The incoming Republican trifecta in Washington is not the ideal outcome for climate tech, but it is not a surprise. There is no doubt there will be some painful cuts in federal energy and climate spending, most notably to the historic Inflation Reduction Act. There could also be at least a few silver linings.

My view so far is that consumer incentives for clean energy technologies are most at risk. So those generous tax credits you were going to use for electric vehicles, rooftop solar, batteries, heat pumps, and energy efficiency (for your bingo card at home: 30C, 30D, 25C, 25D, 48A, 45W, et al) could be eliminated or reduced.

At the same time, unallocated agency funds are likely to be frozen (thanks, Elon and Vivek), creating an urgent need for funding awardees to complete their contracts before January 20th. Our affected clients are currently doing just that.

Not everything is in clear peril, though. Manufacturing tax incentives (48X) and carbon capture credits (45Q) appear more resilient and may even get a boost — as these programs were strategically designed to benefit Republican states and garner support from fossil fuel industries. And manufacturing stateside — even clean technologies — is after all putting America first. The hydrogen production credits (45V) are likely to survive as well, given oil and gas industry support, though potentially with modifications favoring hydrogen produced with natural gas.

I also reached out to some DC lobbyists to get their take on what might happen next year.

Here’s what I heard:

Say goodbye to EV incentives

“With the upcoming expiration of the Tax Cuts and Jobs Act,” which some people call the Trump tax cuts, “2025 was always going to be a big tax year,” said Kellie Donnelly, executive vice president and general counsel at Lot Sixteen. “While a full IRA repeal may not happen, the GOP will likely need ‘pay-fors’ for its tax package next year.” She specifically mentioned EV incentives and tech-neutral tax credits that do not have a definitive end date.

“I am certain getting rid of the EV credits in some form or fashion is the most important thing for your average Republican,” said Joe Britton, president of Pioneer Public Affairs. But he also pointed out that the potential estimated savings of $100 billion from EV credit modifications represents only a fraction of the approximately $2 trillion in budget savings that Republicans are seeking.

Clean energy manufacturing could fit into "America First" mindset

Manufacturing tax credits designed for clean energy technologies (like 45X) could be relatively insulated, according to Ashley McManus, vice president at Lot Sixteen: “Given that President Elect-Trump ran on expanding American manufacturing and expanding mining in the US, and 45X benefits both, you would think it is more than magical thinking,” that the tax credit will be safe.

According to another GOP lobbyist, “There’s a lot of ‘TBD’ with respect to how active red state governors will be in opposition to Congress gutting 45X. They’re the key to saving it.” The lobbyist pointed to Mississippi as an example. In early 2024, the state approved the second-largest capital investment in its history for a commercial EV battery plant that could create more than 2,000 jobs. “There are dozens of projects like this across the Southeast and a few Midwestern states with GOP governors,” the lobbyist added.

While it’s likely that 45X will stick around, it’s not inevitable. “Industry will need to go in and make the case to Congress to keep it and show the results the credit has already brought to states and districts,” said McManus.

Carbon capture, hydrogen, critical minerals, oh my

Carbon capture and storage (CCS) and carbon removal more broadly could benefit, given support from Republicans like Doug Burgum, Trump’s Interior Secretary nominee who recently approved an underground CO2 storage project.

Climate advocates and the fossil industry might embrace expanded support for CCS because it could lead to 100% carbon capture hydrogen production. “[The oil and gas industry] doesn’t sacrifice anything by being for a new pathway of decarbonization. It's not something that directly competes with them,” said Britton. He added that they get to "tell a positive decarbonization story" while developing new market opportunities.

According to Donnelly, “The incoming Trump administration may elect to retain the hydrogen tax credit,” but she warned that the Biden administration’s proposed guidance which favors certain forms of green hydrogen, “would likely be overturned in litigation in a post-Chevron world.”

The GOP is expected to roll back environmental permitting requirements, which could lead to more critical minerals mining and processing for batteries domestically. According to Britton, domestic mining with onsite processing reduces overall emissions by eliminating overseas transportation. “Your average critical mineral travels like 30,000 nautical miles between mineral development and processing and back,” Britton said. It’s also better than getting it from China.

It’s the states, stupid

As I try to remind everyone often, while the federal election sucks up a lot of oxygen, most meaningful energy regulation happens at the state level, and the leading states remain firmly open for business. California, Massachusetts, New York, Washington, Colorado, and many other states will continue driving forward the energy transition. In fact, Massachusetts just quietly passed a major climate law after the election that advances renewables and slows natural gas. All is not lost. Thank you, federalism.