The Inflation Reduction Act After the Election

Our expert panel included Ted Brandt of Marathon Capital, Shariff Barakat and Chris Treanor of Akin Gump and Erik Underwood of Basis Climate.

Read our key takeaways and watch the recording below.

Key Takeaways

• Post-election uncertainty in clean energy policy: The Republican election win has introduced significant uncertainty around the Inflation Reduction Act (IRA). While full repeal of the IRA is technically possible via budget reconciliation, bipartisan support for certain provisions, particularly in Republican-led districts, may help preserve key elements of the legislation.
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• Strategic importance of the IRA: In the past two years, companies have announced a total of over $300 billion in new investments in clean energy, leveraging tax credits like 45X to incentivize domestic manufacturing and renewable energy deployment. This design aligns incentives with political priorities, fostering resilience despite potential legislative challenges.
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• Domestic manufacturing as a success story: The IRA’s domestic content requirements have driven substantial investment in U.S.-based clean energy manufacturing. Companies are realigning supply chains to qualify for incentives, with major projects like solar manufacturing plants under development in states like Texas and New York.
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• Corporate demand for tax credits: Corporations are increasingly buying tax credits to reduce liabilities while supporting clean energy projects, leveraging an expected $40 billion in tax credits in 2024 (already double pre-IRA levels). This burgeoning market includes "economic players" seeking safe, low-risk returns by purchasing tax credits at a discount, bolstering demand for 45X and ITC-based transactions.
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• Stability of tax credit transactions: Clean energy tax credit deals remain active and show strong momentum, even amid political uncertainties. Transactions are progressing uninterrupted, with many parties safe-harboring assets through early investments and planning for potential regulatory adjustments.
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• Challenges in policy implementation: Even if the IRA survives wholesale repeal, the new administration could impede its rollout via executive orders or delays in regulatory guidance. For instance, critical registration portals for tax credit transfers could face disruptions, creating additional hurdles for developers and investors.
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• Sectoral vulnerabilities: Certain credits, such as those for green hydrogen and energy-efficient home improvements (25C), face heightened risk of repeal or adjustment due to their weaker political support. Conversely, provisions tied to domestic content and union jobs are likely to endure, reflecting bipartisan priorities.
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• Renewable energy’s long-term resilience: Despite near-term political turbulence, renewable energy remains a core component of the U.S. energy landscape. Corporate climate commitments, rising short term electrification needs from artificial intelligence computing, and the economic viability of renewable projects ensure that the clean energy transition will continue to gain traction.