At Cape Fear Solar Systems, we believe energy independence is for everyone. With the current political climate, we strive to remain as nonpolitical as possible. With that being said, though policy is inherently political, our aim with this article is simply to provide education on the history of solar policy to try to get an understanding of how it could develop in the next four years.
On March 5, we hosted a webinar discussing the current state of solar funding and incentives under this new administration.
Below is a further breakdown of the timeline of solar funding, what the administration was trying to do, and how it could affect tax credits.
Current-Administration Solar Grant Funding Timeline
On his first day in office, President Trump signed a series of executive orders to rescind executive actions from the previous administration, including Unleashing American Energy, which sets forth the new energy policy of the United States and issues an immediate pause on all disbursement of Federal funds appropriated through the Inflation Reduction Act of 2022 (IRA) and the Infrastructure Investment and Jobs Act (IIJA) that contravene with the principles set forth in the new policy. This was clarified the next day in a memo from the Office of Management and Budget (OMB) clarifying that pause “only applies to funds supporting programs, projects, or activities that may be implicated by the policy established in Section 2 of the order.”
The OMB then followed up with a memo on January 27 to all federal agencies that temporarily suspended the disbursement of Federal funds to such programs, but was rescinded after two days, when a judge issued a temporary stay on the evening of Tuesday, January 28. The following Monday, grant recipients for several Environmental Protection Agency (EPA)-administered grant programs, including $7-billion Solar for All, which provides solar for low-income and disadvantaged communities, still couldn’t access their awarded funds, leading another federal judge to issue a temporary restraining order to “halt all remnants of the spending freeze.” On February 4, the EPA released an internal memo from acting-CFO Gregg Treml, stating, “Consistent with the order, the agency’s financial system will now enable the obligation of financial assistance.” It goes on to state that the “EPA’s Office of Budget will follow up with a detailed list of the programs that should now receive disbursements,” including those within the IRA and IIJA.
On March 5, Solar for All sent out an email announcing that they were officially (finally) able to access their funds.
What Was Trump Trying to Do?
In an attempt to break through the confusion that is circulating the industry right now, let’s take a look at what Unleashing American Energy was actually attempting to do.
Per the executive order, the new, official national energy policy is outlined in the following bulleted summaries:
- 2(a) encourages the energy exploration and production on federal lands/waters
- 2(b) refers to strengthening domestic supply chains by increasing American production and processing of non-fuel minerals–including rare earth minerals
- 2(c) describes ensuring reliable energy in every U.S. state and territory to protect economic and national security and military preparedness
- 2(d) states that all energy regulations must have legal grounds
- 2(e) vows to promote consumer choice by eliminating emission waivers and EV mandates that place restrictions on gasoline-powered vehicle sales
- 2(f) refers to increasing market competition and innovation to give consumers a broader choice of goods and appliances (with a list of products have relied heavily on energy-efficiency ratings)
- 2(g) ensures that reports on global effects of a rule, regulation, or action will be separated from reports of its domestic costs/benefits to ensure the American people are prioritized
- 2(h) guarantees all executive departments/agencies provide the opportunity for public comment and peer-reviewed scientific analysis
- 2(i) ensures no federal funds will be disbursed on initiatives that contravene with the aforementioned principles, unless legally required
Overall, this aligns pretty directly with Trump’s campaign promises to put America first and rescind Biden’s executive actions to reduce greenhouse gas emissions–specifically those in the Green New Deal, IRA, and IIJA.
Programs and regulations with federal funding (different than tax credits) from these acts that also contravene with the new national policy include those dealing with:
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EV manufacturing
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Methane emission
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Green banks
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Energy efficiency
Do you know what’s not included? Solar.
So why was solar funding also temporarily paused with the executive order? In short, because of lack of clarity and agencies’ fear of not complying. But can Trump legally withhold discretionary spending for the ‘offending’ programs? According to the Impoundment Control Act of 1974, not without prior Congressional approval–hence the court orders.
What is Trump’s Stance on Solar?
With his outspokenness on repealing the Green New Deal, many people would assume that Trump and, by extension, his administration would be anti-solar. The reality is actually quite the opposite.
During his debate on September 10, 2024, Trump stated that he is “a big fan of solar,” just not of the massive solar farms. In simple terms, our president and his newly-confirmed Secretary of the Department of Energy (DOE), Chris Wright, simply don’t think solar can completely “replace most of the energy services and raw materials provided by hydrocarbons” at scale for the foreseeable future.
A December 2024 DOE report found that, especially with the rise of energy-demanding data centers needed for artificial intelligence, “lower-carbon sources of power aren’t coming online fast enough to replace older, dirtier power plants as they shut down,” particularly on the east coast. And President Trump has made it very clear that he wants the United States to be “at the forefront of artificial intelligence innovation,” both during his previous administration and this one.
When looking at the below irradiance map from the National Renewable Energy Laboratory (NREL), it makes sense from a national perspective that solar energy might not make the most financial sense to all areas of our country. And we can respect that–someone in rainy Seattle, Washington definitely has a different climate than our sunny, coastal region.
Secretary Wright did promise in his confirmation hearing that he would “work tirelessly to implement [Trump’s] bold agenda as an unabashed steward for all sources of affordable, reliable and secure American energy,” including “oil and natural gas, coal, nuclear power and hydropower, along with wind and solar power and geothermal energy.” While he and the president may favor fossil fuels, the secretary told the Senate that “he would try to increase U.S. power supplies to help lower electricity prices.” This is akin to expanding the nation’s energy “portfolio,” rather than replacing solar with hydrocarbons.
How Does the Executive Order Affect Incentives & Subsidies?
When Congress passed the IRA in 2022, it embedded solar and EV tax credits into the tax code. While Trump has stated his interest in getting rid of the EV subsidies, it will take an act of Congress to rewrite the tax code. Interestingly enough, Tesla-founder and the Department of Government Efficiency (DOGE)-head Elon Musk has embraced this idea, stating that it could only help Tesla by reducing the competition of other manufacturers.
As of right now, the president has made no statements in regards to targeting the solar tax credits.
If Congress were to rewrite the tax code to do away with any incentives, they would need a 51-vote majority to pass the new law, or either a 60-vote (two-thirds) supermajority or budget reconciliation to avoid any delays with a filibuster. (Ironically enough, budget reconciliation is how the IRA got passed in 2022.) While Republicans hold very slim majorities, with 53 of the 100 seats in the Senate and 218 of the 435 seats in the House, there are quite a few Republicans that are against fully repealing the IRA. House Speaker Mike Johnson, himself, has also said that ‘they expect to take a ‘scalpel’ to the IRA rather than a ‘sledgehammer.'”
As Trump has long been a supporter of bolstering the American economy by bringing more overseas manufacturing and, by extension, jobs to the States, it’s unlikely that all solar incentives will be on the chopping block. After all, a lot of IRA-related spending has led to manufacturing investment in politically-red areas.
Final Thoughts
It is interesting to note that the language presented in this executive order doesn’t mention limiting the eco-friendly options of electric/hybrid vehicles or energy-efficient appliances. Rather, it specifies “removing regulatory barriers” that restrict the manufacturing of non eco-friendly options and promoting true “consumer choice.”
During a press briefing, Wright encouraged businesses to “build EVs, innovate EVs, sell them. Consumers will buy them. We’re all for all of that. We’re just not for reducing choice and taking American taxpayer money to subsidize wealthy people.” Trump’s most recent pledge to purchase a Tesla echoes Wright’s later statement, that “across this administration, there’s fans of electric cars–plenty of owners of electric cars in this administration.”
As consumers, we truly vote with our dollars, and, if we decide to dedicate our dollars to the products that align with our values, corporations will continue to invest more money into whatever has the highest demand. When you purchase “green” you cast your vote.
