The Biden administration unleashed a flurry of renewable energy activity since taking office in 2021, with official commitments to build more clean energy paired with massive incentives in the Inflation Reduction Act. Biden has taken more climate actions than any president before him, according to an analysis by more than 20 climate groups, including the youth-led Sunrise Movement.
“He signed into law landmark actions bringing jobs back to the U.S. and revitalizing communities, while cutting a billion tons of carbon pollution,” said Lori Lodes, Climate Power’s executive director, in a press statement.
Now with Biden out of the race and the next presidential election just months away, many are wondering if the administration’s incentives that are starting to ramp domestic solar manufacturing and development are at risk.
The answer is a bit complicated. A few potential scenarios could yield very different results — including whether Democrats maintain control of the White House and a majority in the Senate, Republicans take over both, one or neither.
Presumptive Democratic presidential nominee Kamala Harris was obviously supportive of the IRA in her role as vice president, but some think she may push the lever even further for green energy as the head of her own administration.
“She was born and bred in California, where the clean energy revolution, in some ways, has started,” said Jillian Blanchard, director of the Climate Change and Environmental Justice Program for the legal advocacy organization Lawyers for Good Government (L4GG). “I think she sees not only the need to protect our planet, but also the benefits in terms of workforce development [and] job opportunities. I think she’s also dedicated to the cause of environmental justice, which is a big piece of Biden’s platform that I think she will continue and hopefully expand upon.”
As a U.S. senator, Harris introduced the Climate Equity Act and Clean School Bus Act, and co-sponsored the Green New Deal to transition the country to 100% clean energy.
“Vice President Harris has been integral to the Biden administration’s most important climate accomplishments and has a long track record as an impactful climate champion,” said Lena Moffitt, executive director of nonprofit climate group Evergreen Action in a press statement. “We are confident that she is ready to carry forward President Biden’s historic legacy and set a new high bar for climate ambition in America.”
IRA outlook if Republicans win
While the IRA would likely be preserved under a Harris presidency, Republican nominee Donald Trump called President Biden’s agenda a “Green New Scam” and said during the 2024 Republican National Convention that he would redirect climate-related funding, according to The Hill. But it may not be that simple to execute, even if Trump does take the presidency.
“It would take a substantial or definitive [Republican] victory with margin to effectuate a meaningful change in the IRA,” said Matt Breidert, senior portfolio manager at renewable energy investment firm Ecofin. “In absence of a sweep of the House, the Senate and the presidency, it will be difficult to materially change the IRA.”
If a Republican sweep does happen, some elements of the IRA are likely to be safer from slashes than others. Breidert said domestic renewable energy manufacturing credits would be difficult for Republicans to axe.
Many of the new solar manufacturing announcements to come out of the IRA are benefitting red states, with investments by NorSun in Oklahoma, PV Hardware in Texas and ReCreate in Tennessee, as just a few examples.
“The Republican Party is very keen to do more and more reshoring,” Breidert said.
SEIA president and CEO Abigail Ross Hopper has been spending lots of time on Capitol Hill ensuring legislators understand the impact of these credits in their states and districts. She’s also been addressing their concerns about Chinese imports by pointing to the manufacturing progress made stateside thanks to the IRA.
“If we want to address the Chinese influence on the solar and storage industry, we have to provide support to domestic manufacturing, and that comes through this tax credit,” Hopper said.
On top of the hometown benefits and independence from China, domestic manufacturing credits were determined to be a relatively low-cost budget appropriation when scored by the Congressional Budget Office.
“If you look at the cost of the manufacturing tax credits, they’re actually very low, relative to the whole funding size of the IRA. So our view is that we don’t think the manufacturing tax credits, manufacturing solar or wind equipment, would be highly at risk,” Breidert said.
Numerous manufacturers across the solar supply chain — including those making modules, inverters, racking and more — have cited the IRA as the reason they’re moving manufacturing operations to the United States. They very likely would not have been able to make the move without the tax credits.
“We need investors who are willing to say, ‘Yeah, I am going to take a gamble on this, because I know I can get a return,'” said Leslie Chang, director of strategy and policy for U.S. perovskite startup Caelux, which recently opened a 100-MW factory outside of Los Angeles. “These manufacturing tax credits have just significantly de-risked the markets such that we can get that level of investment.”
ITC and PTC could be at risk
While the manufacturing tax credit is likely the safest IRA incentive in Republican hands, both Breidert and Hopper agree the ITC and PTC may be more at risk.
“The manufacturing tax credit, I would say, has the most durability. The pots of money that are sitting around and unspent have the least durability,” Hopper said.
Breidert said reallocating the money set aside for the ITC and PTC would help Republicans extend the tax credits they passed in 2017 that are set to expire at the end of 2025, including personal estate tax exemptions and corporate income tax exemptions.
Still, even if the Republicans do have the power to cut the ITC and PTC, Breidert believes they wouldn’t immediately stop the program, but instead shorten their lifespan from 2032 to 2026 or 2028.
“We don’t think there’s a lot of risk that they abruptly end credits for wind and solar. They’re very popular, they’re widely realized and enjoyed on a bipartisan basis,” he said. “A lot of rural economic interests benefit from these tax credits.”
Hopper and SEIA are working hard to keep that top of mind for legislators.
“It was not that long ago that there was consensus among Republicans and Democrats that this was a job creator,” she said. “If you look at the amount of private investment that comes from the ITC, it’s staggering numbers. It has an incredible multiplier effect.”
Legal advocacy group L4GG has helped many cities use the ITC through the new direct pay provision, and sees how popular it is with all demographics.
“I’m working with cities across the country in red and blue and very red states who are taking advantage of tax credits — in Ohio, in Missouri, in Indiana,” L4GG’s Blanchard said. “I don’t think these cities would be very happy to have these things pulled away.”
Regardless of what happens with the IRA, Breidert believes renewable energy will still flourish as the country moves quickly toward clean electrification. If the incentive time limit is shortened, jobs will just get fast-tracked.
“We can see that the uncertainty is difficult,” he said. “If, in fact, there were to be a change in the IRA in a shortening of the tax credit period … you would obviously then see a lot of pull forward and a lot of activity. People would race to try to get a lot of projects done quickly. So, ironically, it could lead to a bit of a boom, in the short run, as we’ve seen in other cycles where ITCs and PTCs are expiring.”
Solarman3 says
No problem with the law itself but the provisions to get these credits is the problem and needs to go. If you are going to grow an industry why put so much regulatory guidelines on it? Just build and give the credits with out the hassle.
Solarman2 says
The pros and cons of any Engineered solution and that includes “social” Engineering solutions. One points out the IRA and what happens to (it), (IF), there are undercurrents set in place some time back with the continuing run on AD/CVD briefs filed by companies claiming Chinese end runs around tariff protections from “dumping solar PV panels, cells and BOM” components from China directly from China or in an around about way by sending solar PV cells and materials to Malaysia to circumvent tariffs.
Biden has also increased some Tariffs on Chinese goods and materials, yet, the overriding realization from the languid effectiveness of the Trump 201, 301 tariffs has not been that effective either. So, one does not know how this will flesh out either until the Treasury Department generates another “guidance document” which will lay out the tariffs, which items from where and enter these in the current 201, 301 tariff lists. The over all foolishness in all of this is, Congress over decades has not been proactive and is now trying to be (reactive) to remediate a problem where China now has MOUs or ownership of about 60% of the Worlds know Lithium raw supply chains. Then China has been busy for at least 20 years building up refineries, for raw to feed stock materials used in manufacturing World wide and owns about 80% of the silicon foundries for Amorphous and Crystalline silicon used in the solar PV and IC chip industries World wide. To keep businesses afloat, all the “tariff” does in this situation is cost the U.S. consumer more per item bought either due to being the only item that is also made in China or is made even in the U.S. with Chinese materials and feedstocks that are under the tariff guidance.
No U.S. supply chains, tariffs to “protect” U.S. manufacturing interests and who gets rich? The U.S. Treasury. You can reduce “income” tax to give folks more money to spend, when one looks at the tariff protectionist concept with no one else to turn to but China, you are erasing tax relief with inflationary tariff goods increases.