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Donald Trump’s return to the White House puts more than $300 billion in potential federal infrastructure funding at risk, U.S. investors said, as they grapple with the scale of his decision to dismantle the program Joe Biden’s climate change.
Hours after his inauguration Monday, Trump signed numerous executive orders reversing Biden’s policies, including one suspending federal disbursements to manufacturers and infrastructure developers.
The affected funds were provided as part of two of Biden’s signature legislative achievements – the Inflation Reduction Act and the bipartisan Infrastructure Act – and include nearly $50 billion in loans from the Department of Agriculture. Energy already awarded and another $280 billion in loan applications under review, according to Financial Times analysis. of the DOE loan portfolio.
“All agencies must immediately suspend the disbursement of funds affected” by these laws, the Trump administration declared in an executive order entitled “Unlocking American Energy”.
Among the disbursements now in immediate jeopardy are a $9 billion conditional loan to Michigan-based utility DTE Energy and another $3.5 billion to Oregon-based utility PacifiCorp.
DTE did not immediately respond to a request for comment. PacifiCorp said it was working with the ministry on the loan guarantee terms.
“If you had grants, loan guarantees, funding that was somehow tied to the IRA and the money hadn’t come out yet, it would be very difficult to see that money come out under the Trump administration ” said Rob. Barnett, senior analyst at Bloomberg Intelligence.
The executive order was among dozens signed by Trump in a late-night blitz after he was sworn in for a second presidential term and promised to end Biden’s “Green New Deal” and increase fossil fuel production.
Trump’s decision to halt funding sent shockwaves through the clean energy sector and signaled his intent to undermine Biden’s industrial policy, particularly his programs aimed at accelerating the energy transition.
“The executive orders indicate that federal funding for electric vehicle and battery manufacturing will be more difficult to access, increasing the risk of stranded capital for manufacturing projects already underway,” said Shay Natarajan of Mobility Impact Partners, a private equity fund based in New York.
The Infrastructure Act of 2021 provided $1.2 billion to improve the nation’s transportation system, while the IRA offered $370 billion in tax credits, grants and loans.
Both programs significantly expanded the Energy Department’s Office of Loan Programs, which is responsible for distributing $400 billion to developers and has been a prime target of Republican attacks.
Investors said they feared that an additional $300 billion in future federal funding — mostly from the infrastructure law — would now also be frozen by Trump’s decision.
Unlike loan office money, IRA tax credits – the primary form of subsidy under the legislation – are unlikely to be affected. Credits have been a key driver of investment, with manufacturers committing more than $130 billion since the law was passed, according to the FT analysis.
Fearing that Trump might decide to halt disbursements, Biden officials made nearly $50 billion in loan commitments to developers in the weeks after his re-election in November.
Trump also wants to stop the construction of wind farms on federal lands and waters and said he would end “unfair subsidies” for electric vehicles. Shares of Tesla, Rivian, Ørsted and other electric vehicle and wind companies fell on Tuesday.
This week, Italian cable maker Prysmian Group announced it was abandoning plans to build a factory in Somerset, Massachusetts, that would have made cables for the offshore wind sector.
Other investors had already scaled back their US renewable energy projects in the United States before Trump’s return. German energy giant RWE announced in November that it was withdrawing its wind power projects in the United States.
Nearly 25 GW of offshore wind projects, or 65% of U.S. projects in development, are unlikely to advance under the Trump administration, Rystad Energy said Tuesday.
“When you start to give the impression that there is a lack of stability in the investment that you were thinking of making in the United States, that has a potentially very negative effect, in the long term, on our ability to attract capital ” said Eli Hinckley, a partner at Baker Botts.
Additional reporting by Claire Bushey, Christian Davies, Harry Dempsey, Kana Inagaki, Laura Pitel, Rachel Millard, Attracta Mooney, Stephen Morris, Patricia Nilsson