The International Ground Source Heat Pump Association provided an update in February on recent actions by President Donald Trump’s Administration and potential impacts on the geothermal industry.
The Inflation Reduction Act and the Infrastructure Investment and Jobs Act (a.k.a. the Bipartisan Infrastructure Law) are comprised largely of two budgetary categories. Direct appropriations for grants, programs, and other specific purposes is the first category. The other one includes the geothermal tax credits.
The first category of IRA/IIJA direct appropriations includes money that has been spent already, money that has been obligated but not spent, and money that hasn’t gone out and hasn’t been obligated/awarded. The language in the Unleashing American Energy Executive Order has relevance for obligated/awarded and unspent funds. Geothermal tax credits are currently unaffected.
One program that has some relevance for the geothermal industry that might be affected are the IRA-funded, state energy office-led home energy efficiency rebate programs referenced in this map.
It's currently unclear if states will see any of the $8.8 billion appropriated for these programs in the IRA. The Biden Administration was taking steps to get funds out to approved states, but the funds have been paused by the executive order. States will argue that the funds were allocated by Congress and legally awarded and therefore must be paid. The question of whether the current administration can “impound” the funds will likely be sorted out in the courts.
Unlike the state-run rebate programs, geothermal tax credits are law and will take an act of Congress to modify or repeal. While the commercial Investment Tax Credit and residential credits are under scrutiny by congressional tax committees, a wholesale repeal is unlikely in a narrowly divided House of Representatives. A handful of Republican Congress members are urging their colleagues to protect tax credits.
Any action on taxes will be undertaken through the budget reconciliation process. This is the same legislative maneuver that was used to pass the IRA and requires only a simple majority of votes in the Senate. House Republicans released an overview of the process that includes their legislative priorities for reconciliation. Click here to read more.
The NGWA and WQA 2025 Fly-In will take place March 25-26 in Washington, D.C., and connect attendees with key decision-makers in Congressional offices, government agencies, and departments to foster better working relationships and understanding about geothermal. Click here for more information on NGWA’s funding and policy priorities.