US clean energy allies game out 2024 election scenarios for US climate law

The US clean energy industry is bracing for multiple 2024 election scenarios that could result in congressional efforts to repeal or modify key federal incentives in the Inflation Reduction Act, a panel of experts said Aug. 20.

The historic energy and climate law — which included $370 billion for energy and climate measures — could see changes after the November election, depending on party control in Congress and the White House. Since the Inflation Reduction Act (IRA) was passed two years ago, the private sector has announced $126 billion in investments in US clean energy generation and manufacturing, according to the business group E2.

Colin Silver, vice president of content and strategy at the Solar Energy Industries Association (SEIA), said the trade group is focused on three potential election outcomes.

One scenario assumes a win by Vice President Kamala Harris in November, with a Republican-controlled Senate and Democrat-controlled House of Representatives. Another scenario assumes a win by former President Donald Trump, with a GOP Senate majority and a Democratic majority in the House.

A third scenario assumes a GOP trifecta, or full control of the White House and both chambers of Congress. Full Democratic control of government is considered unlikely, but technically possible, given a Senate map that favors Republicans this election cycle, Silver said.

"No matter what, we're going to have a new administration and a new Congress with new priorities, new personnel, and potentially new policy objectives," Silver said during an Aug. 20 webinar hosted by the private equity firm CleanCapital LLC.

Wholesale IRA repeal seen as unlikely

Regardless of the election outcome, the next Congress must reckon with raising the US debt limit by next summer and tax cuts enacted during the Trump administration that are set to expire after 2025, Silver said. Some of these issues could be addressed in a large budget or tax package under the next Congress, he added, noting that budget reconciliation — the procedural tool used by Senate Democrats to advance the Inflation Reduction Act without a 60-vote majority — would become more likely under full Republican or Democratic control scenarios.

Silver said the US solar industry sees broad repeal of the IRA through budget reconciliation as unlikely even under a GOP trifecta.

"Members of Congress could call for a wholesale repeal of the bill, but those are really challenging legislative efforts to undertake," Silver said.

Republicans, for example, tried unsuccessfully to repeal and replace the Affordable Care Act via budget reconciliation in 2017.

"The individual policies of the IRA are enormously popular," Silver said, noting that SEIA plans to release polling in the coming weeks demonstrating broad public support for the law "across parties and across geographies."

E2's analysis, released Aug. 14 in connection with the IRA's second anniversary, found that approximately $106.8 billion — or 85% of post-IRA private investment announcements — is in Republican congressional districts.

Focus on appropriations, updates around the margins

Under a divided government scenario, SEIA will be focused on the congressional appropriations process to ensure IRA provisions such as a 30% investment tax credit for solar and energy storage projects remain intact, Silver said.

"I think what we're more likely to see are small tweaks around the edges in order to create 'pay fors' for some of the tax credit extensions, or other fiscal tweaks that the Republican Party, for example, might want to make," he said.

Silver said potential tweaks could include efforts to narrow the investment tax credit or adjust the IRA's bonus tax credits, which require developers to meet prevailing wage and apprenticeship requirements.

"There are a lot of updates around the margins, which wouldn't necessarily come the to the national conversation as a 'repeal,' but they might be thrown in on the side of other tax bills or revenue efforts that Congress might go after," he said.

Sydney Bopp, managing partner at the government affairs firm Boundary Stone Partners, predicted a slowdown in IRA-related agency guidance and funding announcements if Trump wins in November. A Harris win would mean that IRA implementation could continue during the presidential transition, she noted.

Julia Bell, chief investment officer at CleanCapital, stressed that the pace of technical guidance from agencies like the US Treasury Department has already delayed a significant number of clean energy projects.

"I think there's a real fear that we slow the deployment beyond what we can bear and that investors get distracted," Bell said. "There are a lot of places for folks to invest their money, and this has generally been seen as a fairly stable and safe industry, so we do want to make sure that that continues."