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President Biden’s climate law gets a political stress test.
For the first time since it passed last summer, the Inflation Reduction Act — President Biden’s flagship climate law — is facing a threat of repeal.
The Republican majority in the House of Representatives has proposed essentially rolling back the law in their opening bid on negotiations with the White House to extend the government's borrowing limit and prevent a calamitous default. The GOP's proposal, called the Limit, Grow, and Save Act, would raise the debt ceiling for a year while slashing trillions in federal spending over the next decade.
While the Republican bill proposes deep cuts across the board, it takes a cleaver to Biden’s climate policy. Folding in the Lower Energy Costs Act, the first bill that the new GOP majority put on the floor, the act would repeal more than two dozen of the IRA’s clean-energy tax credits, including subsidies for renewables and electric vehicles. It would also defund programs meant to open new factories in the United States and gut climate-friendly programs popular with Republicans, such as generous subsidies for nuclear energy and hydrogen production.
Now, let’s get this out of the way: Neither the bill nor the negotiations around it are likely to repeal the IRA. Yet for the next few days or weeks, the IRA will likely appear to be in danger as nobody will quite say it’s safe out loud.
The Republican bill’s chief importance is as a piece of political posturing: Speaker of the House Kevin McCarthy hopes to demonstrate that he has 218 votes to raise the debt ceiling and pass a budget, any budget, through his disorganized and dramatic caucus. Then he can open more serious negotiations with President Biden and Senate leaders about the debt ceiling and the year’s budget.
But to get there, he’ll have to keep the GOP’s right flank on his side first. McCarthy and House Republican leadership didn’t even want to include the IRA repeal in the Limit, Save, and Grow Act, but included it because the far-right House Freedom Caucus demanded it. That means House leadership must look completely serious about its intent to repeal.
At the same time, climate advocates must now mobilize around the IRA to demonstrate its importance to the public and prevent the Biden administration from sacrificing it in negotiations.
More broadly, though, this moment is a test for a few competing hypotheses about whether the IRA can survive — and about the future of climate policy in America.
To the set of political scientists, climate activists, and energy experts who championed the law, repealing the IRA would be so damaging to Republicans as to be unthinkable. That’s because Republicans’ constituents are, for now, reaping much of the IRA’s economic rewards. Up to two-thirds of green-energy investment nationwide is happening in GOP congressional districts, according to Politico. The all-important swing state of Georgia leads the country in clean-energy and electric-vehicle investments, forming the heartland of a new, vaguely banana-shaped “Battery Belt” that stretches across the largely Republican Southeast. Even beyond that region, Speaker McCarthy’s California district is one of the top two districts nationwide for utility-scale solar, wind, and battery plants.
This wasn’t an accident. The IRA is a product of the Democratic Party, so it was, yes, meant to do all those old-school Democrat things — encourage unionization, boost wages, and help revitalize the old industrial Midwest. But it was written by Democrats who see the party’s future in the Sunbelt suburbs and who prioritize decarbonization above other political goals. They knew — they couldn’t help but know — that much of the law’s investment would flow to the manufacturing centers of the American South and Southwest, where “Right to Work” laws restrict worker power and corporate-friendly policies reign.
On the other side, a set of critics allege that Republicans’ attack on the IRA doesn’t need to make political sense. Kate Aronoff, a New Republic staff writer who has been guardedly skeptical of the law, argued last week that House Republicans don’t care about the political fallout of killing the IRA because they’re protected from virtually any type of political fallout at all, thanks to gerrymandering, their deep-pocketed corporate donors, and a sharply conservative Supreme Court. In that view, the attempts to secure the IRA by appealing to Republicans’ constituents is futile: The party will simply do what it wants.
At stake here is a deep but important disagreement about the IRA. The flagship law aims to cleave fossil-fuel interests from the rest of the corporate bolus: to make it so attractive for banks, carmakers, electric utilities, steelmakers, manufacturers, and everyone else to decarbonize that they had no choice but to do so.Can that happen? Will that happen? This is the question on which the IRA’s advocates and its climate-friendly critics disagree. It is also is the question on which the fate of the IRA — and American climate policy — turns.
In her piece, Aronoff notes that fossil-fuel companies donated 13 times more to politicians in 2018 than renewable companies did. I found that to be oddly encouraging: If money alone is the issue, then the fossil-fuel industry’s alleged grip on the GOP could loosen over time. (The gap is already narrowing: Oil and gas-affiliated groups gave about six times more than renewables groups did in the most recent election cycle.)
The far more dangerous possibility for the IRA is that Republicans cannot be won over with money or argument. The party may just vibe with fossil fuels. Lawmakers and officials might feel an ideological affinity for oil and gas that goes deeper than those fuels’ economic or security benefits. During President Donald Trump’s term, he sometimes seemed to speak about fossil fuels not as a necessary evil, but as a positive good. This sometimes verged on trolling, but that was the point too: for Trump, at least, that it triggered liberals only underscored its correctitude. If that view were to break out into the party at large, it would spell an end to any kind of bipartisan shift on climate policy.
Which is all to say: Republicans probably won’t repeal the IRA this week.
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A conversation with Mike Hall of Anza.
This week’s conversation is with Mike Hall, CEO of the solar and battery storage data company Anza. I rang him because, in my book, the more insights into the ways renewables companies are responding to the war on the Inflation Reduction Act, the better.
The following chat was lightly edited for clarity. Let’s jump in!
How much do we know about developers’ reactions to the anti-IRA bill that was passed out of the House last week?
So it’s only been a few days. What I can tell you is there’s a lot of surprise about what came out of the House. Industries mobilized in trying to improve the bill from here and I think a lot of the industry is hopeful because, for many reasons, the bill doesn’t seem to make sense for the country. Not just the renewable energy industry. There’s hope that the voices in Congress — House members and senators — who already understand the impact of this on the economy will in the coming weeks understand how bad this is.
I spoke to a tax attorney last week that her clients had been preparing for a worst case scenario like this and preparing contingency plans of some kind. Have you seen anything so far to indicate people have been preparing for a worst case scenario?
Yeah. There’s a subset of the market that has prepared and already executed plans.
In Q4 [of 2024] and Q1 [of this year] with a number of companies to procure material from projects in order to safe harbor those projects. What that means is, typically if you commence construction by a certain date, the date on which you commence construction is the date you lock in tax credit eligibility, and we worked with companies to help them meet that criteria. It hedged them on a number of fronts. I don’t think most of them thought we’d get what came out of the House but there were a lot of concerns about stepdowns for the credit.
After Trump was elected, there were also companies who wanted to hedge against tariffs so they bought equipment ahead of that, too. We were helping companies do deals the night before Liberation Day. There was a lot of activity.
We saw less after April 2nd because the trade landscape has been changing so quickly that it’s been hard for people to act but now we’re seeing people act again to try and hit that commencement milestone.
It’s not lost on me that there’s an irony here – the attempts to erode these credits might lead to a rush of projects moving faster, actually. Is that your sense?
There’s a slug of projects that would get accelerated and in fact just having this bill come out of the House is already going to accelerate a number of projects. But there’s limits to what you can do there. The bill also has a placed-in-service criteria and really problematic language with regard to the “foreign entity of concern” provisions.
Are you seeing any increase in opposition against solar projects? And is that the biggest hurdle you see to meeting that “placed-in-service” requirement?
What I have here is qualitative, not quantitative, but I was in the development business for 20 years, and what I have seen qualitatively is that it is increasingly harder to develop projects. Local opposition is one of the headwinds. Interconnection is another really big one and that’s the biggest concern I have with regards to the “placed-in-service” requirement. Most of these large projects, even if you overcome the NIMBY issues, and you get your permitting, and you do everything else you need to do, you get your permits and construction… In the end if you’re talking about projects at scale, there is a requirement that utilities do work. And there’s no requirement that utilities do that work on time [to meet that deadline]. This is a risk they need to manage.
And more of the week’s top news in renewable energy conflicts.
1. Columbia County, New York – A Hecate Energy solar project in upstate New York blessed by Governor Kathy Hochul is now getting local blowback.
2. Sussex County, Delaware – The battle between a Bethany Beach landowner and a major offshore wind project came to a head earlier this week after Delaware regulators decided to comply with a massive government records request.
3. Fayette County, Pennsylvania – A Bollinger Solar project in rural Pennsylvania that was approved last year now faces fresh local opposition.
4. Cleveland County, North Carolina – Brookcliff Solar has settled with a county that was legally challenging the developer over the validity of its permits, reaching what by all appearances is an amicable resolution.
5. Adams County, Illinois – The solar project in Quincy, Illinois, we told you about last week has been rejected by the city’s planning commission.
6. Pierce County, Wisconsin – AES’ Isabelle Creek solar project is facing new issues as the developer seeks to actually talk more to residents on the ground.
7. Austin County, Texas – We have a couple of fresh battery storage wars to report this week, including a danger alert in this rural Texas county west of Houston.
8. Esmeralda County, Nevada – The Trump administration this week approved the final proposed plan for NV Energy’s Greenlink North, a massive transmission line that will help the state expand its renewable energy capacity.
9. Merced County, California – The Moss Landing battery fire is having aftershocks in Merced County as residents seek to undo progress made on Longroad’s Zeta battery project south of Los Banos.
Anti-solar activists in agricultural areas get a powerful new ally.
The Trump administration is joining the war against solar projects on farmland, offering anti-solar activists on the ground a powerful ally against developers across the country.
In a report released last week, President Trump’s Agriculture Department took aim at solar and stated competition with “solar development on productive farmland” was creating a “considerable barrier” for farmers trying to acquire land. The USDA also stated it would disincentivize “the use of federal funding” for solar “through prioritization points and regulatory action,” which a spokesperson – Emily Cannon – later clarified in an email to me this week will include reconfiguring the agency’s Rural Energy for America loan and grant program. Cannon declined to give a time-table for the new regulation, stating that the agency “will have more information when the updates are ready to be published.”
“Farmland should be for agricultural production, not solar production,” Cannon wrote – a statement also made in the USDA report.
REAP is a program created in 2008 that exists to help fund renewable energy and sustainability projects at the level of individual farms and has been seen as a potential tool for not only building more solar but also more trust in agriculturally-focused communities. It’s without question that retooling REAP to actively disincentivize awardees from building solar on farmland could have a chilling effect, at least amongst those who receive money from the program or wish to in the future. This comes after Trump officials temporarily froze money promised to farmers, too.
As we’ve previously written in The Fight, agricultural interests can at times present as much a threat to the future of solar energy as any oil-funded dark money group, if not more so. Conflicts over solar production on farmland make up a large portion of the total projects I cover in The Fight every week, and it is one of the most frequently cited reasons for opposition against individual renewables projects. (Agricultural workforces are one of the most important signals for renewable energy opposition in Heatmap Pro’s modeling data as well.) I wrote shortly after Trump’s inauguration that I wondered when – not if – he would adopt this position.
It’s unclear what exactly led USDA to dive headlong into the “No Solar on Farmland” campaign, aside from its growing popularity in conservative political circles, but there is reason to believe farming interests may have played a role. USDA has stated the report was the product of discussions with farming groups and an industry roundtable. In addition, per lobbying disclosures, at least one agricultural group – the Pennsylvania Farm Bureau – advocated earlier this year for “congressional action and/or executive orders” to “balance renewable and conventional sources of energy” through “limit[ing] solar on productive farmland.” (The Pennsylvania Farm Bureau denied this in an email to me earlier this week.)
There’s also reason to believe some key stakeholders were caught off-guard or weren’t looped in on the matter.
American Farmland Trust has been trying to cultivate common ground between farmers, solar companies, and various agencies at all levels of government over the future of development. But when asked about this report, the nonprofit told me it couldn’t speak on the matter because it was still trying to suss out what was going on.
“AFT is meeting with the Trump administration to learn more about what they are planning in terms of policy and programs to implement this concept,” AFT media relations associate Michael Shulman told me.