Updated: February 21, 2025
Executive Summary
- President Trump issued Executive Order 14154 “Unleashing American Energy” on his first day in office, which caused for an immediate pause in the dispersement of funds under the Inflation Reduction Act and Bipartisan Infrastructure Law.
- Subsequent clarification from the White House limits the scope to projects – most notably electric vehicles and EV infrastructure – that is in conflict with US priorities as outlined in the Executive Order.
- OMB M-25-13 was issued on January 27, 2025 and rescinded on January 29, 2025. Executive Order 14154 was not affected by OMB M-25-13.
- Grant and loan programs, particularly those such as Renew America’s Schools that include funding for Electric Vehicles and Infrastructure, are paused pending further guidance.
- Rural Energy for America Program (REAP) has funding under both the Inflation Reduction Act and the Farm Bill. Funding under the IRA has been paused, but funding under the Farm Bill continues to be active.
- Tax credits and deductions are unaffected by the Executive Order, as the US Constitution grants Congress the right to levy taxes, not the Executive Branch.
- Further guidance is expected from the White House and Congress in the coming months.
Background on Executive Order 14154 “Unleashing American Energy”
On January 20, 2025, President Trump issued the Executive Order 14154 “Unleashing American Energy,” which outlines priorities around energy. Section 7 of the Executive Order calls for an immediate “pause in the disbursement of funds” appropriated through the Inflation Reduction Act and Investment Infrastructure and Jobs Act (also known as the Bipartisan Infrastructure Law), and introduces significant uncertainty for projects that are already in progress and for those currently being planned.
In a subsequent clarification memo M-25-11, issued on January 21, 2025, the White House added clarification that the pause “only applies to funds supporting programs, projects, or activities that may be implicated by the policy established in Section 2 of the order”.
Section 2 of “Unleashing American Energy” outlines that it is the priority of the United States to:
- to encourage energy exploration and production on Federal lands and waters, including on the Outer Continental Shelf, in order to meet the needs of our citizens and solidify the United States as a global energy leader long into the future;
- to establish our position as the leading producer and processor of non-fuel minerals, including rare earth minerals, which will create jobs and prosperity at home, strengthen supply chains for the United States and its allies, and reduce the global influence of malign and adversarial states;
- to protect the United States’s economic and national security and military preparedness by ensuring that an abundant supply of reliable energy is readily accessible in every State and territory of the Nation;
- to ensure that all regulatory requirements related to energy are grounded in clearly applicable law;
- to eliminate the “electric vehicle (EV) mandate” and promote true consumer choice, which is essential for economic growth and innovation, by removing regulatory barriers to motor vehicle access; by ensuring a level regulatory playing field for consumer choice in vehicles; by terminating, where appropriate, state emissions waivers that function to limit sales of gasoline-powered automobiles; and by considering the elimination of unfair subsidies and other ill-conceived government-imposed market distortions that favor EVs over other technologies and effectively mandate their purchase by individuals, private businesses, and government entities alike by rendering other types of vehicles unaffordable;
- to safeguard the American people’s freedom to choose from a variety of goods and appliances, including but not limited to lightbulbs, dishwashers, washing machines, gas stoves, water heaters, toilets, and shower heads, and to promote market competition and innovation within the manufacturing and appliance industries;
- to ensure that the global effects of a rule, regulation, or action shall, whenever evaluated, be reported separately from its domestic costs and benefits, in order to promote sound regulatory decision making and prioritize the interests of the American people;
- to guarantee that all executive departments and agencies (agencies) provide opportunity for public comment and rigorous, peer-reviewed scientific analysis; and
- to ensure that no Federal funding be employed in a manner contrary to the principles outlined in this section, unless required by law.
M-25-11 further states that for “the purposes of implementing section 7 of the Order, funds supporting the “Green New Deal” refer to any appropriations for objectives that contravene the policies established in section 2. Agency heads may disburse funds as they deem necessary after consulting with the Office of Management and Budget.”
M-25-13 Issued and Rescinded
On January 27, 2025, OMB M-25-13 was issued by the White House. It listed sweeping pauses in federal spending, affecting most government programs. The White House rescinded M-25-13 on January 29, 2025.
Executive Order 14154 “Unleashing American Energy” was not affected by the issuance and recension of M-25-13.
Analysis of the Effects of Executive Order 14154 “Unleashing American Energy” on Clean Energy Projects
General Impact on Tax Credits and Deductions
Executive Order 14154 “Unleashing American Energy” (and its follow up memo) collectively are unclear on what programs are and are not impacted. Until further clarification is provided, all projects have some level of risk of their incentives being taken away by executive and/or legislative action.
However, while the Executive Order calls on an immediate pause in funding, this most directly impacts grant and loan programs funded through the IRA and IIJA, rather than tax credits and tax deductions which are administered by the IRS through U.S. Tax Code.
U.S. Constitution, Article I, Section 8 explicitly grants Congress the power to lay and collect taxes, which includes the creation and modification of tax credits. Executive orders, issued by the President, do not have the authority to alter the tax code itself. Any changes to federal tax code, such as those related to renewable energy, electric vehicles, and energy efficiency, would need to be enacted by Congress through new legislation. Even if/when such changes are proposed, existing IRS guidance typically remains valid until Congress passes new laws and the IRS issues updated guidance.
Impact on Solar Energy Projects
Solar is not mentioned in Executive Order “Unleashing American Energy”, so further clarity is needed from the White House of any intention to include or exclude solar from its priorities. Solar is not in conflict with any of the Section 2 priorities so should not impacted by the funding pause. Additionally, as most solar incentives are tax credits or deductions, most standard solar projects would benefit from similar tax incentives as before the Executive Order. This includes the 25D Residential Clean Energy Credit for residential projects and some commercial solar projects under Section 48, 48E, 45 and 45Y), which are detailed further below.
Further guidance is needed to clarify the impact of the Executive Order on Renewable Energy Projects.
Residential Solar Investment Tax Credit (25D Residential Clean Energy Credit)
For residential solar installations under Section 25D that were installed in 2024, the Executive Order has no impact. Taxpayers can file for their Investment Tax Credit with their annual tax filing under the procedures of the Inflation Reduction Act. The Section 25D credit offers a 30% tax credit for eligible solar PV systems and battery storage systems.
For 2025 residential solar installations, Section 25D current remains unchanged and in effect. If an executive or congressional act changes this, projects that have relied on guidance available at the time of contract execution in good faith can claim the credits on their appropriate tax return.
Commercial Solar ITC and PTC (Section 48, 48E, 45 and 45Y)
Commercial Solar project Investment Tax Credits (Section 48 and 48E) and Production Tax Credits (Section 45 and 45Y) for 2024 projects are not impacted by the Executive Order and can claim tax credits upon completion.
For commercial projects beginning in 2025, Section 48E and 45Y remain in effect. If an executive or congressional act changes this, projects that have relied on guidance available at the time of contract execution in good faith can claim the credits on their appropriate tax return.
It is less clear if tax exempt entities that have claims for IRS Elective Payment under solar will be provided the Elective Pay rebate. See IRS Elective Payment section for more details.
Energy Efficient Commercial Buildings (Section 179D)
The Section 179D Energy Efficient Commercial Buildings deduction, enacted with the EPAct in 2006 and greatly expanded through the Inflation Reduction Act of 2022, provides a tax deduction for energy efficiency upgrades to commercial buildings. In 2025, that deduction is up to $5.81 per square foot.
Section 179D is not in conflict with any priorities outlined in Section 2 of “Unleashing American Energy” and is a tax deduction rather than tied to federal funding. The Executive Order has no impact on Section 179D deduction claims.
Electric Vehicle Tax Credits
Item e) of “Unleashing American Energy” Section 2, specifically prioritizes ending the “EV mandate” and mentions eliminating subsidies for electric vehicles across public, commercial and individuals.
The tax credits under Section 30D (Clean Vehicle Tax Credit), Section 25E (Used Clean Vehicle Credit), and Section 40W (Commercial Clean Vehicle Tax Credit) are all at high risk based on the Executive Order. While constitutional authority ultimately falls to Congress for tax code, an intention of the order appears to be to stop funding and subsidies for electric vehicles, and it is likely this issue will either be swiftly addressed in Congress or will be decided in federal courts.
Further guidance is needed to clarify the impact of the Executive Order on electric vehicle tax credits.
IRS Elective Payment for Tax Exempt Entities
Under the Inflation Reduction Act, tax exempt entities (i.e. municipalities, nonprofits) can receive tax rebates through a process called IRS Elective Payment or Direct Pay. These payments are made by the IRS as a rebate to tax exempt entities through a pre-registration and tax filing process. Eligible projects for elective payment include commercial solar projects, commercial electric vehicles, and certain electric vehicle infrastructure projects.
It is unclear how IRS Elective Payments will be handled, and if it is viewed as a dispersement of funding that must be paused. If, for example, a school district is owed direct payment for electric buses placed in service in 2024, will the dispersement of that rebate be in violation of Section 7 (and Section 2) of the Executive Order?
Further guidance is needed to clarify the impact of the Executive Order on IRS Elective Payment.
Rural Energy for America Program (REAP)
REAP was enacted as part of the 2002 Farm Bill, extended many times. Additionally, REAP was provided additional funding under different rules under the Inflation Reduction Act of 2022.
Under the Farm Bill, REAP provides a 25% grant for renewable energy projects, capped at $500,000 per project. With $50,000,000 in funding earmarked for 2025, the Farm Bill REAP program is administered federally by the USDA national office.
The Inflation Reduction Act of 2022 added additional funding for REAP and made many changes to the program. Notably, the IRA REAP program provides a 50% grant (up t0 $1,000,000) to eligible agricultural producers and small rural businesses for renewable energy (i.e. solar) and energy efficiency projects. Additionally, instead of being administered nationally, the USDA allocates funds to each state, and the State USDA office administers the competition and funding.
Executive Order 14154 “Unleashing American Energy” has been interpreted by the USDA to pause dispersement of funding under the Inflation Reduction Act funding for REAP. Because REAP funds are typically obligated before the project begins but dispersed upon project completion, there are many projects in progress that have been obligated funds that have not be dispersed.
However, because the Farm Bill funding for REAP was not impacted by Executive Order 14154, this program is still operating and funding projects, with the next competition currently scheduled for March 31, 2025.
While dispersement of funds under the Inflation Reduction Act REAP program are currently paused, the renewable energy and energy efficiency funding are not in conflict with American priorities as outlined in Section 2 of Executive Order 14154. Thus, while funding is delayed, it would seem likely to eventually be released.
While not directly related to the recent Executive Orders, it is important to note that on December 19, 2024, the USDA issued a memo that paused competitions under Inflation Reduction Act funding until at least July 1, 2025. In the stakeholder announcement, it stated the “decision will allow USDA time to decide the necessary resources and attention to the growing backlog of applications.”
Renew America’s Schools Program
The Renew America’s Schools Program is a Department of Energy Grant program funded under the Investment in Infrastructure and Jobs Act. It provides funding for schools to invest in renewable energy, energy efficiency, electric vehicle, and infrastructure projects. It is currently accepting applications for the 2025 funding cycle through the Renew America’s Schools program page.
With Executive Order “Unleashing American Energy” pausing funding for programs that in conflict with Section 2 of the order, it is likely that the program will not disperse funds based on current program guidelines.
Further guidance is needed to clarify the impact of the Executive Order on Renew America’s Schools program.
Other Programs
With over 230 programs enacted or modified by the Inflation Reduction Act and Investment in Infrastructure and Jobs Act, the impacts of a pause in certain funding impacts far and wide on renewable energy and infrastructure projects.
Several programs, including the EPA’s Climate Pollution Reduction Grants Program have announced formal pauses in funding during the 90 evaluation period outlined by Executive Order 14154.
Further guidance is needed to clarify the impact of the Executive Order on many of these programs to reduce uncertainty on these investments.
Conclusion
The pause in federal funding and disbursement processes created by Executive Order “Unleashing American Energy” has raised considerable uncertainty for projects that rely on tax credits, grants, and loans under the IRA and IIJA.
Clarification from the White House and further guidance from federal agencies is needed to reduce the impact of these delays on ongoing and planned projects.
At Regenerative Shift, we remain committed to providing our clients with timely updates and guidance as we navigate these evolving circumstances together.
