IRA and IIJA – Introduction
The Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act of 2022 (IRA) have provided unprecedented financial support for climate change initiatives, spanning battery manufacturing, critical minerals development, carbon capture, methane control, and industrial decarbonization.
Since 2022, the US Department of Energy (DOE) has consistently issued funding opportunities and awarded grants to advance the Biden Administration’s climate goals, fostering U.S. clean energy innovation and domestic manufacturing.
The IRA has also bolstered the DOE loan guarantee program.
However, as the Trump Administration takes office, questions arise regarding the fate of these awards and loan guarantees.
Risks to IRA Tax Credits and Financial Assistance Awards
Some IRA tax credits face the possibility of repeal by Congress.
Similarly, Congress may decide to rescind funding allocated to unexecuted financial assistance awards.
However, agreements that have already been executed, along with finalized loan guarantees, are likely to remain intact, even amid a shift in policy priorities.
The Outlook for IRA-Funded Loan Guarantees
During President Trump’s first term, the DOE Loan Programs Office (LPO) did not close a single loan guarantee, despite being funded.
Applications currently under consideration that fail to close before the inauguration could face a similar fate.
However, there are indications this pattern may differ under the new Trump Administration:
- The DOE loan guarantee program now includes projects beyond clean energy and advanced vehicles, extending to initiatives such as critical minerals development (tied to both energy and national security), reinvestment in coal plants, upgrades to electricity transmission infrastructure, and CO2 transport.
- These types of projects align with industries and regions that have traditionally been supportive of President Trump, increasing the likelihood of favorable consideration.
Applicants must advocate early and clearly for their projects to avoid potential elimination of the program, which could be framed as part of the “Green New Deal” that President Trump campaigned against.
Stability of Completed Financial Assistance Awards
The DOE has already awarded tens of billions of dollars in funding to various decarbonization efforts under the IRA and IIJA.
While the agreements include standard termination clauses allowing the government to end them if they no longer align with program goals, such terminations would need to reference the original appropriations statutes.
The IRA and IIJA explicitly define the purposes of the awards, and the DOE has adhered to these legislative directives.
Consequently, attempts by the new administration to revoke completed awards would likely face legal challenges and have limited chances of success.
Vulnerability of Unexecuted Awards and Pending Opportunities
Unexecuted awards and open funding opportunities face significant risks under the new administration.
After the inauguration, there will likely be a temporary freeze on financial assistance awards still under negotiation and announced funding opportunities.
DOE career staff may delay further action until receiving directives from new leadership.
Nonetheless, prolonged inaction could lead to legal challenges from applicants.
Additionally, the Republican-controlled Congress might opt to withdraw previously appropriated funds to redirect the budget toward new priorities, such as tax cuts.
For applicants who have not yet been selected for awards, prospects for success are likely to diminish significantly.
Those who have been selected but have yet to finalize negotiations should prioritize completing them as soon as possible, as DOE’s current leadership is likely working to finalize agreements before the administration change takes effect.
IRA and IIJA – Conclusion
While executed financial assistance agreements and loan guarantees appear secure, pending applications and unexecuted awards face uncertainty under the Trump Administration.
Applicants must act swiftly to complete negotiations or risk losing out as policy priorities shift.
Final Thoughts
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