When the Senate Finance Committee released its portion of the “big, beautiful bill” in June, it included a new tax on solar and wind projects, prompting a mad scramble among senators and renewable energy executives to kill it.
Kill it they did, but more than a month later, the origin of the excise tax remains a mystery. No lawmaker has claimed credit for the idea, and one senator involved said leaders were just as surprised as everyone else.
“I brought it up at the lunch [soon after the text’s release] and leadership had not heard about it,” Sen. John Curtis (R-Utah), a key negotiator pushing to save renewable energy incentives, said in a recent interview.
“Some members of Finance got surprised when I brought it up.”
There has been no shortage of theories spread online and in group chats. Was a fossil fuel advocate behind it? Did the White House want it? Was a single senator quietly championing it? And why was one solar industry advocate saying it was “a step in the right direction”?
Specifically, the tax would have penalized wind and solar projects sourcing materials and parts from countries like China, the world’s leading supplier of clean energy technologies.
That would have been on top of a sharp phase-down of green energy incentives from the Democrats’ 2022 climate law. Companies spent millions trying to keep some of those credits alive.
Soon after the text was released, energy executives started calling people “in the middle of the night,” as one industry player put it, with another calling it a “kill shot.”
By Saturday morning, American Clean Power Association president Jason Grumet declared the “midnight dumping” would freeze markets. Princeton professor and well-known climate modeler Jesse Jenkins declared on X, “utter insanity!”
In the end, the provision vanished about as fast as it appeared. Curtis and Murkowski struck a deal with leadership to remove it along with other changes.
But its origin has remained largely a mystery.
“There had been no heads up — none,” Murkowski said recently. “We had been focusing on what we might be able to negotiate with regards to the clean tax credits and kind of the longer phase-out … and then — boom! It’s like, ‘What’s this?’”
She continued: “We’re still asking the question.”
‘It was a perfect MacGuffin’
According to interviews with senators, aides and lobbyists familiar with the process, what happened went something like this: Committee staff took scores of meetings for over a year. They received direction from lawmakers to find a solution that could be supported by Senate Republicans based on what was in the House version. They were concerned about hurting manufacturing jobs and dealing with politics in both chambers.
Ultimately, the idea came out of policy discussions with the Joint Committee on Taxation, legislative counsel and internally among staff.
But given the quickly approaching July 4 deadline demanded by President Donald Trump, and a broad array of changes in the bill, the people said, not all ideas were discussed broadly with members prior to public release.
“It was a perfect MacGuffin for the most frenzied point in the process,” reflected Liam Donovan, a political strategist at the firm Bracewell. He called it a “reminder to industry that things could get worse.”
A Senate leadership aide referred questions to the committee; the Finance Committee did not return requests for comment nor a request for an interview with Chair Mike Crapo (R-Idaho).
Finance Committee member Sen. Thom Tillis (R-NC), who opposed the final legislation, thought it was an attempt to put the nail in the coffin for the renewable industry. But a month later he said he was still in the dark.
“I really don’t know [where it came from],” Tillis said recently “I can’t think of any member. I haven’t been able to trace it to any one member.”
Another committee member, Sen. James Lankford (R-Okla.), explained that Crapo and his team were trying to strike a balance to “make sure that you didn’t have foreign entities actually trying to be able to come in, but we also wanted to make sure they could actually finish the projects they had.”
‘Aren’t that many tools in the toolbox’
Even without the excise tax, renewable energy executives were up against House Republicans and Trump who had pushed for projects to be plugged into the grid, or “placed in service,” by the end of 2027 to qualify for credits. That requirement would have disincentivized the use and manufacturing of domestic solar and wind materials.
As one Republican aide granted anonymity to speak candidly explained, while the excise tax was in part an attempt to Band-Aid problems, it ultimately was “moving chairs on the Titanic” and senators saw it as more problematic than beneficial.
That led Curtis and Murkowski — and others more quietly — to strike a deal that included removing the excise tax.
“It was a good win to get out — and stay out,” Murkowski said.
The idea behind an excise tax aligned with the growing anti-China sentiment that’s been building on Capitol Hill, particularly after years of official reports about forced labor in the Xinjiang Region.
Such a tax would serve as a stick to reshore domestic manufacturing, a key purpose of the Inflation Reduction Act, which offered mostly carrots.
“There aren’t that many tools in the toolbox,” said Adrian Deveny, founder of Climate Vision and a former top energy aide to Minority Leader Chuck Schumer. “The committee staffers know the basic tools.”
He added: “The truth of how a lot of this stuff happens, much of the policy is not requested by a member, it’s committee staff, it’s not a new phenomenon.”
Finger-pointing all over
When the text dropped, the finger-pointing was immediate and relentless.
Some tried to blame the tax on fossil fuel proponent Alex Epstein, who had been personally pushing senators for quicker ends to clean energy investment and production tax credits. He denied it.
“I was not in D.C. when this happened,” he said in a recent interview. “Privately, I made the case this was very bad and worth fighting against. … I was most aggressively fighting for the placed in service by end of 2027 cut off. My view was that kind of thing would undercut the messaging of, ‘Hey, we’re against favoritism. We don’t want to punish solar and wind, but we don’t want to give it special preferences.’”
He added he doesn’t have “100 percent” confidence of where it came from.
Others saw a potential culprit in domestic solar manufacturers, who have long sought to punish China for matters like skirting tariffs, among other issues.
Such splits have sometimes manifested themselves in fights on Capitol Hill, with some lawmakers arguing that overly punitive measures on Chinese solar imports could inflict more harm than good on the domestic solar industry and the jobs it creates. Others argue that domestic producers will never be able to outcompete cheap Chinese parts unless aggressive measures are taken.
Observers like Russ Greene, a senior fellow at the Charles Koch-founded group Stand Together, said that solar manufacturers were backing the tax, writing on X, “The proposed excise tax on wind and solar was supported by *solar manufacturers*. Not by @Alex Epstein. People on here were saying the opposite, so I hope they issue retractions.”
The Solar Energy Manufacturers for America (SEMA) Coalition, whose member companies represent more than 14,000 U.S. workers, stressed they were lobbying for other priorities along with project developers.
A SEMA fact sheet in June called for maintaining the domestic content bonus, an additional incentive for projects using American made materials, and amending requirements surrounding the advanced manufacturing credit, 45X.
After the updated text was released, Mike Carr, the coalition’s executive director, offered some praise for the excise tax, saying that while it was “not a complete replacement for the proven approach of the domestic content incentive, it is a step in the right direction and should be retained in the final package.”
SEMA defended themselves online and in a follow-up statement to POLITICO’s E&E News.
“We as manufacturers wanted 48E/Domestic Content Bonus duration to support billions in investments in advanced manufacturing,” said SEMA chief strategy officer Yogin Kothari, echoing a post on X in response to Greene’s accusations.
“Unfortunately, the Friday Senate text did not incorporate such an incentive and put us in a position where we could not forego the only lifeline offered.”
When asked more recently, Carr said, “The first time we saw the excise tax provision was the same time as everyone else. We didn’t provide any input on that provision. We were and remain focused on domestic content incentives to support the onshoring of advanced manufacturing.”
Murkowski and Curtis both said they never heard from solar manufacturers pushing the idea. “I don’t believe — I have no reason to believe they knew it was in there or that it was a strategy,” Curtis said.
Reporter Nico Portuondo contributed.
