House Budget Menu Eyes Cuts to Climate Law Credits, Funding

January 21, 2025

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by Kelsey Tamborrino and James Bikales (Politico Pro) A new document obtained by POLITICO lists a menu of items that Republicans are considering for cost-saving offsets for their planned package of tax cuts and other priorities. -- House Republican lawmakers are targeting across-the-board cuts to climate change measures in Democrats’ Inflation Reduction Act, including gutting the clean energy tax credits and grant programs under the law.

A new document obtained by POLITICO lists a menu of items that Republicans are considering for cost-saving offsets for their planned package of tax cuts and other priorities, and suggests that numerous policy options remain on the table.

The document, prepared by House Budget Committee Republicans, includes repealing all of the clean energy tax credits “created and expanded under the Inflation Reduction Act,” which it forecast would yield up to $796 billion in savings over 10 years.

But it noted that estimate is tied to higher uptake of the electric vehicle tax credit due to the Biden administration’s tailpipe emissions rule, which President-elect Donald Trump has vowed to roll back as soon as he takes office.

The document estimated that repealing the tailpipe rule and the Transportation Department’s strengthened fuel economy standards will yield $111.3 billion in 10-year savings by reducing uptake of the credit.

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Reconciliation Options (U.S. House of Representative Ways and Means Committee)
GOP budget menu outlines sweeping spending cuts: The document provides a look at what Republicans are considering as they assemble a package of tax cuts and other priorities for early 2025. (Politico Pro)

Excerpt from U.S. House of Representatives Ways and Means Committee:

Repeal Title I of IRA (Excluding: 45Q Carbon Sequestration, 45U Nuclear Power, 45Z Clean Fuels, and EV Tax Credit)

$404.7 billion in 10-year savings

VIABILITY: HIGH / MEDIUM / LOW

 Reducing 45Q, 45U, and 45Z would streamline and reduce government intervention in the energy industry that props up the green energy sector and distorts market competition.

...

Increase Electric Vehicle Fees

Unknown savings

VIABILITY: HIGH / MEDIUM / LOW

 Electric vehicles do not currently contribute to the Highway Trust Fund, which is largely funded by the federal gas tax. This option would assess a new fee on electric vehicles. Border Adjustment Tax $1.2 trillion+ in 10-year savings

...

Border Adjustment Tax

$1.2 trillion+ in 10-year savings

VIABILITY: HIGH / MEDIUM / LOW

 This option creates a new tax on goods where they are consumed, not produced. This shift from an origin-based tax to a destination-based tax.

...

Inflation Reduction Act Repeals in Titles V and VI

$17.3 billion in 10-year savings

VIABILITY: HIGH / MEDIUM / LOW

 Title V programs include ($12.69 billion): o Home energy performance based and whole-house rebates ($2.8 billion)

o High efficiency electric home rebate program ($2 billion)

o State-based home energy efficiency contractor training and grants ($120 million) o Assistance for latest and zero building energy code adoption ($600 million)

o Funding for Department of Energy, Loan Program Office ($3.9 billion) o Advanced vehicle technology manufacturing ($1.6 billion) o Transmission facility financing ($14 million)

o Interregional and offshore wind transmission planning and modeling ($73 million)

o Department of Energy administrative funding ($80 million)

o Federal Regulatory commission funding (($85 million)

o 1.42 o Grants for interstate electricity transmission lines ($337 million)

o Advanced industrial facilities deployment program ($2.3 million)

o Department of energy oversight ($59 million) o Canal improvement project ($21 million)

o Domestic manufacturing conservation grants ($1 billion)

 Title VI Programs include ($4.64 billion):

o Clean heavy-duty vehicles ($621 million)

o Grants to reduce air pollution at ports ($1.8 billion)

o Diesel emissions reductions ($20 million)

o Funding to address air pollution ($40 million)

o Funding to address air pollution at schools ($4 million)

o Low emissions electricity program ($20 million)

o EPA production declaration assistance ($44 million)

o Methane emissions reduction grants ($698 million)

o Climate pollution reduction grants ($2 million)

o Low embodied carbon labeling for construction materials ($30 million)

o Environmental and Climate Justice Block Grant ($1.4 billion)

...

Repeal EPA Tailpipe Emissions Rule and Department of Transportation CAFE Standards Rule

$111.3 billion in 10-year savings

VIABILITY: HIGH / MEDIUM / LOW

 The EPA Tailpipe and DOT CAFE Standard rules considerably increase the usages of the IRA’s EV tax credits. It is likely that these rules will be among the first repealed by Trump executive action.

...

Electric Vehicle Inclusion to the Highway Trust Fund (HTF)

Unknown savings

VIABILITY: HIGH / MEDIUM / LOW

 Incorporate electric vehicles into the HTF’s revenue stream to contribute toward constructing and improving the nation’s infrastructure.

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