Trump And Congress Will Alter, Not Erase, Biden’s Energy Legacy

The scaffolding around the second Trump administration’s energy policy is largely in place—the people, the pillars and the mission—to produce and export more U.S. fossil fuels to boost the economy and national security.

Between his slated cabinet picks, his new National Energy Council under construction, to his ever-strengthened relationships in the legislative branch, the President-elect’s pathway to deliver on his energy promises are aplenty.

But the political course Trump must take to unwind Biden’s trillion-dollar industrial energy policy is fraught.

Trying to Secure and Safeguard Subsidies

The Biden administration is feverishly trying to cement as much of the 46th President’s clean energy legacy as possible before 45 becomes 47 on January 20.

Biden secured about $1.6 trillion of grants and tax incentives to expand the American clean energy economy through four pieces of legislation—the American Rescue Plan; the Infrastructure Investment and Jobs Act, dubbed the Bipartisan Infrastructure Law; the CHIPS and Science Act; and the Inflation Reduction Act (IRA).

The IRA contains $369 billion of energy tax credits, grants and loan guarantees to spark clean energy project development, from renewable storage to hydrogen production.

This month, Biden announced he had already doled out $100 billion in grants.

Democrats are going to try to do everything they can to “finalize, secure, safeguard, and insulate” Biden-endorsed policies to make it as difficult as possible for the Trump administration to reverse those policies, said Matt Leggett, a partner in the policy and law group at Washington, D.C.-based K&L Gates.

But the Democrats are getting help. More than a dozen Republicans asked House Speaker Mike Johnson not to gut incentives in the IRA that are benefitting red states.

In fact, public and private investment for clean energy flowed to all 50 states between August 2022—when the IRA was passed by Congress and signed into law by President Biden—and 2024, according to Tallying the Two-Year Impact of the Inflation Reduction Act, a new report by the Clean Investment Monitor, a joint project of Rhodium Group and MIT’s Center for Energy and Environmental Policy Research. The CIM tracks public and private investments in manufacturing and deployment of climate technologies in the United States.

This could be a flashpoint as the President-elect has promised to “terminate the Green New Scam and rescind all unspent funds” from the IRA and redirect energy incentives into “real infrastructure” according to Karoline Leavitt, Trump-Vance transition spokeswoman.

There’s plenty of federal money left to redirect—nearly $300 billion.

Through the IRA, the federal government has spent $78.4 billion on clean technologies for manufacturing, transportation and residential clean energy “almost entirely in the form of tax credits,” CIM said.

The U.S. federal government paid out only $2.19 billion via grants, loans, and loan guarantees for clean technologies between 2022 and early 2024.

However, the IRA’s incentives have had a “catalytic impact” on private investment in clean technology, which is estimated to be 5-6 times larger than the public investment. Actual business and consumer investment totaled $493 billion, CIM said.

California has seen the most private investment capitalizing on IRA tax credits—$94 billion.

Investment in Texas projects totaled $69 billion; Florida, $29 billion; Georgia, $22 billion. Arizona has seen $18 billion invested in clean energy projects thanks to the IRA incentives.

In May, Leggett told Forbes, moderate Republicans’ support of measures in the IRA creates “a mitigating environment against wholesale repeal or modification of the IRA.”

Congress in His Sails

Republicans have several options to scale back Biden energy policies in 2025—the Congressional Review Act, budget reconciliation, executive action via the Cabinet, and executive orders from Trump himself.

“Based on historical administration changes, several pathways for change are available and it’s likely that we’ll see the new Congress and administration use different pathways for different policies,” said Anna Mosby, senior analyst for S&P Global Commodity Insights.

While Trump could use executive authority to unwind Biden energy provisions, Mosby and others have said Congress is likely to lead a process that peels back policy, discards or alters certain provisions, all of which experts say insulates the action from legal scrutiny.

“Any repeal of provisions would likely go through Congressional action via budget reconciliation,” Mosby said.

Using budget reconciliation, the Republican-led Congress could pass a bill with a simple majority that essentially does not fund Biden clean energy provisions.

The new Congress, if it had full Republican support, could repeal the IRA in its entirety using budget reconciliation.

The legislative branch also could scrutinize policies through the Congressional Review Act, a 1996 law that allows Congress to reassess and repeal policies advanced by the previous administration. The process requires a majority in the House of Representatives and 60 votes in the Senate to repeal a provision. It escapes committee discussion and scrutiny as well.

The CRA is a rarely used surgical tool Congress can use to overturn federal actions, but only if those actions were put in place within 60 legislative days of the end of the legislative session.

That means the new 119^th Congress, to be sworn in January 2025, could vote to reverse any of Biden’s policies enacted after about the beginning of August 2024, with a simple majority.

The CRA can be used as a tool “to prevent an administration to pass a lot on the way out the door,” but “It’s also a very quick way to immediately undo regulations,” Mosby said.

During Trump’s first term—January 20, 2017-January 20, 2021—16 administrative rules were repealed using the CRA.

Congress could try to dismantle the entire IRA through the CRA as well, but it would likely fail.

“This is what we saw in the past two administrations. We had the Affordable Care Act passed by the Obama administration, and the Trump administration said we are going to undo this. We are going to unravel it. That proved to be very difficult,” Mosby said.

In the new Congress, bipartisan IRA provisions such as the 45Q tax credit for carbon sequestration projects have “greater odds of remaining in place than others,” Mosby said.

Meanwhile, the 45V Clean Hydrogen Production Tax Credit may simply be altered by Trump’s Treasury officials to “align more with its policy priorities.”

President Biden’s Treasury Department set out a proposed rule in December 2023 that would award the highest subsidy—$3 per kilogram—for hydrogen produced from renewable energy. Deflated oil majors like ExxonMobil who were vying for that subsidy to produce hydrogen from natural gas may get their chance under Trump’s Treasury Department when it issues a final rule on the subsidy.

The Biden administration has finalized many key climate-related regulations well in advance of August 2024, Mosby said, including the emissions standards for vehicles and power plants, and the emissions standards for methane from oil and gas facilities, both finalized in the first half of 2024.

“But there are a few rules that are likely vulnerable to the CRA,” Mosby said. “Watch the Waste Emissions Charge rule: The EPA finalized the rule, allowing the EPA to implement the provision of the IRA that applies essentially a fee on methane emissions to high-emitting oil and gas facilities, on November 12.”

“Given the extremely slim Republican majority in the House, Congress will likely need to be very judicious in its selection of any provision to alter or repeal, because it could impact projects in Republican-leaning or traditionally swing states,” Mosby said.

Trump could keep a chunk of his energy policy promises through West Virginia Democratic Senator Joe Manchin’s Energy Permitting and Reform Act of 2024, still awaiting a vote by the full House of Representatives.

The bipartisan bill gives the Federal Energy Regulatory Commission more backstop authority to approve critical infrastructure from electric transmission to interstate natural gas pipelines. It also expands federal land for oil and gas drilling, among other provisions.

Getting Beyond Biden Barriers

Recent Biden executive actions that could be reversed more easily include: the Securities and Exchange Commission’s climate disclosure rule, the Environmental Protection Agency’s (EPA) standards for existing and new coal and new natural-gas fired power plants, EPA’s light vehicle and medium-to-heavy duty vehicle emissions regulations, and the agency’s methane fee for oil and gas facilities.

Those policies could be reversed quickly by Trump’s future Cabinet chiefs who are teed up for Senate confirmation that could come as early as February.

If confirmed by the Senate, the day-to-day bureaucracy of the Energy Department will fall to Liberty Energy CEO Chris Wright.

New York Congressman Lee Zeldin would run the Environmental Protection Agency where he could unravel burdensome costly redundant regulations and pave the way for new carbon capture projects among other things.

North Dakota Governor Doug Burgum, who also ran against Trump for the 2024 presidential nomination, would run the Interior Department.

Burgum would also oversee all U.S. energy policy from the helm of the new National Energy Council, which would give him a seat on the National Security Council, critical as the incoming administration will focus on energy security as a means to national security and vice versa according to those close to the transition. Membership and responsibilities of the National Energy Council are being developed now.

US oil boost rivals neighbors’

During his first term from 2017 to 2020, Trump delivered for the U.S. oil and gas industry, and it delivered for him. In 2019, Forbes reported that Trump harvested more money for the U.S. Treasury from domestic oil and gas leases than any president in U.S. history.

According to the EIA, until the U.S. averaged 12.9 million barrels per day in 2023, President Trump had presided over the U.S. record for production in 2019—12.3 million barrels per day.

Trump has said he wants more production, beyond 12.9 million barrels per day in an effort to reduce gasoline prices by half within a year of his inauguration January 20, 2025.

Worth noting, reducing gasoline prices would likely mean lower crude prices as well, which could dissuade producers from drilling at lower margins in various oilfields.

His would-be Treasury Department chief, Scott Bessent, said he wants the industry to produce 3 million additional barrels of crude per day.

The move would add to a global oil supply surplus, which the International Energy Agency said would outpace demand in 2025 even as 2024 OPEC+ oil production cuts remain.

The IEA said in its most recent Oil Market Report that “world oil supply is rising at a healthy clip.”

Following Trump’s reelection in November, IEA expected U.S. producers would only produce an additional 1.5 million barrels per day, not the 3 million b/d Bessent proposed.

The U.S. is expected to continue to lead non-OPEC+ supply growth as it has in 2024. Canada, Guyana and Argentina are raising output, and Brazil, Latin America’s largest producer, is expected to be “a major source of growth next year,” IEA said.

“When you look at the West’s reorientation in record speed away from Russia, Iran, China, away from North Korea, likely away from Venezuela, you are seeing supply chain shifts, and you are seeing increasing demand for secure reliable affordable energy, in large part US LNG,” Leggett said.

“That will be a very big change from where we were in the first Trump administration.”

Leggett said he expects the next Trump administration to use U.S. energy resources as a negotiating tool to address trade imbalances with other countries and also address the growing demand for energy for AI.

For the U.S. to win the AI race on national security grounds, on economic security grounds, the country is going to need all the energy it can muster, Leggett said.

In 2022, power data centers, AI and cryptocurrency ate up 2% of global electricity produced, a trend which is only expected to grow.

“As a result, all members of Congress are going to view the energy needs that underwrite that through a very different lens than through climate and whether those energy sources comport with climate goals,” Leggett said.