It’s officially 60 days to go until US voters elect their next president (and Senators, and House representatives). In the countdown, we’re continuing our coverage of what’s at stake — and what’s at risk — this November.
In particular, the Inflation Reduction Act (IRA) represents one of the most ambitious climate policies in US history, with substantial funding allocated to renewable energy, clean manufacturing, carbon capture, green infrastructure, and more. However, the future of this funding is uncertain and closely tied to the political composition of Congress and who wins the presidency. The upcoming elections will determine whether this climate-forward momentum continues or faces potential rollbacks.
We already covered how different outcomes of the election could impact one of the biggest levers of climate tech deployment: tax credits. Now, in part two of our coverage, we’re diving into the IRA’s funding pools, which include federal grants, cost-shares, loans, and incentives designed to accelerate decarbonization efforts across various sectors.
This is a sneak peak from our “What’s on the ballot for climate tech in the 2024 US election?” report, exclusive for Sightline Climate clients. If you're a client, you can access the full version here. If you’re interesting in becoming a sightline climate, request a demo here.
With countless moving pieces at play, different outcomes across the presidency and branches of Congress, with varying margins, would dictate the government’s actions regarding the IRA. You can dive deeper into these scenarios in our last newsletter about climate tech on the ballot.
Funding features
Funding pool
Description
Repeal risk
DOE Loan Program Office (LPO) Loan Authority
Provides loans and loan guarantees for clean energy projects, supporting large-scale renewable energy and advanced technology deployment — after announcing ~$25bn in closed or conditionally closed loans, the office has ~$216bn in loan authority remaining.
Changes in oversight criteria or funding levels through budgetary processes — a new administration could also decline to use loan authority or reduce scope of loan programs. Loan authority could be reduced or restricted by Congress.
The LPO's operations could be scaled back under a Republican executive branch, but existing loans are generally protected. (See below for more)
DOE Office of Clean Energy Demonstrations (OCED)
Provides awards for large-scale demonstrations of clean energy technologies to accelerate their commercial deployment — received $25bn in IRA funding.
As the office offers awards for applicants who fit criteria, budgetary changes could reduce or eliminate funding authority for awards, the program’s focus could be narrowed to fewer technologies, or new political appointees in charge of office could decline to make awards.
Similarly to LPO, funding that has already been deployed is generally safe, although future deployments could be scaled back under unsupportive administration.
Greenhouse Gas Reduction Fund (GGRF)
With $27bn, supports projects aimed at reducing greenhouse gas emissions through grants and investments in clean energy and efficiency projects.
Current administration has already announced $27bn in allocations; Future appropriations could reduce or redirect funding, if it’s not already out the door.
Defense Production Act for Heat Pumps and Critical Minerals
Allocates $250m in funding to ramp up the production of heat pumps and critical minerals needed for clean energy technologies.
Needs to be reauthorized before 2025; Congress could reduce or eliminate funding through budget cuts or refocus the scope of the program on fewer technologies.
May face reductions under Republican control, as some Republicans have criticized this approach as an overreach.
Agricultural Conservation and Renewable Energy Programs
Provides $19.5bn for agricultural climate-smart conservation; provides $13.3bn support for renewable energy projects on farms, including biogas and wind power.
Under Republican control, agricultural conservation measures are likely to change due to ongoing controversy. Republicans want to expand the scope to include all conservation programs, not just those related to climate.
Congress may also reduce or redirect funding through budget appropriations.
Tribal Energy Loan Guarantee Program
Provides $75m of loan guarantees to support energy projects on tribal lands, including renewable energy and energy efficiency projects, via DOE.
Funding could be reduced or eliminated through budget cuts. The program’s scope could be narrowed to focus on fewer types of projects.
However, the program is likely to be preserved due to its importance to tribal sovereignty and energy independence.
Electric Vehicle Charging Infrastructure Grants
Provides $2.5bn in grants to build out electric vehicle (EV) charging infrastructure across the country, with a focus on underserved and rural areas, from the DOT.
Likely to be targeted under Republican control, particularly if there is skepticism about federal support for EVs.
Congress could reduce funding or limit the scope of the program through appropriations. The eligibility criteria for grants could also be tightened.
Hydrogen Hubs and Carbon Management Hubs
Provides $7bn funding to establish regional hydrogen hubs to promote the production and use of clean hydrogen as an energy carrier; also provides $3.5bn in funds for RD&D in industrial and power plant carbon capture, direct air capture, carbon transport systems, and carbon capture, utilization, and storage (CCUS) projects.
Already, these planned hydrogen hubs have run into major issues, like Heartland’s cancellation. They’re likely to face scrutiny and potential reductions under Republican control over cost overruns.
However, CCUS may retain some bipartisan support because of success in oil and gas sectors, reducing the likelihood of complete elimination. Congress could cut funding or limit the number of hubs through budget appropriations.
Experts told us that funds already allocated and spent are generally safe. However, many of these awards are disbursed in tranches, and the secondary and tertiary allotments are given once projects hit certain milestones. It’s possible that future tranches of funding could be delayed or redirected through budget negotiations and changes in selection criteria — and a change in administration could slow down the follow-on tranches. New political agency appointees might not be able to reverse existing initiatives, but they could significantly hinder progress by clogging the process with bureaucratic hurdles or withholding approvals for ongoing DOE awards.
Case study: Lessons learned from Trump's first presidency
During Trump’s previous administration, the Department of Energy’s Loan Programs Office (LPO) effectively stalled, with only one new loan being approved despite Congress authorizing billions of dollars during the Obama administration. This single loan was for a nuclear reactor project in Georgia, which had been initiated during Obama’s tenure. This was largely due to the administration’s broader skepticism of government intervention in energy markets and its emphasis on promoting fossil fuels over renewable energy — and we can expect something similar if there’s another term.
Overall, because loans and loan authorities are relatively discretionary, they could see changes in oversight and risk tolerance, potentially affecting new loan approvals and the implementation of existing projects. A change in administration could lead to a more conservative approach, reducing the number and size of new loans via executive authorizations. In particular, while the Impoundment Control Act requires that allocated funds be spent for their intended purposes, future appropriations can change the direction of spending.
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