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.
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