Final passage of the Republicans’ tax cut, energy and border spending megabill means a Senate compromise on renewable energy tax credits will become law.
But negotiations Wednesday that helped secure enough conservative votes to send the legislation to President Donald Trump suggests the administration may sabotage the slower phase-out of wind and solar credits.
Language cobbled together in the Senate earlier this week lets wind and solar facilities that break ground within 12 months, or that are plugged into the grid by 2027, continue to have tax advantages from the Inflation Reduction Act.
But the 12-month window for beginning construction — among other concessions to renewable energy — angered some members of the far-right House Freedom Caucus.
Rep. Chip Roy (R-Texas), the caucus’ policy chair, told reporters that the new language around the tax credits was “the most troubling” issue about the budget reconciliation bill.
As leadership looked to convert the Freedom Caucus holdouts, Roy said that they would need assurances from the Trump administration that the tax credits would not be implemented as passed.
“We need to know what the administration is going to do in the absence of backbone from the Senate,” he said on Fox News.
“If the subsidies will flow, we’re not gonna be able to get [to a yes vote]. If the subsidies are not gonna flow, then there might be a path,” he later told reporters.
The Republican holdouts conferred with a number of White House staffers throughout the day, including Office of Management and Budget Director Russ Vought.
It remains unclear whether Roy and other Freedom Caucus members got direct assurances from the White House that the tax credits would not be implemented.
Outside of the Freedom Caucus, many Republicans were unbothered by Senate tweaks to the tax credits. Ways and Means Chair Jason Smith (R-Mo.) told POLITICO’s E&E News that the new Senate energy language was “virtually the House bill.”
More reconciliation bills
As House Republicans moved to pass their “One Big Beautiful Bill” on Wednesday, some were already looking forward to what could be included in a future reconciliation bill this Congress.
The budget reconciliation process allows the the majority to bypass the Senate filibuster on certain fiscal legislation. Republicans will try to deploy it again.
House Natural Resources Chair Bruce Westerman (R-Ark.) predicted a future reconciliation effort will include energy and environment provisions that weren’t “fully developed” enough to go forward in the current bill.
“There’s a lot of things that were never even put on the table because they weren’t fully developed that we’ll see in a future reconciliation bill,” Westerman told reporters.
Westerman said he’ll “keep his powder dry” on what those specific provisions could be, but other Republicans speculated that future salvos against the Inflation Reduction Act could be options for lawmakers to pursue.
Rep. Buddy Carter (R-Ga.), a supporter of clean energy credits, said he “suspects there will be” further legislative work on the Inflation Reduction Act if the House successfully passes the current reconciliation bill.
Beyond the climate law, Rep. Bob Latta (R-Ohio), chair of the Energy and Commerce Subcommittee on Energy, said Republicans were eager to pass policy to support baseload generation.
“The discussion early on was that we would do two [reconciliation bills],” Latta said. “Getting one done is already tough, but in all my time in Congress, I think this is the best two-year window we’ve had for energy policy.”
Democratic plans
The GOP megabill phases out all wind and solar tax credits by the end of 2027. If Democrats start regaining power in Washington in 2027 or 2029, they may see an opportunity to restore the credits and continue bolstering clean energy projects.
Rep. Jennifer McClellan (D-Va.), a member of the Energy and Commerce Committee, said she would look to get Inflation Reduction Act tax credits back in place “as soon as possible.” She said Democrats could also put in place other subsidies to boost energy projects.
“I think you need to have a multipronged strategy to get projects off the ground as quickly as possible, to meet our energy needs and also to meet the moment to address climate change,” she said.
Rep. Pramila Jayapal (D-Wash.), the former chair of the Congressional Progressive Caucus, went further, saying that Democrats in the next years will need a climate and energy vision that works outside of the tax code.
As a place to start, she pointed to clean energy job corps programs, which were pitched during the Biden administration but were slow to start up.
“I think we have to learn from some of the lessons of the IRA, where it took us way too long to get the money out. We didn’t get it into states that were critically important to us. We weren’t prepared. I think that there are ways we can speed up the process and still keep the rights of communities protected,” Jayapal said.
“At the end of the day, I think we have to have an even bigger vision than what we did last time, and I think we’ll be prepared for that,” she said.
Rep. Scott Peters (D-Calif.) said the Republican megabill threatened bipartisan talks on permitting. A major incentive for Democrats to ease approvals was to get more renewable energy on the grid.
“If clean energy isn’t really viable because of what the Republicans have done to this, it poisons the well in terms of permitting,” Peters said. “I think that unless we resolve this issue, it’s going to be difficult to get the votes we need to do permitting reform.”
This story also appears in Energywire.
