Now that the U.S. House of Representatives has passed a measure to kill nearly every federal tax credit there is to support the clean energy transition, gobsmacked advocates and industry leaders in solar, wind, and electric vehicles are looking desperately to the Senate to amend it.
In North Carolina, that means all eyes turn to senior U.S. Sen. Thom Tillis, a second-term Republican up for reelection next year in this steadfast purple state, which is already reaping benefits from the clean energy economy.
“Sen. Tillis is going to be so important, along with other voices,” said Stephen Smith, executive director of the nonprofit Southern Alliance for Clean Energy, “because he has indicated that we don’t want to whipsaw 180 degrees back and forth between approaches to energy policy.”
Tillis is among four Senate Republicans who signed an April letter urging a targeted approach to reforming renewable energy tax incentives rather than a wholesale repeal. The four signatories alone could sink the House measure if they joined Senate Democrats in opposing it.
The senator’s stance, the economic benefits of clean energy, and bipartisan support among voters for solar, wind, and efficiency all give advocates in the state some cause for cautious optimism. So does the reality that solar and batteries are the quickest, cheapest way to solidify the nation’s “energy dominance,” a frequently stated goal of President Donald Trump.
“We need energy today and tomorrow,” said Chris Carmody, executive director of Carolinas Clean Energy Business Association, a trade group. “Not only are renewables and storage the lowest-cost option, they’re also the fastest to build.”
The clean energy economy has an intricate foothold in North Carolina. Largely owing to its acres upon acres of solar fields, the state was home to the fourth most solar capacity in the country last year, supporting over 7,000 jobs, according to the Solar Energy Industries Association. And the region doesn’t just use solar equipment, it also makes it: Vietnamese panel manufacturer Boviet Solar opened its first U.S. plant in Greenville, North Carolina, in April, with plans for expansion next year that would create over 1,300 local jobs.
The Tar Heel State is also a leader in the emerging electric vehicle supply chain, with lithium mines, Toyota’s massive battery plant in Randolph County, and EV factories all in the works. Its robust manufacturing sector already produces a number of renewable energy components. In all, North Carolina boasts over 109,000 clean energy jobs, the ninth most in the country, per the national nonprofit E2.
The federal tax credits that helped spur this economic activity were first enacted decades ago with bipartisan support. Combined with favorable state policies, that means that wind, solar, and battery storage were on the rise during the first Trump administration and before. But the incentives were undoubtedly supercharged by the Inflation Reduction Act of 2022.
The landmark climate law extended the tax credits for large wind and solar projects and rooftop solar through 2032, then tapered them down over several years. It enacted new and expanded incentives for rooftop solar, EV purchases, and energy-efficiency improvements, set to end around the same time. It also included an advanced manufacturing incentive, designed to spur domestic production of minerals, battery components, and more.
This 10-year runway of economic certainty sparked a wave of clean energy development across the country. After the passage of the climate law in August 2022, E2 says 27 new projects were announced in North Carolina alone, representing an investment of over $21 billion.
House bill takes sledgehammer, not scalpel, to clean energy incentives
Experts say the House Republicans’ budget measure, which cleared the chamber by just one vote, would imperil all of these economic gains. The tax credits that benefit large clean energy projects will last until 2028, but only for those that begin construction within 60 days of the bill’s passage, an impossibility for most.
“Unless your project is shovel-ready and has gotten every permit, there’s no project, in any type of energy, that can go from zero to begin in 60 days,” Carmody said.
The rare developer who can begin construction that quickly faces another seemingly insurmountable hurdle: It must document that no component of its project, no matter how small, is linked to a “Foreign Entity of Concern” such as China. That requirement also applies to the advanced energy manufacturing tax credit, rendering that incentive all but useless even though it’s extended beyond 2028.
“It’s never been done before for any industry. It’s incredibly onerous,” said John Szoka, CEO of the Conservative Energy Network. “We have a global interconnected economy. We definitely want more manufacturing back in the U.S., and I agree with the president 100% on that. But the way that [provision] is worded, it’s almost impossible to meet.”
The House bill abruptly eliminates at year’s end an array of tax credits for EVs and charging infrastructure. Combined with the poison-pill provision on foreign components in advanced manufacturing, the termination of those incentives could kneecap the state’s burgeoning EV sector.
“The bill passed by the House takes a sledgehammer to North Carolina’s EV industry and undermines efforts to build secure and reliable access to critical minerals,” said Ben Prochazka, the North Carolina-based executive director of the Electrification Coalition, a national nonprofit.
“Removing these credits would pull the rug out from under the auto and aligned battery industries at a critical time, immediately putting North Carolina jobs at risk,” he said.
