Will the Trump administration repeal most climate provisions in the Inflation Reduction Act?
NOPE, said 68% of the insiders. (About 17% said yes, and 15% weren’t sure or thought a minority of the grants might get clawed back.) “I expect it will go after some provisions, but there is quite a bit in the IRA that will be very difficult to repeal since large-scale clean energy investments have been made, and a majority of those in red states whose politicians will not want to give them up,” said one former U.S. official. “A lot of money has already gone out, so I’m guessing the money for EJ initiatives and communities is most at risk,” said a climate researcher. One Biden official threw down the gauntlet: “None of the measures will get repealed. Even unspent money will largely be safe.”
TERRE HAUTE, Ind.—The mayor of this Rust Belt city is tracking so many infrastructure investments that he is running out of room on his whiteboard. There are new parks, sidewalks and housing units under construction. A giant factory is rising south of town and another is on the way.
The growth is some of the best this region has experienced in decades, much of it sparked by federal funding from President Biden-backed legislation.
The Covid stimulus funding in the 2021 American Rescue Plan Act (ARPA) gave Terre Haute about $34 million to plow into city improvements—a once-in-a-generation windfall for a community of 60,000 people. The 2022 Inflation Reduction Act (IRA) is providing more than $2 billion in loans and tax credits to two planned factories that will create more than 800 jobs.
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Biden leaves office Monday with a largely unpopular economic record. Sharp inflation struck U.S. consumers like a lightning bolt soon after his election, causing swift spikes in grocery, housing and auto prices that helped force Biden out of the election. His approval rating has tanked to a dismal 36%.
The green shoots emerging in Terre Haute are another part of Biden’s legacy that will continue unfolding long after he is gone.
The hundreds of billions of dollars that his legislative initiatives directed to infrastructure, manufacturing, green-energy projects and urban development are just now starting to take shape nationwide. The administration says the funding is supporting more than 74,000 infrastructure projects, factories and clean-energy ventures, with a big share going to red states and regions hard-hit by offshoring and globalization.
“It will likely be beneficial to many places across the country looking back in a few years,” said Mark Muro, a senior fellow at the Brookings Institution who is tracking the investment.
Some Republicans have blasted elements of the spending, saying that it unnecessarily pulls money from taxpayers at a time of soaring national deficits. Critics also say the funds sometimes go to corporations that might have been inclined to invest anyway. Even Sen. Bernie Sanders (I., Vt.) declined to support one law subsidizing computer-chip factories, calling it corporate welfare.
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Still, an array of federal funding is starting to bear fruit in many parts of the country. Just one small slice of the IRA—expanded funding for a tax credit known as 48C—is helping to build dozens of new factories, including a planned battery-metal refinery in Ohio and a facility to recycle solar panels in Georgia. The administration’s award gusher continued last week with a $1.4 billion investment in computer-chip facilities in Arizona, Georgia and California.
Perched on the banks of the Wabash River in western Indiana, Terre Haute rose as a manufacturing hub in the late 19th century, cranking out everything from iron to Clabber Girl baking powder. Author Theodore Dreiser was born in town, and Larry Bird played for Indiana State University here in the 1970s. Recent decades brought hard times, including the same plant closures and population decline that have plagued many manufacturing communities. Terre Haute’s median household income of $42,000 is well below Indiana’s of $70,000.
But lately, things have been looking up. Driving through town on a recent afternoon, Mayor Sakbun showed off several clusters of housing construction spurred by ARPA funds that are paying for sewer, water and electricity lines. The funding helped developers start or finish construction of 450 homes last year, compared with 120 or so in years past, a pace the city hopes to maintain. Some investors are also using the funds to rehab properties that have stood vacant for decades.
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Much larger projects are rising on the outskirts of town. Entek, an Oregon-based company that makes parts for lithium-ion batteries, is building a $1.8 billion factory supported by a $1.2 billion loan from an Energy Department program that got new funding from the IRA. The investment is one of the largest the area has ever received, and the planned 650 jobs will make the plant one of the biggest employers in town.
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A big aim of the IRA was to create new jobs in coal communities as the country transitions to cleaner sources of energy. Terre Haute sits above a historic coal-mining region that has suffered amid declining demand.
Just north of town, Wabash Valley Resources is awaiting a $1.6 billion IRA-funded loan guarantee to turn the site of a former coal-fired power plant into a factory to make ammonia for fertilizer. Traditional ammonia production emits harmful greenhouse gases, but the Terre Haute project aims to trap its CO2 emissions and bury them underground, a cleaner approach known as carbon sequestration that the Biden administration has been eager to support.
The project will create 500 construction jobs and about 150 permanent jobs with an average base salary of about $100,000 a year, the company said.
A collective investment of around $133 billion is expected to create more than 109,000 American jobs, much of it at battery factories across the South and Midwest, according to data from the Center for Automotive Research. The string of battery sites stretching from Georgia up to Michigan has even earned the moniker “the Battery Belt” from some elected officials.
Helping fund these projects are federal tax credits meant to build an EV battery supply chain in the United States. The 2022 Inflation Reduction Act, President Biden’s landmark clean-energy law, set aside tens of billions of dollars in tax credits for companies that make EV batteries.
The federal subsidies reduce the cost of making batteries domestically by about $4,000 per electric vehicle, based on the average battery size of EVs available in the U.S., said Sam Adham, head of battery materials research at CRU Group, a consulting firm. The government is expected to pay companies an estimated $78 billion in tax credits through 2028, with additional outlays into early next decade.
Competing with China
Some D.C. watchers and Wall Street analysts say they expect the battery funding to survive because it is nurturing U.S. manufacturing jobs, an objective shared by both parties. While no Republicans voted for the IRA, some GOP lawmakers who represent states with big EV projects have defended aspects of the law.
“These are huge investments going into places that have been the backbone of automotive manufacturing for decades,” said Albert Gore, executive director of the Zero Emission Transportation Association, which represents Tesla, Rivianand several battery makers.