President-elect Donald Trump spent much of his campaign harshly criticizing key parts of the anti-inflation law, from solar and wind tax credits to electric vehicles and environmental justice initiatives.
However, his return to office does not necessarily mean that this landmark legislation will be repealed. While the Trump administration is unlikely to support specific climate technology startups, it will be difficult to repeal widespread laws.
The Inflation Control Act of 2022 introduced a variety of tax credits and incentives aimed at reducing carbon pollution in the United States and attracting climate-friendly industries to the country. On both counts, it was a success. Carbon emissions are decreasing and investment in climate change technologies is increasing.
Start-ups have widely benefited from the Inflation Control Act. Tax credits have encouraged investors to pour money into nuclear power, hydrogen and EVs in general. Nuclear power, one of the most expensive sources of electricity in the United States, receives production tax credits under the law. Green hydrogen is no different and could help achieve cost parity with fossil fuel-derived hydrogen more quickly. Battery startups are benefiting as major manufacturers look to build domestic supply chains for new U.S. factories
That's just the tip of the iceberg. Further downstream, startups are emerging to help homeowners and landlords install heat pumps and electric vehicle chargers. This is the type of ripple effect that extends beyond the hit to the U.S. Treasury.
In many ways, this law has been a success. In the first year alone, more than 270 clean energy projects were announced and private investment in the sector exceeded $130 billion. Rhodium Group says companies have invested in manufacturing and consumers have invested in everything from electric vehicles to heat pumps. Investors have bet $110 billion on this space so far, according to Benchmark Mineral Intelligence.
The biggest hurdle facing President Trump is the fact that the Anti-Inflation Act is already signed into law. Repealing this would require a majority in the Senate to block the filibuster. Many of the previous climate-related policies under President Barack Obama were either easily rescinded executive orders or regulatory changes that took longer but were less expensive than repealing laws. The Trump administration may be able to water down some provisions and redirect some of the funding. However, it is unlikely that President Trump will be able to repeal the law completely, given the support from moderate Republicans and the public popularity of certain provisions of the law.