The Senate Finance Committee’s portion of the Republican megabill, released Monday evening, is not the language renewable energy advocates were looking for.
Senators have been saying for weeks that they would be more lenient than the House-passed “One Big Beautiful Bill Act” when dealing with tax credits from the 2022 Inflation Reduction Act.
But even though the new text is friendly to geothermal, nuclear and hydropower, it doesn’t do much to protect incentives for wind, solar and hydrogen.
The Senate bill also includes supply chain requirements to prevent the use of Chinese products, though observers say the language appears more permissive than the House package.
“It looks a lot like the House bill, really,” Sen. Kevin Cramer (R-N.D.) said of the Finance text. “They did good work on ending the longtime credits and technologies and we pretty much stuck to that, so I think it’ll be fine.”
The Senate resurrected a policy favored by companies, called transferability, which allows energy project sponsors to transfer their credits to a third party.
The new legislation would also allow renewable energy projects more time to begin construction. However, it would target wind and solar for quick phase-downs beginning next year.
The Finance Committee said its bill “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.”
The committee’s top Democrat, Oregon Sen. Ron Wyden, who helped write the tax credit language in the 2022 climate law, said the Republican proposal “would endanger hundreds of thousands of clean energy jobs.”
With tight margins in both the House and Senate, leaders have been working toward a product that gives moderates some of their demands while also not alienating the right. It’s unclear they will succeed.
Shortly after Finance unveiled its text, Sen. Josh Hawley (R-Mo.) complained about new savings coming from Medicaid helping pay for renewable energy benefits.
“I don’t know why we would defund rural hospitals in order to pay for Chinese solar panels,” he told reporters. “It sounds like to me we are going to keep the Biden Green New Deal subsidies, and we’re going to pay for that by defunding rural hospitals. That’s going to be a hard sell in Missouri.”
Pro-fossil fuel advocate Alex Epstein wrote on X a “Sad update” that the Finance Committee was extending solar and wind subsidies. Rep. Chip Roy (R-Texas) responded, “Yeah, I will not vote for this.”
But Sen. Thom Tillis (R-N.C.), among the group of lawmakers calling for more flexibility for climate law credits, said he was “generally satisfied” with the text.
“I think you have to look at every individual provision because it’s not just solar — it’s rooftop solar, it’s leasing in solar, it’s commercial, so you gotta [look] through every one of them,” Tillis said.
More details
The Senate bill would extend technology-neutral production and investment tax credits for geothermal, hydropower and nuclear to projects that begin construction by 2033.
But the bill would begin phasing out such incentives for wind and solar in 2026. At the same time, it would nix a House requirement forcing projects to begin construction within 60 days of the law’s enactment.
Notably, the Senate product would not revive the House’s strict phase-down of the hydrogen production credit, known as 45V, which would be gone by the end of the year.
Senate Environment and Public Works Chair Shelley Moore Capito (R-W.Va.) has been a defender of the credit and a hydrogen production hub in Appalachia. Her office did not return a request for comment.
Pavan Venkatakrishnan, an infrastructure fellow at the Institute for Progress think tank, said the changes to the investment and production tax credits “would drive reliability by supporting the deployment of baseload technologies like nuclear, geothermal, hydropower and long-duration energy storage.”
He said he had unanswered questions about the foreign entity of concern — or FEOC — provisions on the advanced manufacturing credits. “To my eye, they maintain the House’s intent while improving administrability,” he said.
The new text would amend the federal 45Q tax credit, a top carbon capture incentive, by proposing “parity” between different possible uses of CO2 — something that made Cramer happy.
“My biggest interest is the carbon capture pieces, and there’s some pretty good news,” he said. “You never get everything you want, but I feel pretty good about it.”
Another provision being pushed by Sen. James Lankford (R-Okla.), which was not in the House bill, offers midsize oil and gas producers deductions for intangible drilling costs.
The left-leaning group Public Citizen quickly declared the bill “simply obscene to cut the social safety need in order to send polluters another handout.”
Industry reaction
Clean energy advocates have been flooding Senate offices in recent weeks after some were stunned the House took a sledgehammer to clean energy tax credits. Many were still combing through the text at press time, but some offered initial takeaways.
The Edison Electric Institute released a statement saying the Senate version included “more reasonable timelines” and welcomes the return of “transferability.”
“Financial certainty and access to cost-effective financing are critical tools for electric companies as they continue to make needed investments to meet rising customer demand and to expand generation capacity,” the utility trade association said in a statement. “These modifications are a step in the right direction, and we thank Chairman Crapo for his leadership in balancing business certainty with fiscal responsibility.”
Heather O’Neill, CEO of Advanced Energy United, was not as positive. The group includes a wide array of interests, from energy companies to automakers and technology firms.
“The cumulative impact of the initial Senate Finance language will be to imperil those projects, chill investment, destroy jobs, raise electricity costs, and undermine American energy abundance,” she said in a statement.
“Businesses can’t invest without consistent tax policy. By axing a range of long-standing tax policies, this proposal undercuts business certainty while robbing consumers of the opportunity to lower their energy costs.”
Even though the Senate tax bill is more lenient on some IRA credits, lawmakers scaled back the state and local tax deduction compared to the House version. New York House Republicans called that a non-starter.
During a meeting with Senate Republicans on the megabill, Senate Majority Leader John Thune (R-S.D.) emphasized the need to get legislation to the president’s desk. But he and Crapo are also open to changes.
“They’re really patient. They are listening to everyone’s ideas. And they’re still working on it — it’s still a work in progress,” said Sen. John Hoeven (R-N.D.).
The Solar Energy Industries Association is planning a rally on Capitol Hill on Tuesday.
