The Peace Monument in front of the Capitol dome. Photo: Andrew Caballero-Reynolds/AFP via Getty Images
Lawmakers believe the U.S. energy transition will be rattled by the expected government shutdown.
Why it matters: A shutdown won't completely halt federal climate efforts — but it'll gum up the works and could hurt investor confidence in the U.S. economy, with impacts trickling down to growth sectors like low-carbon energy and tech manufacturing.
Driving the news: Congress is likely to miss the appropriations deadline tomorrow over a standoff with House conservatives with no immediate sign of a resolution.
- It'll delay operations across government, including at DOE, EPA, Interior and Treasury.
- Some efforts to implement the infrastructure law and IRA will continue because they have mandatory funding in place, according to agency contingency plans.
- But lawmakers believe a shutdown will dampen the speed of government permits and the private sector enthusiasm key to making those laws effective.
- "It'll stop and slow down a lot of the investments people were looking for in different types of things, whether it be in fossil or clean energy," Senate Energy and Natural Resources Chair Joe Manchin told Axios.
Zoom in: On permits, Sen. Lisa Murkowski said Deputy Interior Secretary Tommy Beaudreau assured her that while permits may not entirely stop, "you may have slowdowns in permits being issued simply because you don't have some people at the bottom of the chain."
- Per BLM, the agency will "continue certain permitting and related activities in a limited manner utilizing available fee revenues" but "program operations will be scaled back to a level commensurate with available funds during the period of the lapse."
Of note: Democrats told Axios they're worried Treasury may delay issuing more guidance for programs like home rebates for lower-carbon energy siting.
- The Treasury says work on the IRA will continue, but the timelines for tax credit guidance it laid out earlier this month could be impacted.
- "I don't know that I can quantify exactly what it might mean. We've got to see just how deep into the rabbit hole they take us here in the next few days," Rep. Jared Huffman said.
- As EPA Administrator Michael Regan put it during a House hearing this week: "A government shutdown would be detrimental to any work being done on regulations that would help us stay globally competitive and take advantage of technologies that we want to corner the market on."
- Plus, EPA's water quality and Superfund facility inspections will grind to a halt, Regan said.
The big picture: A prolonged freeze in government functions could undermine trust in the U.S. economy in markets around the world, as the nation's credit rating is already wobbling.
- "This game that these Freedom Caucus people are playing to no productive end is undermining the confidence of people here and overseas," said Rep. Steny Hoyer. "As you reign in, that lack of confidence feeds on itself and that leads to a recession."
- And Rep. Lizzie Fletcher told Axios: "My colleagues who seem to be marching us towards this outcome really need to be thinking about the bigger impacts."
The bottom line: Whether President Biden uses executive powers to preserve energy policy in a shutdown "could depend, at least in part, on whether he and his advisers see a political 'win,'" ClearView Energy Partners said in a Wednesday note.
- "Our base case expectation is for the White House to protect the IRA, but the answer could depend on how the White House sees the IRA-inspired greening of red states," ClearView said.
