Senate Republicans double down and target clean energy in draft tax bill

Tax credits for crucial clean energy and home energy efficiency projects would still be phased out, albeit less quickly, under Senate Republicans’ proposed changes to a massive tax bill, while electric vehicle incentives and other provisions intended to move the United States away from fossil fuels would be gutted rapidly.

Though the Senate provisions released Monday were largely hoped to be less damaging to the clean energy industry than the version House Republicans passed last month, Democrats and advocates say it would still have significant consequences for wind, solar and other projects.

“They want everybody to believe that after the flawed House bill, that they have come up with a much more moderate climate approach,” said U.S. Sen. Ron Wyden, the top Democrat on the finance committee, during a conference call with reporters Tuesday.

“The reality is, if the early projections on the clean energy cuts are accurate, the Senate Republican bill does almost 90%, 90, 90% as much damage as the House proposal did,” added Wyden, who authored clean energy tax credits included in the 2022 Inflation Reduction Act passed during former President Joe Biden’s term. “Let’s not get too serious about this new Senate bill being a kinder, gentler approach.”

Whether all of the changes will be enacted into law isn’t clear yet. The Senate can still modify its proposals before they go to a vote. Any conflicts in the draft legislation will have to be sorted out with the House as the GOP looks to fast-track the bill for a vote by President Donald Trump’s imminent Fourth of July deadline.

The clean energy tax credits stem from former President Joe Biden’s climate law, considered a landmark for the United States’ clean energy transition. They’re seen as key to the nation’s transition away from planet-warming greenhouse gas emissions.

House Republicans took an axe to many of the credits and effectively made it impossible for players in renewable energy such as wind and solar to meet the requirements and timelines necessary to qualify for the incentives.

The text of Monday’s Senate proposal further “achieves significant savings by slashing Green New Deal spending and targeting waste, fraud and abuse in spending programs while preserving and protecting them for the most vulnerable,” said Sen. Mike Crapo, R-Idaho and chairman of the committee.

Notably, many other Republicans in Congress have advocated to protect the credits, as massive amounts of investment in clean energy have gone to Republican districts as a result.

Language included Monday in the reconciliation bill from the Senate Finance Committee would still phase out – though more slowly than House lawmakers envisioned – some Biden-era green energy tax breaks.

On the chopping block are tax credits for residential rooftop solar installations, ending within 180 days of passage, and a subsidy for hydrogen production. Federal credits for wind and solar would have a longer phaseout than in the House version, but it would still be difficult for developers to meet the rules for beginning construction in order to receive the credit.

The Senate proposal would be “a stake in the heart of solar manufacturing in America,” Wyden added. “Manufacturing isn’t going to happen here, and it will happen in China,” he said. “And that means U.S. steel manufacturers, machinery, components, all of those industries are going to get clobbered as well.”

At the same time, it would boost support for geothermal, nuclear and hydropower projects that begin construction by 2033.

“This is a 20-pound sledgehammer swung at clean energy. It would mean higher energy prices, lost manufacturing jobs, shuttered factories, and a worsening climate crisis,” said Jackie Wong, senior vice president for climate and energy at the Natural Resources Defense Council. “Senators should take a hard look at the businesses creating jobs in their states and the reality of spiking electricity bills.”

The bill would also cancel incentives such as the Energy Efficient Home Improvement credit – which helps homeowners make improvements such as insulation or heating and cooling systems that reduce their energy usage and energy bills – 180 days after enactment. An incentive for builders constructing new energy-efficient homes and apartments would end 12 months after signed. The House’s proposed end date for both is December 31.

“Canceling these credits would increase monthly bills for American families and businesses,” Steven Nadel, executive director of the nonprofit American Council for an Energy-Efficient Economy said in a statement. “Why would we stop helping families save energy when prices are going up and up?

The Monday proposal moves up the timeline for ending the consumer electric vehicle tax credit from the end of this year to 180 days after passage. It also cuts the provision that would have extended until the end of 2026 a credit for automakers that had not made 200,000 qualifying EVs for U.S. sale. It would also immediately eliminate the $7,500 credit for leased EVs.

This administration has staunchly gone after EVs amid Trump’s targeting of what he calls a “mandate,” incorrectly referring to a Biden-era target for half of new vehicle sales by 2030 be electric. His administration has rolled back this target, withheld money from a federal EV charging buildout on highways, blocked California’s ban on new sales of gas-powered cars and is seeking to weaken fuel economy standards that would encourage – though not require – EV adoption.