House Republicans Plan Big Cuts to the IRA’s Clean Energy Grants

Republicans on the House Committee on Energy and Commerce unveiled their draft budget proposal Sunday night, which features widespread cuts to the Inflation Reduction Act and other clean energy and environment programs.

The legislative language is part of the House’s reconciliation package, an emerging tax and spending bill that will seek to extend much of the 2017 Tax Cuts and Jobs Act, with reduced spending on the IRA and Medicaid helping to balance the budgetary scales.

The Energy and Commerce committee covers energy and environmental programs, while the Ways and Means Committee has jurisdiction over the core tax credits of the IRA that power much of America’s non-carbon power generation. Ways and Means has yet to release its draft budget proposal, which will be another major shoe to drop.

The core way the Energy and Commerce proposal generates budgetary savings is by proposing “rescissions” to existing programs, whereby unspent money would be yanked away.

The language also includes provisions to auction electromagnetic spectrum, as well as changes to Medicaid.Overall, the Congressional Budget Office told the committee, the recommendations would “reduce deficits by more than $880 billion” from 2025 to 2034, which was the target the committee was instructed to hit. The Sierra Club estimated that the cuts specifically to programs designed to help decarbonize heavy industry would add up to $1.6 billion.

The proposed rescissions would affect a number of energy financing and grant programs, including:

• The Loan Programs Office, which would have its IRA-specific funding pulled, vastly reducing its overall ability to lend. Committee Republicans said this funding helped support “unproven technologies.” In a post on X, Thomas Hochman, the director of infrastructure policy for the Foundation for American Innovation, called the proposal a move to “effectively eliminate the Loan Programs Office.” The IRA boosted the LPO’s lending authority to around $400 billion, from $40 billion under the first Trump administration (when the office was effectively dormant) and included increased direct appropriations that subsidized the cost of the loans.
• Programs to finance zero-emissions vehicle manufacturing (a.k.a. Domestic Manufacturing Conversion Grants), repowering or retooling energy infrastructure to lower emissions (Energy Infrastructure Reinvestment Financing), loan guarantees for Native American tribes, and loans to build transmission lines. Some of these programs — for instance, the repowering or retooling loans — had already made final commitments to help finance projects,such as $15 billion in loan guarantees for California utility PG&E, plus a number of mining and battery projects funded under the vehicle program, and so may not offer much in the way of budgetary savings. Other programs, however, such as the transmission financing program, had disbursed little if any money.
• Grant programs to help implement clean energy policies. These programs include grants for training and education for the IRA’s home energy programs, grants for siting transmission lines, and grants for planning offshore wind and its associated transmission.
• Money for clean industrial projects. The Advanced Industrial Facilities Deployment Program was designed to support projects that reduced emissions from industry. The Energy and Commerce language would rescind any unobligated funds from this program. The Department of Energy had funded a number of projects to reduce emissions in heavy industries like cement, concrete, and aluminum.
• Permitting fees: Similar to language put out by the Committee on Natural Resources, the Energy and Commerce language includes provisions that allows energy infrastructure developers to pay upfront fees to get expedited permitting and to limit judicial review. The fee programs specifically target natural gas and pipeline projects (including carbon dioxide and hydrogen), also include a provision that allows liquified natural gas developers to pay a $1 million fee to get a project declared in the “public interest.”
• Hundreds of millions of dollars of non-IRA rescissions for DOE programs and offices, including the Office of Energy Efficiency and Renewable Energy and State and Community Energy Programs. These cuts would add up to about $844 million, with the Office of Clean Energy Demonstrations alone counting for $60 million. The largest cut would be to the Office of Energy Efficiency and Renewable Energy, with just over $400 million in rescissions.

And that’s just the “energy” cuts. The language also includes a number of cuts to environmental programs, including:

• “Unobligated” money from Greenhouse Gas Reduction Fund, although exactly what’s obligated and what’s not has been a matter of major controversy in the early months of the Trump administration. Environmental Protection Agency head Lee Zeldin and various Justice Department officials have tried to claw back the grants, which were designed to help establish community-based clean energy funding programs, colloquially known as green banks.
• A grab bag of air pollution programs, including grants to address air pollution at ports, diesel emissions, air pollution monitoring, air pollution at schools, and grants for purchasing electric heavy-duty vehicles.
• Climate-specific programs such as funding for labeling low-carbon construction materials, funding to help build standards for corporate emissions reporting, funding for state, local, and tribal governments to draw up Climate Change Action Plans (which the committee calls a “slush fund”), and funding for environmental justice programs.

Lastly, the proposal would also repeal federal tailpipe emission standards starting in the 2027 model year. These rules, which were finalized just last year, would have provided a major boost to the electric vehicle industry, perhaps pushing EV sales to over half of all new car sales by the beginning of the next decade. The language also repeals the latest gas-mileage standards, which were released last year and would have applied to the 2027 through 2031 model years, eventually bumping up miles-per-gallon industry-wide to over 50 by the 2031 model year.