Trump Promises to Retract Unspent Funds from Climate Law

Donald Trump announced on Thursday his intention to annul any “unspent” funds associated with the Inflation Reduction Act (IRA) if he is elected in November. This decision could challenge significant aspects of the climate legislation and the benefits it has provided to communities led by Republicans.

During his speech at the Economic Club of New York, Trump criticized President Biden’s agenda, labeling it a “waste” of resources. He called the Green New Deal “the Green New Scam,” claiming it moves the country backward rather than forward.

“To further defeat inflation, my plan will terminate the Green New Deal,” Trump remarked, emphasizing his commitment to rescinding unspent IRA funds. The former president’s stance could heighten the urgency for the Biden administration to allocate funds swiftly from the IRA. Additionally, this situation adds to ongoing debates among Republicans on how to manage the law that is facilitating projects and financial investments in Republican districts.

Details remain unclear about which specific IRA programs Trump intends to target. Congressional Republicans have critiqued the law’s funding for green banks and other initiatives, while some leaders in the GOP favor retaining certain IRA tax credits that bolster manufacturing. Notably, Trump’s former trade advisor, Robert Lighthizer, has suggested that components of the law supporting U.S. manufacturing could remain intact under a possible Trump administration.

The Biden administration has allocated billions from IRA funding to back clean energy projects. However, the exact amount of funds that have been obligated or spent remains ambiguous, which would offer some level of legal protection against any efforts by Trump to recover those funds.

A recent analysis by POLITICO highlighted the significant hurdles the Biden administration faces in utilizing these direct funding programs effectively. According to their April report, of the $145 billion earmarked for energy and climate initiatives in the IRA, approximately $60 billion had seen tentative funding decisions. Although that figure has increased since then, many of these funding decisions must comply with various criteria before the funds are formally disbursed.

Moreover, Trump outlined plans for a government efficiency commission inspired by Tesla’s Elon Musk, whom he has increasingly championed. Trump suggested that Musk could lead this new commission.

Trump also reiterated plans to declare a national emergency to boost domestic energy production and accused Vice President Kamala Harris of waging a “war” on American energy, despite claims of record oil production under Biden’s administration.

The IRA’s measures to reduce emissions largely rely on a variety of new and expanded tax credits aimed at clean energy technologies, which would require congressional action to repeal. The law includes grant programs intended to diminish methane emissions, enhance energy efficiency, and establish green banks nationwide—many of which have already faced Republican disapproval.

The stakes are considerable for the Democratic party: If Trump were to win the election, his administration could significantly impede new spending initiatives under the IRA. He has expressed intentions to reinstate presidential authority to overturn spending deemed wasteful, which can directly impact this legislation.

Trump’s proposed efficiency commission would conduct a thorough financial and performance audit of the federal government and provide recommendations for sweeping reforms. The objective would be to eliminate “fraud and improper payments” within a six-month timeframe, potentially affecting additional significant programs within the IRA beyond those related to energy and the climate.

Importantly, while the IRA encompasses substantial health care and tax elements, a report from the U.S. Treasury Inspector General for Tax Administration revealed that the IRS had expended only about 10 percent of its allocated $57.8 billion under the IRA.

On Thursday, Musk expressed his willingness to lead the proposed task force, stating he looks forward to serving America without a need for pay, title, or recognition.

Trump has consistently criticized what he perceives as extraneous government spending under Biden, which he claims contributes to inflated inflation and energy expenses. He has pledged to redirect any unspent IRA funds toward “important projects like roads, bridges, dams” rather than what he labels “meaningless Green New Scam ideas.”

If re-elected, Trump forecasts that his administration would halve energy prices within a year and significantly increase oil production. He also asserted plans to streamline bureaucratic procedures for approving new drilling, pipelines, refineries, power plants, and reactors, aiming to position the U.S. as a leading supplier of rare earth minerals essential for clean energy technologies. Furthermore, Trump vowed to eliminate “a minimum of 10 old regulations” for every new regulation imposed.

In response to Trump’s remarks, the Harris campaign issued a memo on Thursday highlighting her economic policies and criticizing Trump’s agenda for a second term. They warned that his approach could lead to economic shrinkage, hinder job growth, escalate inflation, inflate the national debt, and impose increased taxes on middle-class families.

Trump emphasized a commitment to restoring domestic manufacturing, a goal that aligns with the ambitions of the IRA through its tax credits and other incentives. The law has already catalyzed billions of dollars in investment for manufacturing facilities across the U.S., with the majority located in Republican-held congressional districts.

Though repealing tax credits under the IRA would necessitate congressional approval, Republicans are already considering the renewal of Trump’s 2017 tax legislation, which may include provisions from the IRA as potential funding sources. Some House Republicans have also sought to repeal certain tax credits and programs aligned with the IRA, despite pushback from several members who advocate for safeguarding investments in their districts resulting from these initiatives.

Treasury Secretary Janet Yellen emphasized in a speech in Raleigh, North Carolina, the essential economic benefits of maintaining the tax provisions within the IRA. She cautioned that reversing these measures would be a “historic mistake,” threatening to raise family expenses and potentially giving foreign competitors, particularly China, an advantage in the clean energy sector.