Implementation of the Energy and Infrastructure Provisions of the Inflation Reduction Act of 2022

Background

The executive order aimed at implementing the energy and infrastructure provisions of the Inflation Reduction Act fundamentally shifted the landscape in American environmental and industrial regulation. It facilitated the allocation of federal funding and incentives to expand clean energy investments, impacting regulatory frameworks across multiple agencies. The Department of Energy, for instance, redirected its focus towards accelerating clean energy technologies, which included home energy efficiency improvements and electric vehicle adoption. The Environmental Protection Agency (EPA) also recalibrated its priorities by reinforcing compliance with greenhouse gas emission standards, in alignment with the Act's goals. These changes precipitated operational adjustments within the federal bureaucracy, prioritizing sustainability projects and collaborations with state governments.

The White House established a dedicated office to orchestrate a comprehensive approach for the effective rollout of the Act’s provisions. Under this order, a Senior Advisor for Clean Energy Innovation and Implementation was appointed, tasked with overseeing interagency efforts. This role ensured streamlined communication and reduced redundancies in regulatory efforts across varied sectors, including transportation, commerce, and defense. As a result, significant administrative resources and staffing adjustments were mobilized, reflecting an all-hands approach within the executive branch to implement the transformational goals set forth. Moreover, this centralized coordination had a trickle-down effect on state and local governments, prompting them to align their own regulatory processes with federal objectives.

Further, the executive order reinvigorated focus on environmental justice, directing federal agencies to pay special attention to communities traditionally burdened by industrial pollution. The Biden Administration emphasized the Justice40 Initiative, aiming to deliver 40% of overall benefits from federal investments in climate and clean energy to disadvantaged communities. This mandate required agencies to reevaluate how programs and projects were designed and their impact assessed, bringing about shifts in how public spending was targeted and evaluated. Critically, these intended benefits extended beyond environmental considerations, posing substantial shifts in employment and economic opportunity landscapes. Union jobs in clean energy sectors received a significant boost, and manufacturing in traditional energy communities saw an influx of resources aimed at revitalizing local economies.

Reason for Revocation

President Trump's decision to revoke the executive order on energy and infrastructure marked a distinct ideological pivot from the policies of his predecessor. This revocation aligned with a wider agenda prioritizing deregulation and fostering growth in traditional energy sectors, such as oil and natural gas. The Trump Administration's focus has traditionally been on reducing what it deems regulatory overreach, arguing that such policies disproportionately burden the business community and inhibit economic growth. Deregulation is frequently framed as a mechanism to unleash American innovation and global competitiveness in energy production.

The ideological shift accompanying this revocation reflects Trump's broader commitment to a pro-business, market-driven approach to energy policy. This approach often dismisses or minimizes the urgency of climate change as understood by contemporary science and emphasizes energy independence through maximizing domestic fossil fuel production. Trump's administration has historically sought to bolster industries perceived as the backbone of the American economy and restore their primacy by scaling back environmental regulations perceived as overly burdensome.

Moreover, the revocation may be seen as part of a strategy to dismantle the institutional frameworks created by Biden that expanded the federal government's role in orchestrating energy policy across states and localities. By removing these structures, the Trump Administration could potentially reduce federal influence and return more regulatory power and decision-making ability to states—particularly those inclined towards traditional energy extraction and production industries.

The revocation also signals a reevaluation of federal spending priorities, favoring direct economic growth stimulants as opposed to what the Trump Administration characterizes as expensive oversight-heavy initiatives with long-term, uncertain benefits. This reprioritization aligns with broader fiscal policies advocating for reduced federal expenditure in social and environmental programs, favoring tax cuts and business incentives as stimulants to economic recovery and growth.

Winners

The revocation immediately favors traditional fossil fuel industries, including major oil and gas corporations like ExxonMobil, Chevron, and ConocoPhillips. Removing regulatory barriers could potentially enhance their operational scope and reduce compliance costs, thereby increasing profitability and market share. Companies in coal mining and related sectors also stand to benefit, as the rollback of stricter emissions standards and related environmental accountability could lead to increased production and reduced operational constraints.

Additionally, the rollback serves as a boon to states heavily dependent on petroleum and coal industries for revenue and employment. States like Texas, West Virginia, and Wyoming may experience a resurgence in these traditional energy sectors, potentially leading to job creation and economic activity in regions economically tethered to these industries. The relaxation of previously mandated environmental considerations ensures these states can continue operations with fewer legal and regulatory hindrances.

Industries related to the construction and maintenance of infrastructure for traditional energy extraction and distribution may also profit. Construction companies engaged in building and expanding pipelines, as well as transportation and logistics firms involved in moving fossil fuels, could see increased activity. Furthermore, certain manufacturing sectors may benefit from lowering costs associated with energy inputs, enabling increased global competitiveness.

Losers

Conversely, the revocation represents a setback for the clean energy sector, notably impacting industries linked to solar, wind, and electric vehicle production. Companies focused on renewable energy, reliant on federal support for growth and technological advancement, such as Tesla, Sunrun, and NextEra Energy, may find their expansion plans hindered by reduced governmental incentives and shifting policy priorities. This change has potential downstream effects on innovation cycles and the global competitiveness of American clean technology.

The decision also impacts marginalized communities that have benefitted from targeted environmental justice programs. The reduction or elimination of programs aimed at alleviating the cumulative impacts of pollution could disproportionately affect low-income and minority neighborhoods situated near industrial sites. Systemic inequities in environmental quality may persist or worsen without federal oversight and accountability driving improvements in local environmental conditions.

Furthermore, labor forces aligned with the burgeoning clean energy economy, particularly unionized workers engaged in manufacturing and assembly of clean energy technologies, face uncertainty. The displacement of planned funding and emphasis on traditional energy could result in a reduction of jobs in the green economy and limit pathways into sustainable careers for future workers. This economic retraction may be especially acute in regions previously identified for economic revitalization through clean energy investments.