Senate's deeper IRA cuts spell doom for energy subsidies

 The revised text illustrates the influence of deficit hawks, climate skeptics and conservatives who have aggressively sought deeper cuts to IRA tax credits for renewables.

 

Meanwhile, the law's supporters succeeded in preserving some incentives for GOP-favored energy sources like nuclear, geothermal and hydropower in addition to hydrogen.

 

State of play: The Senate plans to convene at 2 p.m. today and leadership has advised votes are possible.

 

What's inside: The bill would cut off the production and investment tax credits for wind and solar projects that aren't connected to the power grid by 2028. [actually the text of the Senate draft says 2027.]

 

An earlier Senate draft preserved those credits for projects that start construction by that year. [This constitutes a huge difference – a much higher bar to overcome. Very good.]

 

In a nod to President Trump's fervent opposition to wind and solar power, the bill would impose a new tax on wind and solar, Sen. Brian Schatz said: "It will kill the industry, raise costs for everyone even more than we thought, and cause shortages."

 

Zoom in: The Senate also would extend the 45V hydrogen production tax credit phaseout to the end of 2027. The House version would repeal it at the end of this year.

 

It would preserve transferability for the tax credits and maintain restrictions on companies that source from China.

 

Senate Energy and Natural Resources Chair Mike Lee's latest plan to sell public land for housing includes a scaled-down version he hopes will clear the parliamentarian's review.

 

That provision still faces stiff resistance from at least four GOP senators and Rep. Ryan Zinke.

 

The bill maintains the longer phaseout period for the electricity investment and production tax credits for nuclear and geothermal projects that start construction as late as 2035.

 

Those projects can receive full credit if they start construction by 2033 or earlier. They would get 75% of the credit value if they start construction in 2034 and 50% of the value starting in 2035.

 

Our thought bubble: Much of the oxygen this week has been consumed by fierce debates over Medicaid cuts and state and local taxes, leaving IRA credits potentially vulnerable to cuts.

 

We'll be watching to see if any of the four Senate Republicans who have publicly defended IRA credits — Thom Tillis, Lisa Murkowski, John Curtis and Jerry Moran — feel strongly enough to file amendments on the floor.

 

The placed-in-service language could be problematic for Tillis, who had pledged to not cut off projects from the credits and whose state is booming with solar projects.

 

Other Republican amendments could only further restrict energy funding. John Kennedy said he wants congressional oversight of a $1 billion pot of money slipped into the bill.

 

What they're saying: "We thank our Senate champions for recognizing that America needs twenty-four/seven baseload hydropower to keep our electricity grid reliable, clean, and affordable," said Malcolm Woolf, head of the National Hydropower Association.

 

Meanwhile, the solar and storage industries that lobbied the Hill and held a rally last week expressed dismay at the cuts.

 

"Any senator who votes for this bill is voting for higher energy prices, a weaker economy, and a less secure America," said Abigail Ross Hopper, CEO of the Solar Energy Industries Association. [Yada, yada, yada. Just the opposite is true.]

 

Senate's deeper IRA cuts spell doom for energy subsidies

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