What Trump Says About the Future of Gasoline and EV Incentives

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(Bloomberg) — If you’re thinking about buying an electric car or an energy-efficient heat pump that’s eligible for federal tax credits and rebates, now might be the time.

President-elect Donald Trump has called the US Inflation Reduction Act “a new green scam.” He has promised to withdraw funding for the 2022 Biden administration’s signature climate act, which includes more than $8.5 billion in funding for individuals and families to make ends meet.

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“Recovering the money that has been dispersed will be difficult, but that doesn’t mean the Trump administration won’t try,” said Romany Webb, deputy director of the Sabin Center for Climate Change Law at Columbia University. “From a strict legal perspective, there could be many ways for the administration to hold funds that have not yet been released.”

But “failure to move forward with the announced awards may be politically unpopular,” he added.

The benefits of an IRA are many. The law provides up to $14,000 for low- and moderate-income families to install heat pumps, induction stoves and other energy-efficient appliances. Wealthy families can get a $2,000 federal tax credit for replacing an old oil furnace or water heater with a heat pump. Some electric vehicles qualify for a $7,500 tax credit issued at the time of purchase, and a 30% tax credit is available to homeowners for installing solar panels and battery storage systems.

US Representative Ro Khanna, a California Democrat, said Thursday on the Zero podcast that he doubts the new Trump administration and Congressional Republicans will seek to repeal the IRA, given the billions of dollars in benefits it provides to voters.

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IRA funding is distributed to states through rebate programs approved by the US Department of Energy. The federal government has paid $1.4 billion to nine states and the District of Columbia which has begun offering $8,000 for heat pumps and $1,750 for water heaters. They also offer $840 in rebates for induction stoves and heat pump clothes dryers and $4,000 for electrical system upgrades.

Ten other states received $1.2 billion but have not yet begun issuing rebates. Nine other states are still awaiting federal review of their applications, which typically take 60 to 90 days. Other states are still processing their applications except for South Dakota, which does not participate in the program. Florida initially rejected the $175 million grant but has now applied for it.

Short of ending the IRA, however, taking those lucrative benefits away from taxpayers would prove difficult legally and politically problematic, according to David Friedman, executive director of policy for Rewiring America, a nonprofit that advocates for community electrification.

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“The law is very clear that once this money is approved, this money must be used,” said Friedman, who was once the acting assistant secretary for energy conservation and renewable energy at the Department of Energy. “Politically, it would be a bad move to reverse these things as every state and territory but someone has applied for these rebates.”

The $7,500 EV tax credit is particularly vulnerable as it could be subject to legislation that allows Congress to review and reverse newly enacted laws, according to a September paper by Webb and colleagues.

“If we end up with a Republican-controlled Congress, there may be efforts to repeal or revise the IRA bills themselves,” Webb said.

That too can be politically dangerous. The 30% tax credit for residential solar installations, for example, began in 2006 and was set to expire in 2023 before the IRA extended until 2032.

Friedman said now is a good time for families to use an IRA and use electricity. “Regardless of what happens in the future, you have to do it today because it’s big.”

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