GOP megabill could undermine US energy production, Republicans warn

Politico

2 days ago

Republicans want to expand power production to shore up the grid and support the growth of data centers — but their own megabill risks doing the exact opposite.
That's the message lawmakers on both sides of the aisle, industry executives and former Republican officials delivered on stage at the POLITICO Energy Summit on Tuesday.
The reconciliation bill that passed the House last month seeks to gut clean energy tax credits enacted by Democrats in the 2022 Inflation Reduction Act, particularly for wind and solar — two of the fastest-growing sources on the grid. President Donald Trump has derided those subsidies as the 'Green New Scam,' and congressional Republicans have said the two technologies must stand on their own after decades of support.
But the speedy sunset of the investment and production tax credits under the House bill would hurt companies that have made investments based on the IRA, several of the Summit speakers said.
The House-passed bill is not 'fair to businesses in the way that we're phasing [the credits] out,' said Utah Republican Sen. John Curtis. 'Investors have invested billions of dollars based on the rules of the road, and you have employees who have set careers based on these things.'
Energy companies have warned the bill could lead to the cancellation of hundreds of major electricity generation projects, just as the nation's utilities prepare for a surge in power demand from new AI data centers.
John Ketchum, chair and CEO of NextEra, the nation's biggest owner of natural gas-fired power plants and the world's leading generator of electricity from wind and solar power, said he agrees with the Trump administration's declaration of an energy emergency — but warned renewables cannot be taken 'off the table.'
'We cannot afford to do that. If we do that, we will lose the AI race, and we will bring this economic expansion in the United States to a screeching halt,' Ketchum said. That's because a new fleet of natural gas power plants won't be ready until 2032, he added, and nuclear power will take even longer.
And former Federal Energy Regulatory Commission Chair Neil Chatterjee, who served under the first Trump administration, said fossil fuels must be complemented by renewables and emerging technologies like geothermal and nuclear — as well as energy efficiency efforts.
'We can't possibly win the AI race and keep energy reliable and affordable with only fossil fuels,' Chatterjee said. 'We need every available electron.'
But the backing for renewables drew pushback from Jarrod Agen, the executive director of Trump's newly created National Energy Dominance Council, who said he was 'very happy' with the bill the House produced.
Wind and solar are 'intermittent' sources, he said, that 'can't stand on their own feet.'
While the administration believes that nuclear energy will ultimately be the 'perfect source,' fossil fuels and coal are the most reliable and secure sources today, Agen said.
Here are some other takeaways from Tuesday's event:
Curtis, who has urged his Senate colleagues for months to preserve the IRA credits, specifically called for the bill to set a phase-out date for the clean energy tax credits based on when developers start construction of new projects, rather than on when a project begins producing electricity, as the House bill does. The House language discourages new investment because construction timelines are often uncertain, he said.
'Changing it to say something about the date [construction] started would be a really significant difference and not really hurt the intent of what Republicans are trying to do on this bill,' Curtis said.
That echoed comments from Sen. Martin Heinrich (D-N.M.), the top Democrat on the Energy and Natural Resources Committee, who also urged changes to the bill's prohibition on foreign involvement in projects, which he said is 'completely unworkable in its current form.'
Even Jennifer Granholm, who oversaw much of the growth spurred by the credits as the Biden administration's energy secretary, told the summit the bill could be 'workable' if the Senate fixes those two provisions, as well as restores rules that allow companies to buy and sell the tax credits.
Former FERC leaders bemoaned President Donald Trump's treatment of the agency, with Chatterjee warning the moves could turn the independent regulator into the 'EPA,' which has whipsawed between administrations.
Trump requested that former Democratic Chair Willie Phillips depart the commission, and last week declined to renominate current Republican Chair Mark Christie for a second term. His administration has moved to exert more power over other independent agencies as well.
'If the White House exerts control over the agency and they have to clear everything through OIRA and through OMB, then effectively the role of FERC chairman is no longer as head of an independent agency, it's basically a staff position,' Chatterjee told the audience.
The energy world is still processing the falling-out between Trump and his former 'first buddy,' clean energy and electric vehicle entrepreneur Elon Musk.
House Energy and Commerce Chair Brett Guthrie (R-Ky.) told the summit that Musk never brought up objections to the Republican megabill during a breakfast just hours after the House passed the measure.
'He talked about AI, he talked about all this stuff that [was] energy,' Guthrie said. 'Never mentioned the bill. And the bill had just been voted.'
Granholm signaled that clean energy advocates could welcome Musk back into the fold, calling his electric vehicle company Tesla 'amazing' while noting the 'later part of his journey has been more challenging.'
Pressed on Musk's support for clean energy, Agen, the White House official, said: 'The President is in charge.'
Granholm acknowledged that Democrats should have done a better job on the campaign trail last year selling their vision of job creation from the clean energy transition.
But the party going forward also needs to hone its messaging on 'keeping costs low by using the cheapest form of energy,' which is renewables, Granholm said.
Heinrich, too, forecast that Republicans' fossil fuel push would drive up energy prices — and provide a political opening to Democrats.
'We're in a constrained supply environment and an increased demand environment,' he said. 'People's electricity bills all over the country are going to go up. What I can guarantee you is in the next election and the election after that Republicans are going to own increased energy prices.'