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Donald Trump’s return to the White House has put more than $300 billion in potential federal infrastructure funding at risk, US investors said, as they grappled with the scale of his move to abandon Joe Biden’s climate agenda.
Hours after his inauguration on Monday, Trump signed a slew of executive orders rolling back Biden’s policies, including one that halted federal payments to manufacturers and infrastructure developers.
The funds involved were secured under two legislative accomplishments signed by Biden — the Inflation Reduction Act and the bipartisan infrastructure bill — and include nearly $50 billion in Department of Energy loans already agreed upon and another $280 billion worth of loan requests under review , according to a Financial Times analysis of the DOE’s loan portfolio.
“All agencies will immediately halt the disbursement of funds appropriated” through the acts, the Trump administration said in an executive order titled “Unleash America’s Energy.”
Among the payments currently at risk are a $9 billion conditional loan to Michigan-based utility DTE Energy and another $3.5 billion to Oregon utility PacifiCorp.
DTE did not immediately respond to a request for comment. PacifiCorp said it is working with the department on the terms of the loan guarantee.
“If you had grants, loan guarantees, funding that was somehow tied to an IRA, and the money hasn’t come out yet, it’s going to be very difficult to see that money go out the door under the Trump administration,” Rob Barnett said. , senior analyst at Bloomberg Intelligence.
The executive order was among dozens Trump signed in a late-night telegram after he was sworn in for a second term as president and pledged to end Biden’s “Green New Deal” and increase fossil fuel production.
Trump’s move to freeze funding rattled the clean energy sector and signaled his intention to undermine Biden’s industrial policies, particularly his programs to accelerate 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 New York-based private equity fund. .
The 2021 Infrastructure Act offered $1.2 billion to improve the nation’s transportation system, while the IRA offered $370 billion in tax credits, grants and loans.
Both programs greatly expanded the Energy Department’s Office of Loan Programs, which was responsible for awarding $400 billion to developers and was a favorite target of Republican attacks.
Investors said they feared another $300 billion worth of future federal funding — mostly from the infrastructure bill — would now also be frozen by Trump’s move.
Unlike money at a credit bureau, IRA tax credits — the main form of subsidy in the legislation — likely won’t be affected. Credit has been the primary driver of investment, with manufacturers investing more than $130 billion since the legislation was passed, according to an FT analysis.
Fearing that Trump would freeze the payments, Biden officials rushed through nearly $50 billion in developer loans in the weeks after he won re-election in November.
Trump also wants to stop the construction of wind farms on federal lands and waters and has said he will 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, to produce cables for the offshore wind sector.
Other investors have already scaled back their U.S. renewable energy plans ahead of Trump’s return. German energy giant RWE announced in November that it was withdrawing its US plans for wind power generation.
Nearly 25 GW of offshore wind projects, 65 percent of U.S. projects under development, are unlikely to move forward under the Trump administration, Rystad Energy said Tuesday.
“When you start to look like there’s a lack of stability in an investment that you thought you were making in the US, that has a potentially very negative effect, over the long term, on our ability to attract capital,” said Eli Hinckley, a partner at Baker Botts.
Additional reporting Claire Bushey, Christian Davies, Harry Dempsey, Kana Inagaki, Laura Pitel, Rachel Millard, Attracta Mooney, Stephen Morris, Patricia Nilsson
