Federal Outlook for Geothermal Heat Pumps — GeoExchange Update
Recent actions by the Trump Administration have caused alarm and concern within the geothermal heating and cooling community. It is important to understand the actual impacts of executive orders and their relevance to the industry. It is also vital to recognize what the new 119th Congress might have in store for us.
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. The other category 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 geo industry that might be affected are the IRA-funded, state energy office-led home energy efficiency rebate programs referenced in this map. It is 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 Trump 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 congressmembers 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.
GeoExchange will be on Capitol Hill frequently this year to remind senators and representatives of the unique value proposition of geothermal. The technology is good for homeowners, businesses, the economy, and energy security. Congress should continue to support this common-sense HVAC solution.
If you would like to get involved in our effort to protect the tax credits, we welcome your support. Please reach out to info@geoexchange.org for more information.
Here are some additional links on these topics:
https://legal-planet.org/2025/01/20/surfing-the-wave-of-executive-orders/ [legal-planet.org]