GOP bill makes heavy cuts to green energy credits in its fine print
Congressional Republicans' phase-out of the tax credits for climate friendly energy sources are expected to decimate the incentives and raise U.S. emissions.
While the GOP's 'big beautiful bill,' which faces an uncertain future and a key committee vote Friday, proposes to phase out the credits over several years, analysts say the legislation's fine print effectively cuts them entirely.
'What's in the text now is about as bad as it could be and is likely to cause a lot of project cancellations, and that has knock-on effects on the economy, on people's energy bills and so on,' said Robbie Orvis, senior director of modeling and analysis at climate policy think tank Energy Innovation
'It's pretty rough in terms of the outlook for clean energy,' Orvis added.
One of the most significant provisions in Democrats' 2022 Inflation Reduction Act was 'technology neutral' tax credits that provide significant subsidies to any energy source that can get its planet-warming emissions below a certain threshold.
The Republican bill winds down those credits, along with a separate one that specifically benefits nuclear energy, over the next six years or so.
But it also adds new restrictions on who can claim those credits.
The most significant of those is language that says that projects that start construction more than one year after the bill's passage cannot qualify for the credit if they have any components, subcomponents or minerals that are built, mined or processed in China.
China is a major hub for minerals processing, and it may be difficult for companies to find ones that are not refined there, especially on such a tight timeline.
Derrick Flakoll, senior policy associate at BNEF, said that in effect, these requirements are similar to 'a full cutoff for projects from mid-2026' because of 'the ubiquity of Chinese critical minerals, Chinese intellectual property, Chinese batteries, polysilicon for solar [and] permanent magnets for offshore wind.'
Constantino Nicolaou, CEO of manufacturing and installation company Panelclaw, told reporters during a solar industry press briefing that these requirements are 'unworkable.'
'It is so complicated for a manufacturer, it is so complicated for a developer, it's so complicated for a financier,' Nicolaou said, particularly pointing to the subcomponent and mineral restrictions.
The solar industry is lobbying heavily for changes to be made to this provision and others. Representatives from the Solar Energy Industries Association and its member companies have met with 21 congressional offices this week.
Meanwhile, the GOP bill also kills something called 'transferability' that makes it easier for projects to get financing.
Supporters of the credits also say the timeline is particularly short because in the legislation the credit can only be claimed based on when projects actually start producing energy rather than when their construction begins.
Initial analyses of the credits are coming to similar conclusions. Modeler Rhodium Group found that the changes to the tax code under the GOP plan are 'likely to be similar to the impact of a full repeal of the energy tax credits.'
'There's been a couple years of investments already made, stuff that's already come onto the grid, electric vehicles that have already been bought. This doesn't step away from those, but it does mean that going forward, you wouldn't see the benefits of those tax credits,' said Ben King, associate director of Rhodium Group's Energy & Climate practice.
The group's analysis found that such changes could raise household energy bills by up to 7 percent in 2035 and could also drastically raise U.S. planet-warming emissions. The group's baseline scenario puts U.S. emissions between 31 percent and 50 percent lower in 2035 than where they were in 2005, while the policies proposed in the bill would bring emissions down by only between 23 and 39 percent.
King said that in practice, the change in emissions that year is about equivalent to the current emissions of Florida, Ohio and Pennsylvania combined.
Overall, Chris Seipel, vice chairman of Wood Mackenzie's Power & Renewables group, described the bill as 'a sledgehammer disguised as a scalpel,' in an email to The Hill.
Meanwhile, lawmakers in both the sledgehammer and the scalpel camps are criticizing the package as not going far enough and going too far, respectively.
Thirteen Republicans asked House Leadership for more flexibility in a statement on Wednesday, while the Freedom Caucus's Chip Roy (R-Texas) lamented on social media that the bill 'delays IRA subsidy repeal until after Trump.'
Roy has said he will vote against the budget package in its current form, and GOP senators are already signaling that it faces stiff headwinds should it survive the House and make it to the upper chamber.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
18 minutes ago
Filipino forces and villagers struggle to live in China's shadow in disputed waters
WEST YORK ISLAND, South China Sea -- Overwhelmed after setting foot for the first time on a far-flung but picturesque island in the disputed South China Sea, a Filipino army official knelt to kiss the shore. She held a small Philippine flag that fluttered in the breeze. 'This is just so beautiful,' Philippines military spokesperson Col. Francel Margareth Padilla said of West York Island, one of nine islands, reefs and atolls occupied by Filipino forces in the long-contested waters. 'This solidifies our resolve to fight for this place whatever happens.' The 18.6-hectare (46-acre) droplet-shaped island, called Likas by Filipinos, could easily become an eco-tourism draw in tropical Asia with its powdery white-sand beaches, turquoise waters and giant sea turtle sanctuaries. Padilla expressed hope it could someday be opened to Filipino travelers and tourists from across the world. But that longstanding aspiration by Philippine officials has been stymied by a tangle of territorial conflicts involving a militarily superior China. Beijing claims virtually the entire South China Sea, a vital global trade route with rich undersea deposits of gas and oil. It has increasingly flexed its military might, including its navy — the largest in the world — to strengthen its grip on a strategic waterway it says it has owned since ancient times. The Philippines, Vietnam, Malaysia, Brunei and Taiwan contest China's expansive claims with their own, and the territorial stand-offs have increasingly flared into cat-and-mouse confrontations at sea in recent years. The long-simmering disputes are also a delicate fault line in the regional rivalry between Beijing and Washington. Both former President Joe Biden and his successor, Donald Trump, have condemned China's growing aggression in the contested waters, including its coast guard's use of powerful water cannons, blinding military-grade lasers and dangerous sea maneuvers against the coast guard and navy of the Philippines, Washington's oldest treaty ally in Asia. Under President Ferdinand Marcos Jr., who took office in mid-2022, the Philippines has intensified a campaign to expose China's increasingly assertive actions by capturing them in video and photographs. The images have then been made public in the hope that international pressure would prompt Beijing to back down to avoid damage to its reputation. The Philippine military invited a small group of journalists, including two from The Associated Press, in a dayslong naval patrol of the South China Sea territories claimed by Manila and on visits to navy and marine forces deployed to guard them. During the patrol, which ended over the weekend, the BRP Andres Bonifacio navy ship carrying the journalists warned a number of Chinese coast guard ships and suspected Chinese militia vessels by two-way radio to move away from Philippines-claimed waters. The Chinese ships responded by asserting their sovereignty in the offshore region without undertaking any provocative actions. On West York Island, two Filipino marines in camouflage uniforms stood guard with M4 assault rifles under a Philippine flag. One used binoculars to scan the surrounding waters for Chinese or Vietnamese ships passing by from a distance. One of the farthest islands in the disputed waters from the nearest Philippine province of Palawan, West York is a difficult and risky post, where Filipino forces see nothing beyond the small island but sea. Military personnel can occasionally call their loved ones during their two-month deployment, but the internet connection is spotty, especially during the typhoon season that starts in June, according to military personnel on the island. They grow eggplants, okra and chili peppers and raise goats and chickens to augment food provisions delivered by navy ships from Palawan. There is a makeshift basketball court to help while away off-duty time and ease the feeling of isolation. 'It's being away from your family,' Padilla said. 'At the end of the day, you go home to an empty room.' Marine Col. Joel Bonavente, who was among the visiting military officials, told AP that military personnel posted in the remote outpost get additional pay to compensate for the "hazard and loneliness.' On Thitu, the largest Philippines-claimed island, which lies west of West York, civilians have thrived for decades in a small fishing village alongside the military forces. An AP journalist who visited Thitu several years ago saw an island with only a few low-slung wooden and concrete buildings and a gravel airstrip that was being eroded by the constant pounding of waves. There were a few shanties mainlanders had moved to from Palawan in exchange for a monthly government provision of groceries, rice and cash in a bid to grow a civilian community. Dramatic infrastructure improvements have occurred through the years on the 37.2-hectare (92-acre) island, which now has a concrete runway, a huge aircraft hangar, a wharf, a storm shelter and concrete roads running through the fishing village, military encampments and a three-story coast guard surveillance center. A high school building is nearly finished near a seawater desalination facility. 'I want to stay on this island because my blood pressure remains stable without the wide selection of fatty food you find in the city like hamburgers,' said Nenita Bania, a 59-year-old villager who has lived with her husband on Thitu for 12 years. 'Lonely? Not really. It's not the case if you're with family,' she told the AP aboard an air force C-130 aircraft, as she and other villagers hitched a ride back to Thitu from Palawan province. Living in China's shadow in the disputed waters, however, has been challenging, said Larry Hugo, 47, who leads a group of at least 114 fishermen. More than a decade ago, China transformed seven disputed South China Sea reefs into island bases, where Chinese coast guard and navy ships can now refuel and obtain supplies for longer periods far from the Chinese mainland. One of China's artificial islands, Subi, has a military-grade runway and lies just 26 kilometers (16 miles) from Thitu. 'There were no Chinese ships before but now it's a big problem because they are all around our island,' Hugo said. 'They're guarding the reefs where we used to fish, and they block us so we can't venture far.' 'It's very dangerous,' he said. 'We have small boats and we may be run over and that'll be a big problem because we're far from civilization.'
38 minutes ago
Minnesota budget deal cuts health care for adults who entered the US illegally
ST. PAUL, Minn. -- Adults living in the U.S. illegally will be excluded from a state-run health care program under an overall budget deal that the closely divided Minnesota Legislature convened to pass in a special session Monday. Repealing a 2023 state law that made those immigrants eligible for the MinnesotaCare program for the working poor was a priority for Republicans in the negotiations that produced the budget agreement. The Legislature is split 101-100, with the House tied and Democrats holding just a one-seat majority in the Senate, and the health care compromise was a bitter pill for Democrats to accept. The change is expected to affect about 17,000 residents. After an emotional near four-hour debate, the House aroved the bill 68-65. Under the agreement, the top House Democratic leader, Melissa Hortman, of Brooklyn Park, was the only member of her caucus to vote yes. The bill then went to the Senate, where it passed 37-30. Democratic Majority Leader Erin Murphy, of St. Paul, called it 'a wound on the soul of Minnesota,' but kept her promise to vote yes as part of the deal, calling it "among the most painful votes I've ever taken." Democratic Gov. Tim Walz, who insisted on maintaining eligibility for children who aren't in the country legally, has promised to sign the legislation, and all 13 other bills scheduled for action in the special session, to complete a $66 billion, two-year budget that will take effect July 1. 'This is 100% about the GOP campaign against immigrants,' said House Democratic Floor Leader Jamie Long, of Minneapolis, who voted no. 'From Trump's renewed travel ban announced this week, to his effort to expel those with protected status, to harassing students here to study, to disproportionate military and law enforcement responses that we've seen from Minneapolis to L.A., this all comes back to attacking immigrants and the name of dividing us.' But GOP Rep. Jeff Backer, of Browns Valley, the lead author of the bill, said taxpayers shouldn't have to subsidize health care for people who aren't in the country legally. Backer said California Gov. Gavin Newsom, a Democrat, has proposed freezing enrollment for immigrants without legal status in a similar state-funded program and that Illinois' Democratic governor, JB Pritzker, has proposed cutting a similar program. He said residents can still buy health insurance on the private market regardless of their immigration status. 'This is about being fiscally responsible,' Backer said. Enrollment by people who entered the country illegally in MinnesotaCare has run triple the initial projections, which Republicans said could have pushed the costs over $600 million over the next four years. Critics said the change won't save any money because those affected will forego preventive care and need much more expensive care later. 'People don't suddenly stop getting sick when they don't have insurance, but they do put off seeking care until a condition gets bad enough to require a visit to the emergency room, increasing overall health care costs for everyone,' Bernie Burnham, president of the Minnesota AFL-CIO, told reporters at a news conference organized by the critics. Walz and legislative leaders agreed on the broad framework for the budget over four weeks ago, contrasting the bipartisan cooperation that produced it with the deep divisions at the federal level in Washington. But with the tie in the House and the razor-thin Senate Democratic majority, few major policy initiatives got off the ground before the regular session ended May 19. Leaders announced Friday that the details were settled and that they had enough votes to pass everything in the budget package.
CNBC
41 minutes ago
- CNBC
CNBC Daily Open: 'Good reports' from U.S.-China talks could push S&P 500 to new high, analysts say
Trade negotiators from the U.S. and China have met in London, and talks are expected to continue Tuesday, a source familiar with the situation told CNBC's Megan Casella. It seems that coaxing China to relax its rare earths export curbs is at the top of America's agenda, according to a CNBC interview with U.S. National Economic Council Director Kevin Hassett. If China's actions late last week — when it seemingly gave Western automakers concessions regarding those minerals — are any indication, Beijing could be willing to accede to the request. The world's second-biggest economy would demand reciprocity. On June 2, Beijing bristled at Washington's tighter grip on exports of chip design software to China. It's a good thing, then, that Washington also appears to be in a conciliatory mood. "Our expectation is that … immediately after the handshake, any export controls from the U.S. will be eased," Hassett said on CNBC's "Squawk Box." Indeed, Trump has reportedly authorized Treasury Secretary Scott Bessent's team to lift those curbs, according to The Wall Street Journal, and has described receiving "good reports" from the U.S. contingent. If the U.S.-China talks go well, there's a chance the S&P 500, only around 2% off its February high as of Tuesday morning Singapore time, could reach a new peak, noted the JPMorgan trading desk. That'd be something to cheer, of course. But it's slightly disappointing that the S&P could have continued scaling heights from February, or at least broken its closing high much earlier in the year, if not for truculent trade policy from the White House — which, as is evident from the meeting between U.S. and China, governments are still trying to undo. U.S.-China talks set to go into Day 2U.S. President Donald Trump's top trade officials met Chinese counterparts in London on Monday for talks aimed at resolving their trade dispute — particularly with regard to mineral exports. Discussions are set to continue Tuesday. Late last week, in an apparent olive branch, China seemed to offer U.S. and European auto giants something of a reprieve regarding its exports of rare earth elements. Markets inch up globallyU.S. stocks edged up Monday. The S&P 500 added 0.09%, the Dow Jones Industrial Average was mostly flat, and the Nasdaq Composite rose 0.31%. Asia-Pacific markets rose Tuesday. South Korea's Kospi index was up 0.38% at 1:30 p.m. Singapore time. Analysts from Macquarie Group say they think the country's stock market will rally and enter a bull market on the back of "expansionary fiscal policy" from the new government. A new 'Liquid Glass' look for Apple's iOSApple held its annual Worldwide Developers Conference keynote on Monday. At the event, the company announced a redesign to its iOS system called "Liquid Glass," a virtual glass look that was inspired by the Vision Pro and the most significant redesign of its operating system since 2013. Investors were underwhelmed by the announcements — which lacked developments on the AI front — and sent shares down 1.2%. UK in a 'Goldilocks' moment: Nvidia CEO "The U.K. is in a Goldilocks circumstance," Nvidia CEO Jensen Huang said Monday on a panel with British Prime Minister Keir Starmer and Investment Minister Poppy Gustafsson. "You can't do machine learning without a machine — and so the ability to build these AI supercomputers here in the U.K. will naturally attract more startups," Huang said, though he added that the country lacks homegrown AI infrastructure. [PRO] New record for S&P soon?The S&P 500 ticked higher on Monday and continues to chip away at the gap to a new record high. The broad-based index is just 2% below its record close set in February. Several events in the days ahead could prove to be the catalyst that vaults it over the top, according to the JPMorgan trading desk. China's homegrown coffee giants are brewing up a U.S. expansion Chinese beverage chains are redefining coffee culture in the country — and now they're trying to win over customers in the U.S. and beyond. Luckin Coffee, China's largest coffee chain, has expanded aggressively in China and overtaken Starbucks on the mainland, with more than twice as many outlets. After venturing into Singapore, Hong Kong and Malaysia, Luckin is set to take its biggest leap yet with plans to open a branch in lower Manhattan. "New York is probably culturally the best testing ground for an international brand to expand into, especially a Chinese one," said Bernstein senior analyst Danilo Gargiulo, citing the city's diversity and large base of young consumers. "But it's also the most saturated, one of the most competitive markets."
