Senate Republicans said Tuesday they were eyeing changes to the GOP-led megabill, with some saying they wanted to save or alter some renewable energy tax credits slashed by House Republicans last month.
For instance, Sen. Thom Tillis of North Carolina said he wants to modify a provision that bars companies associated with China from accessing tax credits. He dismissed the House-passed language as “void of any understanding of just how these supply chains work.”
Another senator, Bill Cassidy of Louisiana, said he might seek changes to language decreeing that a project must start construction within 60 days of the megabill’s enactment to qualify for clean energy credits. That provision is seen by many as impractical.
Sen. John Hoeven of North Dakota suggested a carve-out for geothermal could garner support. Sen. Shelley Moore Capito of West Virginia wants to resurrect incentives for hydrogen.
And John Curtis of Utah wants Republicans to be “thoughtful but not reactive.”
Such talk might give hope to clean energy advocates, who watched in horror as the House last month shattered much of the 2022 Inflation Reduction Act.
But similar to some House Republicans, who talked a big game on saving parts of the IRA but ultimately folded, no Senate Republican was willing to draw a red line on their support for a final bill.
“I might be willing to accept something less than ideal in any one space if I am convinced the whole package is in good shape,” said Tillis, who has emerged as one of the top credit defenders. He added, “I wouldn’t vote for the House bill in its current form.”
Tillis, a member of the Senate Finance Committee, doubted the committee would mark up the bill and instead the legislation would be a “manager’s package heavily instructed by the underlying text out of the House bill.”
That measure, passed in May, would quickly end “technology-neutral” production and investment tax credits for projects that start construction within 60 days of the law’s enactment and are plugged into the grid by 2028.
The bill would enact complex supply chain requirements that renewable- and battery-makers say are unworkable. It would prevent project sponsors from transferring tax credits to a third party — known as transferability — except for the nuclear industry, which fared well overall. Biofuels and carbon capture were also spared.
Republicans are aiming to pass a final bill through the budget reconciliation process, which would require only simple majorities in the House and Senate, by July 4. The Senate Finance Committee is looking to release text of its tax changes by next week.
Enter Elon
In general, moderate Republicans have said they want to maintain business certainty for investments already underway. But few are showing their cards.
“I’m going to leave those discussions private,” Capito said of her specific conversations with Finance Chair Mike Crapo of Idaho.
In recent days and weeks, industry lobbyists of all kinds have been urging senators to salvage some of the Democrats’ Inflation Reduction Act, which infused hundreds of billions of dollars to green the economy.
In particular, they are worried the strict Foreign Entity of Concern, or FEOC, provision could render the tax breaks worthless, even as they laud the ethos of disallowing Chinese companies from accessing the lucrative credits. In short, the provision is written so strictly it could cost manufacturers millions if they purchased, for instance, screws made in China.
“The FEOC language has to be workable, so there’s going to have to be changes to how the House bill came in,” Tillis said. “Because I believe, in many respects, it’s void of any understanding of just how these supply chains work today, even if we want to change them over time.” He said he encouraged various industries, from renewables to fossil fuels and nuclear, to stick together.
New to the reconciliation talk is Elon Musk, Tesla’s CEO, who posted on social media Tuesday that the House-passed package was a “disgusting abomination” because it would “massively increase the already gigantic budget deficit.”
That criticism of the legislation as being too expensive contradicts his support for incentives for batteries, clean electricity equipment and residential solar energy.
House Speaker Mike Johnson (R-La.) was quick to publicly condemn Musk’s criticism, but over in the Senate, the reaction was more of a shrug. Sen. Kevin Cramer of North Dakota said senators rolled their eyes when they heard the news during their weekly lunch.
“So, no matter what Elon Musk or anybody else says — I don’t want to diminish him because I don’t think that’s fair — it’s still going to be second fiddle to President Trump,” Capito said.
Even still, Tesla representatives have in recent weeks been meeting with top House and Senate staff over concerns with tax credit changes and a new EV fee, according to people familiar with the discussions who were granted anonymity to speak candidly.
Electric vehicle advocates have been trying to make the case that investments strengthening mineral and battery production will help combat adversaries like China.
Worry over hydrogen
Capito, chair of the Environment and Public Works Committee, said she was “concerned” with the House’s changes to a lucrative hydrogen tax credit included in the IRA.
“We have a hydrogen hub in West Virginia, the Appalachian hydrogen hub, that has great promise,” Capito said. “So I am concerned about how the House dealt with that.”
Under the House-passed bill, the climate law’s hydrogen credit, known as 45V, would be limited only to projects that start construction by the end of the year. Capito said that adjustment would be almost impossible for most hydrogen projects, including the Appalachian hub, to meet.
Even fellow West Virginia Republican Jim Justice, who is not typically a supporter of green energy tax credits, said a later phase-out date for 45V would “be more desirable.”
“I do really believe that the hydrogen, the hydrogen idea and concept, is really valid,” Justice said. “If we don’t watch out, we’re going to miss a real opportunity.”
Capito said she was discussing IRA-related issues with Crapo but added that she could only do so much considering she’s not a member of the Finance Committee.
Supporters of saving more IRA credits are up against the likes of Sen. James Lankford (R-Okla.) and Cramer, both of whom have argued the federal government should not be incentivizing “intermittent” power like wind and solar over “baseload” power like nuclear and gas.
“Our country needs more and more base power,” Lankford said Tuesday. “We also need fewer and fewer credits and allow companies to be able to grow. Of wind energy, specifically, he said, “It’s not nascent anymore. It can function. I’m not opposed to wind power. We have a lot of it in our state.”
Others on Tuesday were not specific but expressed support for some changes: “I’m not wedded to a particular model there,” said Sen. Todd Young of Indiana.
“I think many of us recognize we have had significant investments in our state and we’re open to principled compromises on sort of rightsizing those provisions.”
Rep. Andrew Garbarino (R-N.Y.), one of the leading champions of IRA credits in the House, said he’s been helping senators “figure out who’s going to say what” to Senate Majority Leader John Thune (R-S.D.) and Crapo.
Garbarino fell asleep during the House vote but said he would have supported the bill despite being disappointed with its details. The New Yorker had been eyeing the Senate as a way to protect the energy incentives.
“There’s people very receptive,” he said. “I think a lot more governors are calling their senators to say, ‘Hey, this is going to kill all these projects.'”
Reporters Andres Picon, Amelia Davidson and Garrett Downs contributed.
