Clean energy tax cuts in reconciliation budget would stall renewable energy projects in Iowa
Clean energy advocates said Iowa stands to lose jobs, manufacturing facilities, renewable energy project expansions and face more expensive utility bills if Congress passes the budget reconciliation bill as is.
Many of these credits were extended via the Biden-era Inflation Reduction Act, which put them under attack from Republican lawmakers opposed to the green policies. Renewable energy advocates say continued investment into wind, solar and other clean energy sources, regardless of environmental impact, is vital to meeting growing energy demands.
Nearly three-fifths of Iowa's total electricity generation comes from renewable sources, according to the U.S. Energy Information Administration, which also reports Iowa is one of the top states for solar and wind energy generation. Since 2019, Iowa has generated more electricity via wind than from coal and continues to grow its solar production.
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Kristina Costa, who formerly worked at the White House implementing the Inflation Reduction Act's energy and climate policies, said the IRA established at least 10 years of tax credits to support clean energy industries, which launched new projects and expanded the industry.
'The House bill that the Republicans passed explodes that entire paradigm,' Costa said. 'It functions as a full repeal of the Inflation Reduction Act.'
Costa, during a Thursday press conference with Climate Power, said the bill 'really radically' changes how clean electricity developers can plan and develop their projects, by eliminating the ability to 'lock in' a tax treatment at the start of construction.
'This is going to create a lot of uncertainty for project developers,' Costa said. 'It's going to raise financing costs for project developers pretty considerably … but it also just means that fewer projects will end up qualifying for the credits.'
Clean energy tax credits impact transportation, power generation, industry and construction and create incentives for projects like renewable vehicle fuels, solar, wind, nuclear power generation and more.
Per the reconciliation bill text as it passed the House May 22, the bill would terminate clean vehicle credits, residential energy efficiency credits, hydrogen fuel credits and place restrictions on credits for clean electricity production, zero-emission nuclear energy production and other sectors.
Some of the restrictions include strict construction timeline requirements, like beginning construction within 60 days of enactment, and bringing the projects online by 2028.
Costa said these timelines create an 'incredibly sharp cliff' for developers to work within for projects that often take years and can face lengthy setbacks from supply chain disruptions.
The budget bill also has extensive language pertaining to and restricting projects that have any ties to foreign entities.
Costa said these restrictions are 'very complicated, unworkable, Byzantine requirements' that impose 'a lot of red tape' for developers and would have the 'immediate effect of freezing the market.'
She said it would require companies to understand where 'literally every nut, bolt, screw and wire in a project they are building comes from' and certify that it does not have any ties to China or to Russia.
Costa said gutting these policies will lead to increased energy costs for American customers. A study from Clean Energy Buyers Association analyzed the impact of removing just two clean energy tax credit programs, and found it would cause an average increase of 7% for residential electricity costs.
Part of the problem is an anticipated 2% energy demand increase nationwide, in 2025 and again in 2026, according to the EIA. Much of that energy demand is a result of battery manufacturing and data centers.
Iowa alone has roughly 100 data centers, which is one of the largest concentrations in the midwest.
'The near term additions to the grid are going to come from renewables, or they're supposed to come from renewables under the current tax regime,' Costa said. 'That is why you would see these consumer electricity price increases.'
A spokesperson for Alliant Energy, one of Iowa's utility companies with significant investments in solar and wind energy, said the company is monitoring the bill.
A spokesperson for MidAmerican Energy declined to comment on the pending legislation.
Earlier this year, NextEra Energy proposed restarting its Duane Arnold Energy Center, a nuclear plant near Palo. A representative from the company did not answer questions about the impact the Republican-sponsored bill would have on the Iowa project.
A study from The Nature Conservancy found that clean energy tax credits in Iowa alone would add more than $238 million in annual economic value to Iowa, if left intact through 2032.
Repeal of the credits would also affect associated manufacturing companies, like those that make solar panel parts, or wind turbine blades.
Analysis from Climate Power found 400,000 jobs nationwide would be in jeopardy without the tax credits supporting the expanding industry.
Joe Zimsen, an Iowa resident with 10 years of construction experience in the wind industry, said the IRA created a 'tremendous amount of hope' among his colleagues in the industry that has now 'disintegrated' because of budget bill.
Zimsen formerly worked on wind projects near Grinnell, but now works for Renew Energy as a construction manager for off-shore wind projects. He and his family still live in Iowa, and he urged Iowa senators to oppose the bill as it is currently written.
'This policy of killing offshore and onshore wind and solar energy is going to have tremendous detrimental effects and set us back another 10 to 15 years behind our competitors, like China and Europe,' Zimsen said. 'We can't afford to do that.'
U.S. Sen. Chuck Grassley said Tuesday that wind energy incentives have been at risk since 2015 when he worked to extend them, and he said he senators would try to find a 'compromise' on them again, Radio Iowa reported.
But, the so-called, 'big beautiful bill' comprises much more than just clean energy concerns, which Grassley said means one issue can't 'stand in the way' of the rest of the bill.
U.S. Sen. Joni Ernst's office did not respond to requests for comment.
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