US ELECTIONS: Republicans keep US House, bolstering Trump deregulatory ambitions

Republicans gained full control of the US Congress, adding tailwinds for the incoming Trump administration's deregulatory agenda. The election results also increase risks to clean energy spending through the Inflation Reduction Act and bipartisan infrastructure legislation.

The Associated Press projected late Nov. 13 that Republicans have won 218 of the 435 seats in the US House of Representatives, with nine races still to be called. Republicans had secured 53 seats in the Senate, according to the AP. Former president Donald Trump was declared the winner of the 2024 presidential race on Nov. 6.

Control of the House will enable Republicans to attempt to use the budget reconciliation process to achieve some energy policy goals -- although the expected tight margins in the House could add challenges to that effort.

Budget reconciliation, which requires only a simple majority, is likely to become a central focus of legislative activity in the coming year, as Republican lawmakers try to extend expiring tax cuts enacted during the first Trump administration.

As part of that process, efforts to enshrine into law access to federal lands and waters for future oil and gas drilling and mining are a possible Republican priority.

The Inflation Reduction Act's fee on methane emissions from the oil and gas sector is a likely target for reversal.

House Speaker Mike Johnson, Republican-Louisiana, said Nov. 12 that Republicans' unified government in Washington will "quite literally have to fix almost every metric" of public policy. "The budget reconciliation process is a very efficient means to solving a lot of that -- everything related to the budget and spending and all the rest, regulatory reform."

House Natural Resources Committee Chairman Bruce Westerman, Republican-Arkansas, has said that HR. 1 -- a package of legislation on energy including permitting reforms backed by Republicans in the 118th Congress -- could be a guide for the party's efforts on energy policy in the new Congress. And Westerman has mentioned that parts of that package might be able to be included in the reconciliation bill. In that case, though, the provisions would have to survive an assessment of whether they are relevant to the bill's budget focus.

Tax credit debate ahead

Policy analysts offer mixed views on the extent to which clean energy tax credits under the Inflation Reduction Act will be vulnerable to reversal amid Republican control of Congress.

Credits for electric vehicles were an oft-cited target during the campaign, but investments situated in Republican-held districts could spread political support for the newly funded developments as they translate into local spending and jobs.

If Republicans end up with a slim majority once the final House races are decided, that leaves little room for defections on IRA changes, according to Kevin Book of ClearView Energy Partners. At least a dozen Republican advocates for the IRA went on record to support it in their Aug. 6 letter to Johnson and were likely to be around to push back, Book noted.

"And that probably understates the breadth of support for the tax credits, as well," Book said in a Nov. 8 email. "The same could be said for the Senate."

Book saw the methane fee and credits for commercial vehicles as vulnerable in a Republican-controlled Congress. But more generally, ClearView expects "not a termination, but a trimming of IRA tax credits," he said.

Former Representative Kevin Brady, Republican-Texas, now senior consultant at Akin and Gump, said at the firm's post-election webinar that he expected carbon capture and agricultural biofuels provisions from the law to survive a Republican-controlled congress.

Trump's embrace of unions and labor during the campaign could also moderate the president-elect's stance on the apprenticeship and prevailing wage tax credits in the IRA, Brady said.

"The IRA has sort of a spectrum of issues, all of which will be debated individually," he said.

Energy infrastructure permitting reform is likely to get renewed focus in the next Congress, although the Republican sweep may sap momentum for legislation during the upcoming lame-duck session after the election. In the next Congress, Republicans are likely to seek farther-reaching changes to the National Environmental Policy Act, but a compromise may still be needed to get much through the Senate.

Efforts to undo Biden administration emissions rules for the power, oil and gas, and transportation sectors also could emerge through regular order in Congress, although bills outside of reconciliation would require 60 votes in the Senate.

With full Republican control of Congress, Trump could find support if he rolls out ambitious energy-related measures that go beyond what he can advance administratively.

Still, recent decisions by Trump to select several House Republicans for positions in his administration could bring challenges in the near term to having a working majority present for such initiatives amid a tight vote margin in the House.