With a new Administration in place and a sharp turn in climate and energy policy underway, some are eager to dismantle the Inflation Reduction Act (IRA)—piece by piece, credit by credit. The arguments? The energy transition is bogus (or at least troubled), net zero was a pipedream and in the new DOGE era, we can’t afford it. Further, the market will sort it out, and government should get out of the way.
I don’t disagree with some of these statements, especially on the energy transition and net zero. I have never had any illusion about substantially replacing fossil fuels (maybe ever), and I think affordability and accessibility is a real issue for many in the U.S. But I do think we are beginning to see transport energy technologies emerge that will put us on a more sustainable path: low carbon fuels, SAF, CCS, hydrogen and electrification.
One thing I hear across the board from clients and stakeholders is this: policy stability is crucial and a competitive advantage globally. I hear it so much that “regulatory uncertainty” is about as meaningless a phrase at this point as “value added.” Investors, project developers and manufacturers have made multi-billion-dollar decisions based on the market signals sent by the IRA. If those signals vanish, we stand to lose billions in stranded investments and global competitiveness. Who again would ever want to develop an energy project in the U.S.? There are profound implications here that most especially impact the transport energy space.
Don’t kill the IRA. Fix it.
US$600 Billion in Motion—And It’s Not Just in Blue States
Since the IRA passed in 2022, over US$600 billion in clean energy investments have been announced, according to Rhodium’s Clean Investment Monitor and captured in the graphic below. These aren’t speculative venture capital plays. They’re real-world projects: hydrogen, sustainable aviation fuel (SAF), EV battery and vehicle manufacturing (and associated supply chains), CCS and more. This could be an understatement to a degree because I think biofuels and low carbon fuels projects (non-SAF) tend to be ignored and undercounted.
The majority of this activity (70-80%) is happening in red states—Texas, Georgia, Louisiana, Oklahoma, Iowa. These investments are rebuilding industrial capacity in regions long left behind by globalization. It’s clear that the President wants to repatriate manufacturing and to deglobalize. This is it.
The Economic Stakes Are Only Growing
Repealing the IRA now would be more than a political gesture; it would be an economic shock to add to others that are about to be experienced in the U.S. economy as a result of new tariffs. For example, according to a new analysis this week by the International Council on Clean Transportation (ICCT), a full repeal of the IRA could cost the U.S. 130,000 direct auto manufacturing jobs by 2030—and put another 310,000 indirect jobs at risk. States like Michigan, Texas, Tennessee, Nevada, and California would be especially hard-hit, as shown in the figure below. Presumably, that’s before you incorporate the impact of tariffs.
Source: ICCT, April 2025
These findings build on other recent studies. For example, Energy Innovation Policy & Technology projected earlier this month that repealing the IRA would reduce GDP by over US$160 billion by 2030, increase cumulative household energy costs by $32 billion from 2025-2035 and cost the U.S. nearly 790,000 jobs in 2030 and more than 700,000 jobs in 2035. Texas, California, Pennsylvania, Florida, and Georgia stand out as the biggest losers from IRA repeal.
With reconciliation and tax reform discussions heating up on the Hill, some in Congress are eyeing clean energy tax credits as an easy pay-for. That might seem like fiscal discipline to get rid of the “New Green Scam.” In reality, it would be economic malpractice considering the investments that could be stranded and jobs lost. Seeing the iceberg ahead, at least 21 House Republicans have now spoken out against gutting the IRA’s clean energy provisions—because their states and districts are already benefiting with new factories, more jobs and stronger tax bases.
Look at China—This Is What Long-Term Policy Looks Like
A recent letter from some energy executives to Senate and House leaders notes:
“Clearly, the right thing to do is to eliminate all these subsidies. When lobbyists say that these subsidies are essential for America, what they’re really saying is that their backers have made investments in projects that have no near term cost-effectiveness and that are totally dependent on indefinite subsidies to sustain themselves.”
This is not the world we live in: Governments can and do shape and invest in industrial policies. This is happening around the world right at this moment. One example: President Trump’s new tariff policies. The problem often lies in crafting clear, stable, durable, long-term policies that provide a clear signals to industry and that also provide a return to the country and its citizens (also known as the voters). The IRA is not a perfect policy, and implementation of certain tax credits (clean fuels, hydrogen, for starters) have been clunky at best.
If we want to understand what sustained industrial strategy can deliver from an economic perspective, look at China. The Chinese government has invested more than US$230 billion into EVs and batteries alone since 2009. The government has provided sustained support, created durable and certain policies—and now:
- Over 60% of global EV sales occurred in China in 2023.
- Chinese EV giants like BYD are outselling Tesla.
- China so totally dominates the battery supply chain, it will be hard for other countries (including the U.S.) to ever catch up.
- Exports are growing fast globally—and undercutting global OEM competitors on price and co-opting markets around the world.
That’s what consistent policy support looks like for just one sector.
The States Are Moving Forward
Regardless of what happens with the IRA (and Bipartisan Infrastructure Law), my research shows that state governments are moving forward to set an array of climate-energy-related policies as the federal government appears ready to cede authority on climate-energy matters. In fact, there is so much activity on the state front I had to caveat the figure below by noting these were examples.
Red and blue states want companies to develop clean energy projects and technologies. Without federal leadership, such an approach could end up being problematic especially for OEMs and the refining industries with the potential for a new “patchwork hell” of regulations governing fuels and vehicles.
The Future May Belong to the States—But the Stakes Are Still National
We’re entering a new era of American energy governance—one where the federal government may step back, and states will determine (or attempt to) the pace and shape of growth. Red and blue states alike are taking action in the transport energy space, and most are doing it for jobs, investment and resilience.
This decentralization could unlock innovation. But it could also fracture the energy market and saddle national industries with a patchwork of inconsistent rules. That’s why federal policy still matters. The IRA/BIL began to create the connective tissue of a national energy investment strategy. It wasn’t perfect.
If we strip that away now, we don’t just lose $600 billion++ in investment. We lose the next era of energy and industrial development before we get out of the gate. President Trump is a master marketer and brander. Republicans under his direction have an opportunity to rebrand the IRA/BIL, co-opt it and make it better where needed. Don’t kill it. Fix it.
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