Implementing the Inflation Reduction Act: Progress to Date and Risks from a Changing Administration

Abstract

The Inflation Reduction Act of 2022 (“IRA”) is the largest investment in climate change mitigation and adaptation in American history. The IRA appropriates more than $142 billion to carry out activities designed to reduce greenhouse gas emissions and protect against the impacts of climate change. This includes up to$37 billion in appropriations for federal loans and loan guarantees, and nearly $105 billion allocated for grants, awards, and other direct spending by federal agencies. In addition, the IRA creates and expands a number of tax credit programs designed to support a broad range of climate-related activities, including investments in clean and renewable energy, electric vehicles and vehicle charging infrastructure, and energy efficiency projects. The total value of these tax credits is hard to evaluate since many of the IRA’s credits are not capped, but recent studies estimate that Americans may claim between$780 billion and $1.2 trillion in tax credits over the IRA’s 10-year life. While the spending and tax credit provisions comprise the bulk of the IRA, the Act also makes important changes to existing federal land leasing programs, mandates updates to existing greenhouse gas reporting regulations, and requires the Environmental Protection Agency (“EPA”) to collect fees for certain methane emissions. The next Presidential election may jeopardize the IRA’s climate programs. Project 2025, a policy blueprint published by the Heritage Foundation, recommends that the next conservative administration should push for full repeal of the IRA. Perhaps recognizing that could be difficult to achieve, Project 2025 also outlines a suite of measures that a future conservative administration may take to undermine the IRA, should it remain in place. These include measures to redirect climate-related funds and, more broadly, roll back environmental protections. Such proposals threaten to thwart climate action in the United States, and undo hard-won gains in the global fight against climate change. This paper reviews the status of implementation of the IRA’s climate programs, and evaluates the vulnerability of those to unilateral executive branch action under a hostile presidential administration. For the purposes of our analysis, we assume that Congress will not repeal the IRA in whole or in part, but that a future administration may seek to limit its implementation through executive action. Our aim is to determine the legal vulnerability of IRA programs and identify legal constraints on a future administration’s ability to interfere with the programs’ implementation. We note that other factors, including political factors, may also constrain what a future administration can do, but that is not the focus of this paper