want to keep the lights on and prevent blackouts from happening, then we need to keep our coal plants running. Affordable, reliable and secure energy sources are common sense,” Chris Wright said on X in July, in what has become a steady drumbeat from the administration that has sought to subsidize coal and put a regulatory straitjacket around solar and (especially) wind.
This has meant real money spent in support of existing coal plants. The administration’s emergency order to keep Michigan’s J.H. Campbell coal plant open (“to secure grid reliability”), for example, has cost ratepayers served by Michigan utility Consumers Energy some $80 million all on its own.
But … how reliable is coal, actually? According to an analysis by the Environmental Defense Fund of data from the North American Electric Reliability Corporation, a nonprofit that oversees reliability standards for the grid, coal has the highest “equipment-related outage rate” — essentially, the percentage of time a generator isn’t working because of some kind of mechanical or other issue related to its physical structure — among coal, hydropower, natural gas, nuclear, and wind. Coal’s outage rate was over 12%. Wind’s was about 6.6%.
“When EDF’s team isolated just equipment-related outages, wind energy proved far more reliable than coal, which had the highest outage rate of any source NERC tracks,” EDF told me in an emailed statement.
Coal’s reliability has, in fact, been decreasing, Oliver Chapman, a research analyst at EDF, told me.
NERC has attributed this falling reliability to the changing role of coal in the energy system. Reliability “negatively correlates most strongly to capacity factor,” or how often the plant is running compared to its peak capacity. The data also “aligns with industry statements indicating that reduced investment in maintenance and abnormal cycling that are being adopted primarily in response to rapid changes in the resource mix are negatively impacting baseload coal unit performance.” In other words, coal is struggling to keep up with its changing role in the energy system. That’s due not just to the growth of solar and wind energy, which are inherently (but predictably) variable, but also to natural gas’s increasing prominence on the grid.
“When coal plants are having to be a bit more varied in their generation, we're seeing that wear and tear of those plants is increasing,” Chapman said. “The assumption is that that's only going to go up in future years.”
The issue for any plan to revitalize the coal industry, Chapman told me, is that the forces driving coal into this secondary role — namely the economics of running aging plants compared to natural gas and renewables — do not seem likely to reverse themselves any time soon.
Coal has been “sort of continuously pushed a bit more to the sidelines by renewables and natural gas being cheaper sources for utilities to generate their power. This increased marginalization is going to continue to lead to greater wear and tear on these plants,” Chapman said.
But with electricity demand increasing across the country, coal is being forced into a role that it might not be able to easily — or affordably — play, all while leading to more emissions of sulfur dioxide, nitrogen oxide, particulate matter, mercury, and, of course, carbon dioxide.
The coal system has been beset by a number of high-profile outages recently, including at the largest new coal plant in the country, Sandy Creek in Texas, which could be offline until early 2027, according to the Texas energy market ERCOT and the Institute for Energy Economics and Financial Analysis.
In at least one case, coal’s reliability issues were cited as a reason to keep another coal generating unit open past its planned retirement date.
Last month, Colorado Representative Will Hurd wrote a letter to the Department of Energy asking for emergency action to keep Unit 2 of the Comanche coal plant in Pueblo, Colorado open past its scheduled retirement at the end of his year. Hurd cited “mechanical and regulatory constraints” for the larger Unit 3 as a justification for keeping Unit 2 open, to fill in the generation gap left by the larger unit. In a filing by Xcel and several Colorado state energy officials also requesting delaying the retirement of Unit 2, they disclosed that the larger Unit 3 “experienced an unplanned outage and is offline through at least June 2026.”
Reliability issues aside, high electricity demand may turn into short-term profits at all levels of the coal industry, from the miners to the power plants.
At the same time the Trump administration is pushing coal plants to stay open past their scheduled retirement, the Energy Information Administration is forecasting that natural gas prices will continue to rise, which could lead to increased use of coal for electricity generation. The EIA forecasts that the 2025 average price of natural gas for power plants will rise 37% from 2024 levels.
Analysts at S&P Global Commodity Insights project “a continued rebound in thermal coal consumption throughout 2026 as thermal coal prices remain competitive with short-term natural gas prices encouraging gas-to-coal switching,” S&P coal analyst Wendy Schallom told me in an email.
“Stronger power demand, rising natural gas prices, delayed coal retirements, stockpiles trending lower, and strong thermal coal exports are vital to U.S. coal revival in 2025 and 2026.”
And we’re all going to be paying the price.
Rural Marylanders have asked for the president’s help to oppose the data center-related development — but so far they haven’t gotten it.
A transmission line in Maryland is pitting rural conservatives against Big Tech in a way that highlights the growing political sensitivities of the data center backlash. Opponents of the project want President Trump to intervene, but they’re worried he’ll ignore them — or even side with the data center developers.
The Piedmont Reliability Project would connect the Peach Bottom nuclear plant in southern Pennsylvania to electricity customers in northern Virginia, i.e.data centers, most likely. To get from A to B, the power line would have to criss-cross agricultural lands between Baltimore, Maryland and the Washington D.C. area.
As we chronicle time and time again in The Fight, residents in farming communities are fighting back aggressively – protesting, petitioning, suing and yelling loudly. Things have gotten so tense that some are refusing to let representatives for Piedmont’s developer, PSEG, onto their properties, and a court battle is currently underway over giving the company federal marshal protection amid threats from landowners.
Exacerbating the situation is a quirk we don’t often deal with in The Fight. Unlike energy generation projects, which are usually subject to local review, transmission sits entirely under the purview of Maryland’s Public Service Commission, a five-member board consisting entirely of Democrats appointed by current Governor Wes Moore – a rumored candidate for the 2028 Democratic presidential nomination. It’s going to be months before the PSC formally considers the Piedmont project, and it likely won’t issue a decision until 2027 – a date convenient for Moore, as it’s right after he’s up for re-election. Moore last month expressed “concerns” about the project’s development process, but has brushed aside calls to take a personal position on whether it should ultimately be built.
Enter a potential Trump card that could force Moore’s hand. In early October, commissioners and state legislators representing Carroll County – one of the farm-heavy counties in Piedmont’s path – sent Trump a letter requesting that he intervene in the case before the commission. The letter followed previous examples of Trump coming in to kill planned projects, including the Grain Belt Express transmission line and a Tennessee Valley Authority gas plant in Tennessee that was relocated after lobbying from a country rock musician.
One of the letter’s lead signatories was Kenneth Kiler, president of the Carroll County Board of Commissioners, who told me this lobbying effort will soon expand beyond Trump to the Agriculture and Energy Departments. He’s hoping regulators weigh in before PJM, the regional grid operator overseeing Mid-Atlantic states. “We’re hoping they go to PJM and say, ‘You’re supposed to be managing the grid, and if you were properly managing the grid you wouldn’t need to build a transmission line through a state you’re not giving power to.’”
Part of the reason why these efforts are expanding, though, is that it’s been more than a month since they sent their letter, and they’ve heard nothing but radio silence from the White House.
“My worry is that I think President Trump likes and sees the need for data centers. They take a lot of water and a lot of electric [power],” Kiler, a Republican, told me in an interview. “He’s conservative, he values property rights, but I’m not sure that he’s not wanting data centers so badly that he feels this request is justified.”
Kiler told me the plan to kill the transmission line centers hinges on delaying development long enough that interest rates, inflation and rising demand for electricity make it too painful and inconvenient to build it through his resentful community. It’s easy to believe the federal government flexing its muscle here would help with that, either by drawing out the decision-making or employing some other as yet unforeseen stall tactic. “That’s why we’re doing this second letter to the Secretary of Agriculture and Secretary of Energy asking them for help. I think they may be more sympathetic than the president,” Kiler said.
At the moment, Kiler thinks the odds of Piedmont’s construction come down to a coin flip – 50-50. “They’re running straight through us for data centers. We want this project stopped, and we’ll fight as well as we can, but it just seems like ultimately they’re going to do it,” he confessed to me.
Thus is the predicament of the rural Marylander. On the one hand, Kiler’s situation represents a great opportunity for a GOP president to come in and stand with his base against a would-be presidential candidate. On the other, data center development and artificial intelligence represent one of the president’s few economic bright spots, and he has dedicated copious policy attention to expanding growth in this precise avenue of the tech sector. It’s hard to imagine something less “energy dominance” than killing a transmission line.
The White House did not respond to a request for comment.
Plus more of the week’s most important fights around renewable energy.
1. Wayne County, Nebraska – The Trump administration fined Orsted during the government shutdown for allegedly killing bald eagles at two of its wind projects, the first indications of financial penalties for energy companies under Trump’s wind industry crackdown.
2. Ocean County, New Jersey – Speaking of wind, I broke news earlier this week that one of the nation’s largest renewable energy projects is now deceased: the Leading Light offshore wind project.
3. Dane County, Wisconsin – The fight over a ginormous data center development out here is turning into perhaps one of the nation’s most important local conflicts over AI and land use.
4. Hardeman County, Texas – It’s not all bad news today for renewable energy – because it never really is.