Section 7 of the order halts funds conflicting with policies like increasing federal energy output and reducing support for electric vehicles (EVs). Credit: Phil Mistry/Shutterstock.

The White House has announced that President Donald Trump’s recent executive order, titled ‘Unleashing American Energy’ to halt the disbursement of funds, primarily targets programmes that either discourage fossil fuel development or promote EVs.

The funds were appropriated through the Inflation Reduction Act (IRA) of 2022 and the Infrastructure Investment and Jobs Act.

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The order, issued just hours after Trump’s inauguration on Monday, aims to reshape US energy policy. It encourages exploration and production on federal lands and waters, including on the Outer Continental Shelf, prioritises the production of rare earth metals and eliminates what the order describes as the “EV mandate”.

The White House Office of Management and Budget, in a memo dated Tuesday, specified that Section 7 of the order, titled ‘Terminating the Green New Deal’, mandating an immediate pause to the disbursement of funds, only applies to funds that contradict certain policy goals such as boosting energy production on federal lands and cutting support for EVs.

However, funding for other infrastructure projects including bridges, transit and highways will not be affected.

Despite the order’s broad objectives, it is uncertain how much funding is at risk.

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The Biden administration had previously indicated that most clean energy programme grants under the IRA had been obligated and were secure, with only $11bn outstanding.

Additionally, the IRA’s primary support for clean energy and EVs comes from tax credits, which require Congressional action to revoke.

The executive order mandates that US agencies consult the Office of Management and Budget before releasing funds.

Furthermore, the potential impact on lithium mining projects, crucial for EV battery production, is still unclear.

Loans for critical mineral projects finalised under the Biden administration, such as the $2.26bn package for Lithium Americas and nearly $1bn for Ioneer, are irrevocable, reported Reuters, citing industry and administration sources.

However, projects that had not secured finalised loans before Biden’s departure could be at risk. There are 24 projects seeking a total of $45bn that may now face uncertainty under the new directive, according to Energy Department data.