The budget reconciliation bill, signed into law by President Trump last week, guts federal climate and clean energy funding and is expected to eliminate American jobs, raise electricity prices, and worsen pollution and public health impacts across the country.
There’s a lot in the bill that state climate policy actors need to know, from what’s been lost to which opportunities arise at the state level. Climate XChange and Evergreen Collaborative provided an analysis of the reconciliation bill’s impacts to climate and clean energy, geared toward state-level advocates and policymakers.
Tony Sirna, Evergreen Collaborative – The Budget Bill’s Cuts to Climate, Clean Energy, and Other Key Sectors
Learn more by watching the webinar at 04:18
Tony’s presentation included the following climate and energy impacts stemming from the budget reconciliation bill:
- Overall climate, energy, and economic impacts of the ‘One Big Beautiful Bill.’
- Clean energy: Inflation Reduction Act tax credit phaseouts (45Y and 48E), the new Foreign Entity of Concern (FEOC) requirements, transmission funding rescission, and amendments to financing through the Department of Energy’s Loan Program Office.
- Transportation: Electric vehicle tax credit repeals (45W, 30C, 30D, and 25E).
- Buildings: home efficiency tax credit elimination and amendments (25C, 45L, and 179D), and residential clean energy tax credit elimination (25D).
- Manufacturing: tax credit repeal and amendments (45X and 48C) and the rescission of unobligated funds under the Advanced Industrial Facilities Deployment Program.
- Fossil fuel extraction: oil, gas and coal handouts, and the rescission of unobligated funds within the methane waste reduction program.
- Impacts to other key programs including the Greenhouse Gas Reduction Fund, the Climate Pollution Reduction Grants, the Environmental Justice Block Grants, and the new opt-in fee for the NEPA review process.
Jordan Gerow, Climate XChange – State Policies to Fill the Gaps
Learn more by watching the webinar at 27:08
Jordan’s presentation included the following strategies states can employ to fill in the gaps left by the budget reconciliation bill:
- Tools
- The budget challenge: CBPP’s State and Local Revenue Options provides a starting place for understanding different levers for raising state money, including environmental/polluter pays options.
- Beating the phaseout deadlines: while tax credits remain available, states and localities can still receive elective pay. Relevant guides to help speed the process can be found from S2 Strategies, Lawyers for Good Government, Deloitte, and RMI.
- Electricity: solar and wind tax credit phaseouts. States can:
- Address energy affordability through regulating a main source of load growth — data centers.
- Re-incentivize renewable energy through solar and wind carve outs within Renewable Portfolio Standards (RPS), and/or a separate tier of Renewable Energy Certificates (RECs).
- Address grid reliability by empowering Public Utility Commissions (PUCs) to 1) consider clean energy goals, 2) align integrated resource planning (IRP) with energy transition projections and regional transmission planning, and 3) study the impacts of load growth.
- Fossil Fuel Extraction: incentivized and accelerated fossil fuel production. States can:
- Impose higher severance taxes or increase royalty rates for fossil fuel production on state lands, and use the money to fund clean energy.
- Transportation: electric vehicle tax credit and CAFE standard repeals. States can:
- Offer EV and charging infrastructure rebates or tax credits.
- Empower regulators, including the PUCs, to plan out the EV charging network.
- Consider EV charging rate design and affordability, and require bidirectional charging capabilities.
- Set public procurement targets for EVs and electric buses in governmental fleets.
- Encourage electric fleets through indirect source review, controlling the permitting of fleet traffic centers like warehouses.
- Adopt Clean or Low Carbon Fuel Standards (CFSs/LCFSs).
- Environmental Justice: terminated EJ Block Grants. States can:
- Define and map EJ communities.
- Form permanent governmental EJ staff positions and advisory bodies.
- Require a percentage of funds and/or benefits from state climate and clean energy investments to be in EJ communities.
- Methane Regulation: repeals of methane leak incentive and fines. States can:
- Set methane regulations for oil and gas production and operation, through requiring leak detection and repair, prohibiting routine flaring, and reporting emissions.
- Home Efficiency: tax credits and incentives repealed. States can:
- Incentivize heat pumps or geothermal through utility rebates, personal tax credits, property tax incentives, and loan programs.
- Require more efficient buildings through building performance standards (BPSs), gas appliance phaseouts, LEED certification requirements, and more.
Q&A
Hear the full Q&A by watching the webinar at 46:13
- Will states be sued if they try to pass laws that replace federal policy? Could you speak to the risk of Trump’s State Overreach Executive Order and how this limits state power?
- Can you say more about opportunities to phase out gas appliances?
- Do we have a timeline of when we will start feeling rates hike up for bill payers?
- How concerned are you that previous leaders and emerging leaders on climate at the state level may backslide? I’m concerned that as the national policy supports are carved out, states will roll back previous support for climate and environmental policy.
