What's Happening?
The recent federal government shutdown is poised to impact clean energy project developers and corporate tax credit buyers, according to an analysis by Crux, a sustainable finance company. While the Internal Revenue Service (IRS) is expected to continue most of its functions if the shutdown is brief, other agencies involved in clean energy grants and permitting are likely to face immediate disruptions. The shutdown has led to a pause in activities funded through annual appropriations, affecting departments such as Treasury, Interior, Energy, and the Environmental Protection Agency (EPA). The Bureau of Land Management and the Bureau of Ocean Energy Management are expected to halt renewable energy activities and non-time sensitive offshore conventional energy activities. The Federal Energy Regulatory Commission (FERC) will also see most activities cease, although public safety and grid reliability functions will continue.
Why It's Important?
The shutdown's impact on clean energy guidance and permitting could have significant repercussions for the U.S. clean energy sector. Delays in regulatory guidance and permitting processes may hinder the progress of clean energy projects, affecting developers and corporate tax credit buyers who rely on timely approvals and guidance. The potential for prolonged disruptions could also affect the broader energy market, as uncertainty may deter investment and slow down the transition to renewable energy sources. Additionally, the shutdown could exacerbate existing challenges in the energy sector, such as staffing shortages and resource constraints, further complicating efforts to meet clean energy goals.
What's Next?
If the shutdown persists, the delays in clean energy guidance and permitting could become more pronounced, potentially leading to significant setbacks for ongoing and planned projects. Stakeholders in the clean energy sector may need to prepare for extended timelines and increased uncertainty. The IRS's continued operations are crucial for companies looking to use 2024 credits, but guidance on foreign entities of concern may be delayed due to furloughed staff at the Office of Management and Budget and other agencies. The situation may prompt calls for legislative action to resolve the shutdown and mitigate its impact on the energy sector.
