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Trump plans to dismantle Biden’s climate law. It won’t be easy

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President-elect Donald Trump will be empowered by Republican gains on Capitol Hill to pull back portions of the Democrats’ signature climate law he calls “the green new scam,” which devoted hundreds of billions of dollars to subsidizing emission-free energy.

Just don’t expect a wholesale repeal of the Inflation Reduction Act.

“We are not looking at immediate, drastic, apocalyptic changes overnight,” said James Lucier, managing director at research group Capital Alpha Partners. “But there is always a strong likelihood that some parts of the IRA are going to be capped or phased out.” 

Donald Trump during an election night event in West Palm Beach, Florida
Donald Trump during an election night event in West Palm Beach, Florida

Win McNamee/Photographer: Win McNamee/Getty

The IRA fused climate policy with industrial policy, subsidizing electric vehicle, battery and solar manufacturing and other enterprises that will help the U.S. decarbonize. Trump’s return will put the resiliency of this approach to the test. 

The law is driving a wave of investment in red districts. Some GOP lawmakers, loath to give that up, have already said they don’t support making significant changes to the law. And although no Republicans voted for the measure two years ago, some of its incentives, such as credits for producing hydrogen and capturing carbon dioxide, are very popular with oil companies and other core GOP constituencies.

Gina McCarthy, a former White House climate adviser and managing co-chair of the climate coalition America Is All In, called any attempt to roll back the IRA “a fool’s agenda.” 

“Republican members of Congress have been joining hundreds of business leaders at ribbon cuttings and groundbreaking ceremonies” for IRA-supported projects, McCarthy said. (America Is All In is supported by Bloomberg Philanthropies, the philanthropic organization of Michael Bloomberg, the founder and majority owner of Bloomberg News parent Bloomberg LP.)

But Trump’s presidency is almost certain to usher in new restrictions, expiration dates and caps that narrow its scope. That could help offset the costs of extending Trump’s 2017 tax cuts before they expire next year, a top priority of the president-elect and other Republicans. 

The IRA “is the doomsday machine for the budget,” Scott Bessent, a top Trump economic adviser and potential Treasury Secretary pick, who serves as chief executive at the hedge fund Key Square Group, told CNBC. “I think the priority is going to be turning off the IRA.”

ClearView Energy Partners said in a note Thursday that top targets for elimination in the law include credits for used and commercial EVs; a fee on methane emissions levied on oil and gas producers; and billions of dollars in authority given to an Energy Department loan program. A clawback of unused funds for federal climate programs is possible, as is “an attempt to claw back obligated-but-undistributed balances,” the Washington-based consulting firm said.

The success of such efforts is likely contingent on the size of the expected Republican majority in the House. While many races have yet to be called, Republicans appear on track to hold at least a slim majority. They would likely need a much larger one to make major cuts to the law. 

Changes could happen administratively, too. Even without action from Congress, IRA opponents say, the Treasury Department could tighten rules around who can claim tax credits. For instance, strict rules on the sourcing of materials from China and other foreign adversaries, put in place for electric vehicle tax credits, could be applied more broadly to other incentives, such as the advanced manufacturing credit for solar panels and other clean-energy technologies. 

A policy that allows leased electric vehicles to evade those requirements, derided by critics as the “leasing loophole,” is almost certainly done for, analysts say. 

Other rules requiring the use of domestically sourced contents will likely be made more stringent, while bonus credits, such as those for projects built in “energy communities,” could be narrowed. 

Taking a scalpel — not a sledgehammer — to the IRA would still generate revenue to help pay for a tax cut extension. Some lawmakers have already advanced plans to bar companies tied to China and other so-called “foreign entities of concern” from collecting tax credits under the law. That would scale back the expected payouts and align with Republican interests in separating U.S. supply chains from China.

A Republican Congress is also likely to phase out a pair of technology-neutral clean electricity generation credits that go into effect next year. Those credits alone, expected to benefit utility-scale solar and onshore wind, could be a ripe target for lawmakers looking for budget cuts, since they aren’t set to end until the later part of 2032 or until carbon dioxide emissions from the U.S. electricity sector decline to at least 75% below 2022 levels. Some analysts have predicted that won’t happen for another 30 to 40 years. 

“We are talking decades, and definitely trillions of dollars,” said Ryan Sweezey, a director at energy research firm Wood Mackenzie Ltd.

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Accounting

IAASB tweaks standards on working with outside experts

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The International Auditing and Assurance Standards Board is proposing to tailor some of its standards to align with recent additions to the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants when it comes to using the work of an external expert.

The proposed narrow-scope amendments involve minor changes to several IAASB standards:

  • ISA 620, Using the Work of an Auditor’s Expert;
  • ISRE 2400 (Revised), Engagements to Review Historical Financial Statements;
  • ISAE 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information;
  • ISRS 4400 (Revised), Agreed-upon Procedures Engagements.

The IAASB is asking for comments via a digital response template that can be found on the IAASB website by July 24, 2025.

In December 2023, the IESBA approved an exposure draft for proposed revisions to the IESBA’s Code of Ethics related to using the work of an external expert. The proposals included three new sections to the Code of Ethics, including provisions for professional accountants in public practice; professional accountants in business and sustainability assurance practitioners. The IESBA approved the provisions on using the work of an external expert at its December 2024 meeting, establishing an ethical framework to guide accountants and sustainability assurance practitioners in evaluating whether an external expert has the necessary competence, capabilities and objectivity to use their work, as well as provisions on applying the Ethics Code’s conceptual framework when using the work of an outside expert.  

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Accounting

Tariffs will hit low-income Americans harder than richest, report says

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President Donald Trump’s tariffs would effectively cause a tax increase for low-income families that is more than three times higher than what wealthier Americans would pay, according to an analysis from the Institute on Taxation and Economic Policy.

The report from the progressive think tank outlined the outcomes for Americans of all backgrounds if the tariffs currently in effect remain in place next year. Those making $28,600 or less would have to spend 6.2% more of their income due to higher prices, while the richest Americans with income of at least $914,900 are expected to spend 1.7% more. Middle-income families making between $55,100 and $94,100 would pay 5% more of their earnings. 

Trump has imposed the steepest U.S. duties in more than a century, including a 145% tariff on many products from China, a 25% rate on most imports from Canada and Mexico, duties on some sectors such as steel and aluminum and a baseline 10% tariff on the rest of the country’s trading partners. He suspended higher, customized tariffs on most countries for 90 days.

Economists have warned that costs from tariff increases would ultimately be passed on to U.S. consumers. And while prices will rise for everyone, lower-income families are expected to lose a larger portion of their budgets because they tend to spend more of their earnings on goods, including food and other necessities, compared to wealthier individuals.

Food prices could rise by 2.6% in the short run due to tariffs, according to an estimate from the Yale Budget Lab. Among all goods impacted, consumers are expected to face the steepest price hikes for clothing at 64%, the report showed. 

The Yale Budget Lab projected that the tariffs would result in a loss of $4,700 a year on average for American households.

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Accounting

At Schellman, AI reshapes a firm’s staffing needs

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Artificial intelligence is just getting started in the accounting world, but it is already helping firms like technology specialist Schellman do more things with fewer people, allowing the firm to scale back hiring and reduce headcount in certain areas through natural attrition. 

Schellman CEO Avani Desai said there have definitely been some shifts in headcount at the Top 100 Firm, though she stressed it was nothing dramatic, as it mostly reflects natural attrition combined with being more selective with hiring. She said the firm has already made an internal decision to not reduce headcount in force, as that just indicates they didn’t hire properly the first time. 

“It hasn’t been about reducing roles but evolving how we do work, so there wasn’t one specific date where we ‘started’ the reduction. It’s been more case by case. We’ve held back on refilling certain roles when we saw opportunities to streamline, especially with the use of new technologies like AI,” she said. 

One area where the firm has found such opportunities has been in the testing of certain cybersecurity controls, particularly within the SOC framework. The firm examined all the controls it tests on the service side and asked which ones require human judgment or deep expertise. The answer was a lot of them. But for the ones that don’t, AI algorithms have been able to significantly lighten the load. 

“[If] we don’t refill a role, it’s because the need actually has changed, or the process has improved so significantly [that] the workload is lighter or shared across the smarter system. So that’s what’s happening,” said Desai. 

Outside of client services like SOC control testing and reporting, the firm has found efficiencies in administrative functions as well as certain internal operational processes. On the latter point, Desai noted that Schellman’s engineers, including the chief information officer, have been using AI to help develop code, which means they’re not relying as much on outside expertise on the internal service delivery side of things. There are still people in the development process, but their roles are changing: They’re writing less code, and doing more reviewing of code before it gets pushed into production, saving time and creating efficiencies. 

“The best way for me to say this is, to us, this has been intentional. We paused hiring in a few areas where we saw overlaps, where technology was really working,” said Desai.

However, even in an age awash with AI, Schellman acknowledges there are certain jobs that need a human, at least for now. For example, the firm does assessments for the FedRAMP program, which is needed for cloud service providers to contract with certain government agencies. These assessments, even in the most stable of times, can be long and complex engagements, to say nothing of the less predictable nature of the current government. As such, it does not make as much sense to reduce human staff in this area. 

“The way it is right now for us to do FedRAMP engagements, it’s a very manual process. There’s a lot of back and forth between us and a third party, the government, and we don’t see a lot of overall application or technology help… We’re in the federal space and you can imagine, [with] what’s going on right now, there’s a big changing market condition for clients and their pricing pressure,” said Desai. 

As Schellman reduces staff levels in some places, it is increasing them in others. Desai said the firm is actively hiring in certain areas. In particular, it’s adding staff in technical cybersecurity (e.g., penetration testers), the aforementioned FedRAMP engagements, AI assessment (in line with recently becoming an ISO 42001 certification body) and in some client-facing roles like marketing and sales. 

“So, to me, this isn’t about doing more with less … It’s about doing more of the right things with the right people,” said Desai. 

While these moves have resulted in savings, she said that was never really the point, so whatever the firm has saved from staffing efficiencies it has reinvested in its tech stack to build its service line further. When asked for an example, she said the firm would like to focus more on penetration testing by building a SaaS tool for it. While Schellman has a proof of concept developed, she noted it would take a lot of money and time to deploy a full solution — both of which the firm now has more of because of its efficiency moves. 

“What is the ‘why’ behind these decisions? The ‘why’ for us isn’t what I think you traditionally see, which is ‘We need to get profitability high. We need to have less people do more things.’ That’s not what it is like,” said Desai. “I want to be able to focus on quality. And the only way I think I can focus on quality is if my people are not focusing on things that don’t matter … I feel like I’m in a much better place because the smart people that I’ve hired are working on the riskiest and most complicated things.”

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