The House voted almost entirely along party lines on Thursday to approve a big budget bill that would send many of the Inflation Reduction Act’s clean energy provisions to an early grave. Now the Senate will take a shot at drafting its own version.
Two major losses in the House bill are the production and investment tax credits for clean power projects known as 45Y and 48E, which would be phased out much more quickly than under the IRA. Clean power projects would have to start construction within 60 days of the bill being signed into law to be eligible for the incentives, and start service by the end of 2028. Another provision means bad news for rooftop solar, as it eliminates incentives for installations that companies build on homeowners’ roofs for free or at a low price and then lease back to them.
Nuclear power, on the other hand, made out a little better. Advanced nuclear facilities would only have to start construction by the end of 2028 to access 45Y and 48E tax credits.
Several more clean energy incentives face straight-up termination, including tax credits homeowners can use to install electric appliances and make energy-efficient home improvements. The bill would also end tax credits for buyers of EVs, and then punish all EV owners with a $250 annual fee, based on the reasoning that they are getting an unfair deal because they don’t pay gas taxes — even though that math doesn’t add up.
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More federal clean energy funding is in jeopardy
Energy Secretary Chris Wright announced a push last week to roll back what he called “wasteful spending of taxpayer dollars,” and former DOE officials told Latitude Media that Loan Programs Office funding could be the first to go. The LPO allocated more than $107 billion to ambitious clean energy projects under former President Joe Biden, but many of those loans didn’t make it past conditional status, making them easier for Wright to revoke.
LPO uncertainty has already led some conditional recipients to back away from their loans. Battery-component manufacturer Aspen Aerogels ended negotiations in February to finalize its loan to build a Georgia factory, saying it would expand production in China and Mexico instead. That’s the exact kind of thing LPO funding was intended to discourage, said Jigar Shah, who headed the LPO under Biden.
“Based on the early actions of this administration, we can expect to see more and more American factories cancelled or closed, leaving our communities with more broken promises,” Shah said in a statement. “We are on track to again cede our manufacturing industry to China.”
