The Senate is one step closer to gutting the Inflation Reduction Act todayheadline

When the U.S. House of Representatives passed President Trump’s “One Big, Beautiful Bill” last month, gutting former President Biden’s landmark 2022 climate law almost in its entirety, all eyes turned to the Senate. The upper chamber of Congress must pass its own version of the bill to be reconciled with the House text before anything can get the president’s signature and become law.

On Monday, the Senate Finance Committee released legislative text that showed just how willing Senate Republicans are to follow in the House’s footsteps. The results offer little reassurance to climate advocates.

“Senate Republicans want to get credit for their version being less extreme than House colleagues,” said Seth Nelson, deputy communications director for the climate advocacy group Evergreen Action. “The emissions goals that President Biden laid out cannot be fulfilled if this stands as is.” 

Biden’s 2022 law aimed to put the U.S. on the path to net-zero emissions primarily by doling out generous tax credits to companies who build carbon-free sources of power; the GOP majority that took control of the House of Representatives this year has aimed to phase out these credits as soon as possible. But while the Senate text is less drastic, extending existing tax credits for energy sources like nuclear, geothermal, and battery storage into the 2030s, it maintains a rapid phase-out of federal support for the two main pillars of the energy transition: wind and solar power. The Senate also showed no mercy for climate-conscious consumers, proposing to eliminate generous federal subsidies for adopting energy-efficient technologies, like heat pumps and rooftop solar panels, as well as electric vehicles.

Robbie Orvis, a senior director for modeling and analysis at the nonpartisan think tank Energy Innovation, said that while the Senate text is meaningfully different from the House version, it “may still end up very close to the same point on emissions.”

Indeed, if the Senate text is passed and signed by the president, the Finance Committee’s cuts — particularly the loss of hundreds of billions of dollars in estimated tax credits for wind and solar — make it far less likely that the U.S. will get anywhere close to the emissions reductions forecasted as a result of Biden’s law. That legislation was projected to bring U.S. emissions down by close to 50 percent from their 2005 peak by 2035, putting the country within close reach of its goals under the 2015 Paris Agreement. Now, Democrats and environmentalists are facing the possibility that they were overconfident in the staying power of their biggest victory of the past decade.

“I think a lot of single-issue climate groups woefully overestimated the salience of climate and the tax credits for individual members of Congress,” said Josh Freed, senior vice president for climate and energy at the think tank Third Way.

When Democrats passed the Inflation Reduction Act, or IRA, in 2022, the theory underpinning the largest climate spending legislation in world history was that Republicans, should they wrest back control of Congress, wouldn’t vote to repeal a bill that funnels billions of dollars into the less-developed parts of the country where plans for factories like new battery manufacturing plants sprung up shortly after the law’s passage — the same parts of the country that are more likely to be represented by Republicans. That theory didn’t hold up in the House of Representatives last month, when moderate Republicans — representing districts receiving the vast majority of the clean energy benefits of the IRA — voted to effectively repeal the legislation in a massive budget reconciliation bill that aims primarily to extend and deepen the large tax cuts that President Trump pursued during his first term as president.

The theory had better success in the Senate — but not the way that Democrats were hoping. So far the Senate has preserved the parts of the bill that could lead to high-profile factory openings and permanent jobs — support for things like battery manufacturing facilities and nuclear power plants — but not the stuff that is likely to have the greatest impact on emissions: installing more and more wind and solar power to crowd out fossil fuels in the U.S. energy mix. In terms of building political support for climate action, Democrats may be learning that there is no substitute for persuading their opponents that the ends of their energy policies — bringing emissions down to net-zero — are just as desirable as the means of creating jobs and building out a more diversified and efficient energy system.

It remains to be seen if the Senate Finance Committee’s text can secure the 50 Republican votes needed to pass the chamber. In April, before the committee’s deliberations, Alaska’s Lisa Murkowski, Utah’s John Curtis, Kansas’ Jerry Moran, and North Carolina’s Thom Tillis sent an open letter to Senate Majority Leader (and Finance committee member) John Thune warning him that dismantling the IRA tax credits would destabilize investments already underway in their states. 

“A wholesale repeal, or the termination of certain individual credits, would create uncertainty, jeopardizing capital allocation, long-term project planning, and job creation in the energy sector and across our broader economy,” they wrote. 

Other Republican senators — Iowa’s Chuck Grassley, president pro tempore of the Senate and the godfather of the clean energy production tax credit, Louisiana’s Bill Cassidy, North Dakota’s John Hoeven, and West Virginia’s Shelley Moore Capito — have signaled interest in preserving the tax credits. It’s not clear yet if the current text’s relatively stingy preservation of the credits is enough to satisfy them. Susan Collins, a moderate Republican from Maine, has been the target of a pressure campaign being waged by a coalition of climate-aware labor groups in her state who want her to go to bat for the IRA. 

IRA funding has already been a boon to a range of clean energy businesses, including everything from solar, wind, and battery manufacturers to sustainable aviation fuel providers and electric vehicle component makers. A little more than half of the $321 billion in clean energy investments that have resulted from IRA’s financial incentives have landed in states represented by Republican senators — and a full 80 percent are in Republican House districts. According to the Clean Investment Monitor, a project led by the Rhodium Group and MIT’s Center for Energy and Environmental Policy Research, the investments have created more than 26,000 jobs so far and are projected to create nearly 63,000 more. Separately, a Grist analysis of the funding that the IRA made available through federal grants and loans shows that an additional $15 billion has gone to Republican-led states.  

“The same is not true in places that are more urban, for instance, in the Northeast,” said Hannah Hess, an associate director with Rhodium Group’s energy and climate practice. “We aren’t seeing a ton of investment and a ton of jobs.”

As senators begin to consider the Finance Committee’s text, Majority Leader Thune still has his work cut out for him. The GOP has to walk two tightropes at the same time, because its ultra-conservative and moderate Senate factions have competing priorities. While moderates want to preserve federal support for (some) sources of next-generation energy, fiscal hawks like Senator Ron Johnson of Wisconsin want deeper spending cuts. Thune, from South Dakota, can only afford three “no” votes. Whatever bill the Senate passes has to go back to the House for its approval, and multiple House lawmakers have said they will tank the legislation if the Senate has materially changed it — which it already has. 

Despite the fact that House Republicans voted nearly unanimously to phase out the IRA clean energy credits, the lower chamber seems divided on what it wants the ultimate outcome to be: 13 House Republicans sent the Senate a letter last week urging it to undo the damage they did. 

“We remain deeply concerned by several provisions, including those which would abruptly terminate several credits just 60 days after enactment for projects that have not yet begun construction,” the letter said.  

New York’s Chuck Schumer, the Democrat who is the Senate’s Minority Leader, has assembled a team of Democrats to lobby the 16 Republican senators whom he has identified as potentially persuadable. “We want a critical mass of Republicans to go to [Majority Leader John] Thune and say, ‘You’ve got to change this, because I’ll lose thousands of jobs in my state,’” he told Axios in an interview. If that approach fails, Democrats have a few additional options. They could introduce a long list of amendments to the bill, or push House Republicans to protect the clean energy incentives when the bill is sent back to the House. But given paltry GOP support for the bulk of the IRA so far, their best hope may well be dysfunction across the aisle.