House GOP moves to slash renewable energy tax breaks

The Verge

22-05-2025

House Republicans advanced a sweeping spending package that would roll back Biden-era tax credits for renewable energy projects. If the bill passes the Senate and makes it to President Donald Trump's desk to sign, it could deal a serious blow to renewables, new nuclear technologies, and clean energy manufacturing across the US.
The rollbacks would undo much of the 2022 Inflation Reduction Act (IRA), which Democrats touted as the biggest investment in climate and clean energy initiatives. Losing these tax credits would slow efforts to build out enough new energy sources to meet rising electricity demand, as well as previous commitments the US has made on the international stage to help stop the climate crisis.
'This package is really economic malpractice,' says Brad Townsend, vice president for policy and outreach at the Center for Climate and Energy Solutions (C2ES). The bill that the House ultimately passed was even harsher on clean energy than a draft released last week. 'The original version was bad. This version is worse.'
'This package is really economic malpractice.'
Based on the previous draft, C2ES and research firm Greenline Insights estimated that restrictions on which projects would be eligible for tax credits would cost hundreds of billions of dollars in lost GDP. An updated bill released overnight and passed early this morning could lead to even larger losses if the Senate ultimately passes it as-is.
Notably, the bill stipulates that projects must start construction within 60 days of it being enacted and placed in service by the end of 2028 in order to qualify for clean energy tax credits.
That would effectively make it impossible for new projects to qualify, given the long lead times needed to secure permits and financing before starting construction. During remarks on the Senate floor this morning, Senate Minority Leader Chuck Schumer (D-NY) called the provision a ' clean job kill switch.'
'It's one of the most devastating things added at the last minute in this bill snuck in the dark of night. And we in the Senate — and I hope our Republican colleagues will join us in this — are going to fight this every step of the way,' he said.
Nearly 977,000 jobs and $177 billion in GDP would have been lost as a result of requirements in the previous draft that stipulated that projects be placed in service by 2029 to qualify for credits, according to C2ES and Greenline Insights. Again, that draft was less stringent than the text that ultimately passed.
The bill seemingly includes a carveout for nuclear energy industry, to which some GOP members, including Secretary of Energy Chris Wright, have ties. Wright dialed into a meeting with Republican lawmakers on Wednesday night to discuss the tax credits, Politico reported. The bill subsequently says that new nuclear reactors would only have to commence construction by 2028 in order to qualify. But even though the provisions aren't as strict for new nuclear projects to qualify, the bill still sets unrealistic goals. Next-generation nuclear reactors aren't expected to be ready to deploy commercially until the 2030s.
The bill also ends an IRA policy that allowed renewable projects to transfer credits to one another, dealing another economic blow to developers outside of nuclear energy. It disqualifies projects owned by or receiving 'material assistance from prohibited foreign entities.' Those restrictions are essentially unworkable, according to clean energy advocates and industry experts — considering that clean energy supply chains are still concentrated in China and that it could bar developers with investors from other countries. Restrictions on the involvement of foreign entities alone could lead to $237 billion in lost GDP, Greenline Insights and C2ES previously estimated.
Ironically, Republican districts stood to benefit the most from IRA incentives for new solar and wind farms and factories. Investments were concentrated in rural areas, and 73 percent of manufacturing facilities for clean power components are in red states, according to a recent industry report from the American Clean Power Association.
'Texas in particular is going to be hammered by the package as written,' Townsend says. His organization's analysis found that Texas would lose the most jobs — more than 170,000 — from tax credit restrictions initially proposed in the bill.
'Texas in particular is going to be hammered.'
Fortunately, solar and wind power are already cheaper sources of electricity than fossil fuels in many cases and have been making steady gains in the US for decades thanks to falling costs. To be sure, developers now have to contend with new challenges posed by Trump's tariff regime. But the industry has managed to make progress — now providing more than 20 percent of the US electricity mix — despite years of on-again, off-again credits prior to the IRA codifying incentives in a way that offered more long-term certainty for the industry.
What the tax credits in the IRA were supposed to help accomplish, however, was a dramatic ramp-up of carbon-free energy needed to stop the climate crisis. The IRA was expected to slash US greenhouse gas emissions by roughly 40 percent from peak levels by the end of the decade, according to independent analyses. That nearly got the nation to the goal that former President Joe Biden committed to under the 2015 Paris Agreement, which was cutting pollution by at least 50 percent by 2030. And since the US is responsible for more greenhouse gas emissions historically than any other country, the decisions that Congress makes now have consequences for the planet.
Trump, of course, has called climate change a hoax despite mountains of evidence showing how emissions from fossil fuels exacerbate floods, storms, droughts, fires, and other climate disasters.
Aside from worsening weather events putting pressure on the US' aging power grid, the country is also grappling with a sudden rise in electricity demand from new AI data centers, crypto mining, electric vehicles, and increased domestic manufacturing. Electricity demand could grow by 25 percent by 2030, according to one forecast published this week by consulting firm ICF. By slowing the deployment of clean energy, the repeal of IRA incentives would lead to more pollution and raise household energy costs by up to 7 percent by 2035, according to a recent analysis by research firm Rhodium Group.
The Senate now has to wrangle with the entirety of Trump's so-called 'big, beautiful bill.' It also includes proposals to extend and expand income tax cuts, increase military spending, fund mass deportations, impose new restrictions on Medicaid and food assistance programs, and more. Even though the Republican-controlled Senate is likely to fall in line with Trump's agenda, there's still time for proposals in the bill to evolve.
In its current version, 'Americans' electric bills will soar. Hundreds of factories will close. Hundreds of billions of dollars in local investments will vanish. Hundreds of thousands of people will lose their jobs,' Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA), said in a press statement. But, Hopper added, 'it's not too late for Congress to get this right. The solar and [energy] storage industry is ready to get to work with the US Senate on a more thoughtful and measured approach.'