Government shutdown poised to delay billions from Biden’s climate law

A U.S. government shutdown is poised to delay billions of dollars in clean-energy incentives from President Joe Biden’s signature climate law at a pivotal time for investment, senior White House adviser John Podesta said Tuesday. 

“It will be a huge problem,” Podesta, who is responsible for implementation of the Inflation Reduction Act, told reporters in Washington. “It will slow everything down.” 

The Treasury Department is in the midst of writing rules for how it will distribute the measure’s tax credits from hydrogen projects to low-carbon aviation fuel, but work on that guidance could grind to a halt if the government closes, Podesta said. While the climate law included hundreds of billions of dollars in incentives for clean-energy initiatives, industry has been awaiting specific details from the Treasury on how they can claim those credits and who will qualify. 

“That means we can’t do critical tasks like Treasury getting the guidance out that is really important,” Podesta said following remarks at a conference held by the Department of Energy’s Loan Programs Office and the Cleantech Leaders Climate Forum. “It causes challenges to the functioning of government including our ability to move forward with guidance that’s critical to get private-sector investment going.”

Aside from particulars on hydrogen and sustainable aviation fuels, the next tranche of guidance Treasury is working on is set to address incentives for energy-efficient homebuilding and a tax credit for manufacturers of solar panels, wind turbines, fuel cells and other clean-energy equipment, assistant secretary for tax policy Lily Batchelder told reporters Sept. 8. 

The Internal Revenue Service is also seeking to provide guidance on the foreign entity of concern requirements underpinning a popular consumer tax credit for electric vehicles.

Podesta’s remarks come just days before a lapse in federal funding that would shutter a host of public services as Congress struggles to pass a short-term spending bill needed to keep the government open past the new fiscal year beginning Oct. 1.

— With assistance from Jennifer A. Dlouhy