4 min read

Repealing the Inflation Reduction Act

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The Inflation Reduction Act (IRA) was big news when the President first proposed it; Congress fought over it; it underwent innumerable edits and changes, and it was finally passed into law on August 16, 2022.

Now it’s big news again. Less than a year after its birth, certain groups are pushing to repeal it. Developers, whose heads are already spinning from the challenge of taking advantage of all the potential tax credits offered through the bill, are now biting their nails over what will happen if it gets reversed.

Today, we’re going to tackle some of the biggest questions people are asking today: Where does the IRA stand? Who’s pushing to change it and how? How could this impact the Biden-Harris Administration’s energy efficiency goals? In what ways could this impact your plans for the future?

Let’s take a look.

The IRA: Where We’re At

Today, the IRA is law. It mandates prescription drug reforms, incentivizes clean energy to fight climate change, targets carbon emissions reductions, provides environmental justice initiatives, and theoretically fights inflation via deficit reduction.

Originally billed as the Build Back Better Plan, the IRA has undergone a bit of an identity crisis on its way to becoming public law. From a plan conceived as a way of revitalizing the American way of life, it became one geared toward reducing the deficit and curbing inflation, with many of its social reforms conceded in the name of cooperation between parties.

Today, that identity crisis continues. While its prescription drug, health care, and greenhouse gas emissions reforms are admirable, and its clean energy tax credits are mighty incentivizing, not everyone is satisfied with the IRA rebates and incentives.

Who Wants to Change It?

Conservative groups have pointed out from the beginning that, as The New York Times explains, “The Biden administration’s efforts to pitch the IRA as a big ‘investment’ in climate were always at odds with the deficit reduction idea.”

Moreover, the act is nonspecific about how many of its expenditures will play out, continues the paper: “For instance, the bill allows transferability between taxpayers to allow the credits to be fully monetized, and loose legislative language has allowed the Biden administration’s Treasury Department to expand eligibility and use through regulatory guidance.”

Today, some analyses indicate that the “price tag of the Inflation Reduction Act’s green energy tax credits is much higher than we thought.” The writers of this article point out that the Joint Committee on Taxation’s estimates of tax incentives totals rose from $270 billion over 10 years in August 2022, to $570 billion in April 2023, to $663 billion in June.

To some, that’s an acceptable amount to push our country out of the climate crisis and into a more sustainable, more cost-effective, and less carcinogenic future. To others, sticker shock vastly outweighs the potential benefits.

Proposed Changes

Bill H.R.812, somewhat confusingly entitled the Inflation Reduction Act of 2023, seeks to repeal the Inflation Reduction Act of 2022 in its entirety. Most importantly, if passed, it “rescinds any unobligated funds made available by such act.”

That includes all tax credits introduced and/or extended by the bill, such as:

  • Energy credits for solar and wind facilities

  • Credits for siting clean energy facilities in a low-income community

  • Energy community tax credits

  • Credits for domestically produced content

and many more.

The opposition points out that repealing the act will lead to higher drug prices and Medicare costs, increased energy costs at home, jeopardized jobs in the energy sector, and even more national debt. Also, all those clean energy tax credits would go poof as soon as it was repealed.

So what does that mean for you?

Impacts for Developers – Present and Future

The repeal of President Biden’s Inflation Reduction Act would have some pretty obvious downsides for renewable energy developers. Right now you can get incredible tax breaks for taking the right approach to energy production – in the middle double digits once you wrap in the low-income, underserved energy community, prevailing wage and apprenticeship requirements, and domestic content perks.

As for facilities already taking advantage of credits? It’s unclear how the repeal of the bill would affect them. However, as one of the main goals of this juggernaut bill was to revitalize America through green incentives, trashing it would undoubtedly undermine many of our most significant future aims.

Happily, many experts believe it’s unlikely the act will get rolled back.

The Inflation Reduction Act is all carrots, and very few sticks,” says Evan George, Communications Director for the UCLA Emmett Institute. “For better or worse, it’s an incentives-based law that moves away from the reliance on traditional regulation and enforcement. That’s a major departure from the environmental legislation of the 1970s—NEPA, the Clean Air Act, the Endangered Species Act, to name a few.”

Many environmental groups, in fact, are displeased with that very fact of the IRA: that it focuses far more on incentivizing than regulation. When you add changes to the Clean Water Act and recent Supreme Court disappointments for the EPA, these are reasonable concerns.

However, says George, he’s not worried that it will get repealed now or even by a future administration. Still, it never hurts to be careful.

Enter Transect.

Take Advantage of Tax Credits With Transect

As with any other partisan dispute, it’s not for us to say who is right. Rather, our job is to consider the implications and make the best possible recommendations for saving money and hitting timeline targets during the development process.

One of the best ways we can help here at Transect is to streamline the due diligence process so that you can start and finish projects as quickly as possible. That will help you make the most of the tax credits while they’re here.

Even if they stick around forever – which we’re hopeful they will – you can’t go wrong by funding and finishing more projects more quickly, right? Transect can help with automated environmental risk assessment software that generates desktop-ready reports in minutes.

It’s time to stop waiting weeks and spending thousands of unnecessary dollars to do your due diligence. It’s time to start working with Transect today.

If you’d like to learn more about how we work, feel free to sign up for a demo today!


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