Trump’s taxman cometh — for the IRA

Presented by Gevo: Your guide to the political forces shaping the energy transformation

Nov 25, 2024 View in browser   By Arianna Skibell Presented by  Donald Trump (left) listens as investor Scott Bessent speaks on the economy in Asheville, North Carolina, on Aug. 14. | Matt Kelley/AP President-elect Donald Trump’s pick to lead the Treasury Department could upend a suite of clean energy tax credits included in the Democrats’ 2022 climate law. Hedge fund manager Scott Bessent hasn’t exactly embraced President Joe Biden’s historic investment in clean energy technology, calling the Inflation Reduction Act a “doomsday machine for the budget,” writes Jason Plautz. Bessent, who served as economic adviser during the president-elect’s campaign, has called for deregulation, more oil production, “energy dominance” and “reprivatizing the economy.” If confirmed, he would have the power to rewrite or reverse some of the law’s tax provisions, a number of which have yet to be finalized. Chipping away at the roughly $527 billion in clean energy tax credits could offer conservatives a political win while offsetting the extension of the multitrillion-dollar tax cuts Trump implemented in 2017 that are set to expire next year. But the move could also throw the energy industry into even more disarray as companies look to tax incentives to try to meet ballooning electricity demand. “Investors want certainty, they want to know whether their projects will qualify for tax breaks or not,” Aaron Bergman, a former Energy Department official currently with Resources for the Future, told Jason. “Rewriting the tax guidance could create a lot of uncertainty for what is a significant revenue stream.” All eyes on Treasury Biden’s climate law aims to green the economy by offering juicy tax credits to developers of large-scale wind and solar projects along with players in emerging sectors like hydrogen fuel, carbon capture and sustainable aviation fuel. That means much of the law’s implementation work is left up to the Treasury Department, which has been steadily rolling out guidance and rules. The department has already released at least 75 pieces of guidance related to the law, but any rules that have not been finalized by Jan. 20 will be left to the incoming Trump administration. Even those that are finalized, however, could be reopened. The hydrogen production tax credit, for instance, could be rewritten to reward projects that use fossil fuels to operate, rather than clean power. Executives from across the energy industry, however, have cautioned that the tax credits are helping jump-start costly projects — and that reversing them could risk upsetting the market.   It's Monday — thank you for tuning in to POLITICO's Power Switch. I'm your host, Arianna Skibell. Power Switch is brought to you by the journalists behind E&E News and POLITICO Energy. Send your tips, comments, questions to askibell@eenews.net.   A message from Gevo: American-made sustainable aviation fuel (SAF) will strengthen domestic energy security and bolster the rural economy. In South Dakota, Gevo’s Net-Zero 1 SAF facility will create new opportunities for local workers, farmers, and residents – delivering an estimated $116 million in annual value for the local economy. Net-Zero 1 is a critical step in ensuring the long-term competitiveness of American agriculture, energy, and aviation. Learn more.   Power Centers Trump listens to Elon Musk at the launch of a test flight of the SpaceX Starship rocket on Tuesday in Boca Chica, Texas. | Brandon Bell/Getty Images Trump team’s attitude: Bring it on. Trump’s government-crushing team has outlined plans for mass firings of federal employees. Its playbook is causing workers to panic and would almost certainly lead to protracted court fights, writes Robin Bravender. Elon Musk and Vivek Ramaswamy, the wealthy business-world allies Trump picked to lead the incoming administration’s government-downsizing bid, are drafting a playbook for using broad presidential authority to slash regulations and the size of the workforce. Carbon removal developers reconsider oil Startups seeking to vacuum carbon dioxide from the skies have long had an uneasy relationship with the oil giants fueling global warming, writes Corbin Hiar. But with Trump returning to the White House, direct air capture companies’ connections to the oil industry may be their greatest political asset. Direct air capture is a “clean version” of oil production, said Shreveport Mayor Tom Arceneaux, a Republican who works at an oil- and gas-focused law firm. Brussels sacrifices green laws for its economy The European Commission plans to drastically simplify its green regulations in a bid to jump-start Europe’s struggling economy and compete with faster-growing ones in Asia and the United States, writes Marianne Gros. It’s a decisive pivot away from the Green Deal program of the last five years, which put climate and the environment at the center of European lawmaking. The hope was that where Europe went, the world would follow. The retreat suggests Brussels no longer trusts this narrative.   A message from Gevo:   COP Corner Our news roundup from COP29 in Baku, Azerbaijan. Mohamed Adow, director of the think tank Power Shift Africa, is visible in a camera as he speaks to the media during the COP29 U.N. climate summit Saturday in Baku, Azerbaijan. | Peter Dejong/AP Climate summit ends with a long-fought deal — and a lot of anger: Developing nations got a promise of at least $300 billion a year in climate finance from rich countries such as the U.S. and the EU’s members. They wanted far more. What the ‘show me the money’ climate summit tells us about the new Trump era: Big-money pledges will be even harder to trust. Fossil fuel producers have more leverage. China is ascendant. In Other News Study: Climate-driven impacts on water in the U.S. West will raise the cost of cleaning up the electric grid. Recreation: Aspen looks to save skiing from climate change.   Want to know what's really happening with Congress's make-or-break spending fights? Get daily insider analysis of Hill negotiations, funding deadlines, and breaking developments—free in your inbox with Inside Congress. Subscribe now.     Subscriber Zone A showcase of some of our best subscriber content. Pennsylvania Gov. Josh Shapiro speaks at a campaign event at the IBEW Local 5 union hall in Pittsburgh on Sept. 2. | Susan Walsh/AP After Democrats lost up and down the ballot this month in Pennsylvania, Gov. Josh Shapiro strode onto a construction site outside Philadelphia with a pitch to help turn things around. America’s traditional automakers are asking Trump to preserve federal electric vehicle tax credits, putting them on a collision course with Tesla CEO Elon Musk, their chief EV competitor. California Gov. Gavin Newsom announced a plan Monday to Trump-proof — and maybe even Tesla-proof — California’s nation-leading electric vehicle market. That's it for today, folks! Thanks for reading.   Policy Change is Coming: Be prepared, be proactive, be a Pro. POLITICO Pro’s platform has 200,000+ energy regulatory documents from California, New York, and FERC. Leverage our Legislative and Regulatory trackers for comprehensive policy tracking across all industries. Learn more.       A message from Gevo: Sustainable aviation fuel will bolster American energy security and unleash new markets for American farmers. In South Dakota, Gevo’s Net-Zero 1 plant will offer farmers new premiums for their crops as it sources locally grown feedstocks to produce 60 million gallons of SAF per year. According to research from Charles River Associates, Net-Zero 1 is also projected to create thousands of local jobs at the facility and across the agricultural, manufacturing, and transportation industries, generating more than $100 million in annual economic impact. Learn more about how investments in American-made SAF can strengthen American farmers, energy security, and competitiveness here.     Follow us on Twitter Arianna Skibell @ariannaskibell   Follow us

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