President-elect Donald Trump spent plenty of time on the campaign trail railing against key portions of the Inflation Reduction Act, from solar and wind tax credits to electric vehicles and environmental justice initiatives.
But his return to the presidency doesn’t necessarily spell the end of the landmark legislation. While Trump’s administration is unlikely to be supportive of certain climate tech startups, it will have a harder time ending the broadly popular law.
The Inflation Reduction Act, enacted in 2022, ushered in a range of tax credits and incentives aimed at reducing carbon pollution in the U.S. and attracting climate-friendly industries to the country. On both accounts, it’s been successful. Carbon emissions are down, and investment in climate tech is up.
Startups have broadly benefitted from the Inflation Reduction Act. Tax credits have encouraged investors to plow money into nuclear power, hydrogen, and all things EV-related. Nuclear power, which is one of the more expensive sources of electricity in the U.S., receives a production tax credit under the law. Green hydrogen does, too, which could help it achieve cost parity with fossil fuel-derived hydrogen much more quickly. Battery startups have benefitted as major manufacturers look to develop domestic supply chains for new factories in the U.S.
That’s just the tip of the iceberg. Further downstream, startups have sprouted to help homeowners and landlords install heat pumps and electric vehicle chargers. It’s the sort of knock-on effect that broadens the impact beyond the hit to the U.S. treasury.
By many measures, the law has been a success: In the first year alone, more than 270 clean energy projects were announced and private investments in the space topped $130 billion. Companies invested in manufacturing, and consumers spent on everything from EVs to heat pumps, according to the Rhodium Group. Batteries destined for EVs and grid-scale storage have arguably benefitted the most: Investors have bet $110 billion on the space to date, according to Benchmark Mineral Intelligence.
The biggest hurdle Trump will face is the fact that the IRA is already on the books. Repealing it will require a filibuster-proof majority in the Senate; many previous climate-related policies under Barack Obama were executive orders, which are easier to reverse, or regulatory changes, which take longer but can be a lighter lift than repealing a law. Trump’s administration might be able to water down some provisions and redirect some funding. But given support from moderate Republicans and the public popularity of certain provisions of the law, it’s unlikely that Trump will be able to eliminate the law entirely.
