Critical minerals provisions within the US Inflation Reduction Act would likely survive a second Trump administration, while credits aimed at boosting electric vehicle adoption could be revised or rolled back, analysts told S&P Global Commodity Insights.

President Joe Biden's landmark climate law, enacted in 2022, created a slew of tax credits to boost domestic battery supply chains, starting with the production of lithium, cobalt and other critical minerals. Other provisions in the bill include $11.7 billion in funding for new loans from the US Energy Department's Loan Programs Office (LPO) and $500 million for Defense Production Act expenditures, which can be applied to critical minerals projects. The bill has also driven domestic mine development through its incentives for EV-makers to use metals from the US or allied nations.

A strong Republican performance in the November elections, and the potential reelection of former President Donald Trump, could put Inflation Reduction Act (IRA) rollbacks on the table, though experts say mining provisions have bipartisan support. EV incentives could be reduced in the event of a red wave in November as Republicans generally oppose EV incentives.

"The desire to build out a domestic or at least allied supply chain for critical minerals [and] component supply chains is really something that I think is pretty broadly bipartisan," said Sasha Mackler, executive director of the Energy Program at the Bipartisan Policy Center think tank. "Thinking about the risks there [for overhaul] is a slightly different conversation than what we might see for the policies that would really encourage the use of the critical minerals, like, for example, the electric vehicle policies, which I think are pretty vulnerable if there is a significant change in control."

Republican legislative targets

Exact alterations to the IRA are hard to predict.

"It's about what happens in the election with regard to control of the House and the Senate," said Jamie Wickett, a partner at Hogan Lovells and part of the law firm's global regulatory team. "You really have to go kind of on an issue-by-issue, incentive-by-incentive basis, and different incentives are going to stack up differently between Democrats and Republicans."

Multiple experts said the Clean Vehicle Tax Credit is likely to face stronger revisionary efforts and will potentially be allowed to lapse under a Republican sweep scenario. The Clean Vehicle Tax Credit is also referred to as Internal Revenue Code Section 30D, and it is worth up to $7,500 for EV purchases.

If Republicans win a simple majority in both chambers following the election, they could seek to curb EV credits via passage of a reconciliation bill in 2025 that would scale back or modify the IRA, said Kevin Book, managing director at ClearView Energy Partners, an independent research firm. With a significant majority, members could also try to pare back the filibuster, giving them room to pass multiple pieces of legislation that could target specific sections of the IRA individually.

Some in Republican committee leadership have signaled a willingness to take on IRA reforms. Sen. John Barrasso (R-Wyo.), ranking member on the Senate Energy and Natural Resources Committee, and Rep. Cathy McMorris Rodgers (R-Wash.), chair of the House Energy and Commerce Committee, released a joint report blasting multiple elements of the IRA in October 2023, for example. The report did not specify what changes to IRA mining provisions either member would support, and neither member's office responded to a request for comment.

But the credit, which requires EV-makers to use materials from the US and allied countries, has been a boost to miners and mineral processors outside of China. The Asian economic powerhouse dominates the production and processing of critical minerals.

"The mining companies we're talking to, of course, do care a lot about the ultimate incentives related to EVs because so many of those minerals are going to be going into batteries," Wickett said.

Cancelling regulations

A Republican trifecta could also unlock the Congressional Review Act, which allows Congress to cancel agency rules approved by the current administration. But as elections near, analysts said the Biden administration is racing to release final rules before the date that would open them to review in 2025. Analysts disagree on the exact date, but most point to June.

"There's actually a lot of pressure [on agencies] not only to meet the election timeline but to get the rules out ... to avoid the Congressional Review Act risk that Congress can go in and change the rules," said Mackler. "They're not going to able to get through everything, I think that's clear; there's just so much to be done."

Meanwhile, the Biden administration has vowed to fight efforts to overturn the IRA.

"President Biden and Congressional Democrats will continue fighting Congressional Republicans' efforts to repeal the Inflation Reduction Act, which would threaten billions in private-sector investments in American manufacturing and clean energy, reverse our progress strengthening supply chains and energy security, kill thousands of good-paying jobs, and raise costs for families," a White House spokesperson said in an email.

Executive agency targets

Outside of tax credit language, federal funding from the IRA for renewable energy projects is likely to face cuts under increased Republican control of government, although critical minerals funding will probably be unaffected.

Multiple experts indicated that Trump, if reelected, would likely nominate a leader for the LPO who would slow the pace of grants issued to energy initiatives, while Congress could cut funding to the office as part of appropriations.

"I expect that if Trump gets elected, things that are focused on decarbonization will get less emphasis [in LPO]," said Mary Anne Sullivan, senior counsel in the global regulatory team at Hogan Lovells and former DOE general counsel. "But I don't put critical minerals in that category, particularly since the Defense Department is very keen on improving our strategic supplies of critical minerals."

The Trump campaign did not respond to a request for comment on its priorities for the IRA.

The LPO has entered agreements to issue approximately $5.1 billion to select projects focused on critical minerals and EV battery components with funding from the IRA and the US Infrastructure Investment and Jobs Act, signed into law in November 2021. The LPO also has a combined $217.6 billion in estimated remaining loan authority, according to the DOE.

Likely safe

Some critical minerals-related provisions of the law are likely to face revision, but not reversal, regardless of election outcomes.

The Section 45X Advanced Manufacturing Production Credit, for example, which for miners equals 10% of the cost of production of select critical minerals meeting certain purity standards, could face bipartisan scrutiny. The National Mining Association, a trade group for US miners, has criticized the rule for not doing enough to address the cost of mineral production.

Republicans have previously expressed their support for mining bills, such as rule changes aimed at accelerating mine permitting on federal lands, although Barrasso and McMorris Rodgers appeared to criticize 45X for not doing enough to bar foreign companies from accessing the credit in their joint report.

"I think on 45X that it is likely that a [foreign entity of concern (FEOC)] restriction is added to that," said Wickett, referencing domestic and allied critical mineral and battery content rules forming part of the 30D credit. "You already have bills in the Senate and the House to do just that ... and this is not just coming from the Republican side, you will get Democrats supporting this, too."

Experts said agencies' confusing definition of FEOCs will still likely get a second look, regardless of election outcomes. EV supply chain trade groups have said federal guidance on the credit, which bars automakers from sourcing certain critical minerals and battery components from FEOCs, creates overly burdensome restrictions on foreign political actors' involvement, while the National Mining Association has said the language does not go far enough to curb dependence on nations including China for EV materials.

"A tightening of 30D for the critical minerals and battery components language — the way it's interpreted, the ways it's construed, what qualifies — seems very likely," said Book. The refocus could be a stricter threshold for FEOC ownership of supply chain participants that would narrow the list of compliant suppliers, Book added.