Senate GOP bets softer clean energy cuts won't come back to bite them

Politico

7 days ago

'Prices are going to go up, there are going to be energy shortages, and it's going to be the Republicans' fault,' said Sen. Brian Schatz (D-Hawaii), who has predicted the GOP bill would strand hundreds of billions of dollars in investments and have a 'crazy' impact on jobs.
Republicans also are risking factory shutdowns by repealing incentives for the purchase of electric vehicles and other renewable energy components. New manufacturing plants have sprung up across the country since the passage of the IRA based on the expectation that there would be strong demand from consumers.
But some Republicans argued the legislation ultimately struck a careful balance — allowing planned projects that were counting on stable policy to proceed while achieving their goal of sunsetting tax credits they argue are subsidizing mature industries.
'I just felt so strongly that how we transitioned off of these [tax credits] made all the difference in the world,' said Curtis. 'And if we didn't get it right, we'd put tens of thousands of people out of jobs. We'd have stranded billions of dollars in investment. We'd hurt our grid. We don't get the AI. And it would impact utility prices for the average consumer.'
Curtis said he communicated to Senate Majority Leader John Thune that the clean energy issue was a 'red line' for him, meaning he would have voted against the megabill if it contained sharper cuts like those included in the bill passed by the House and pushed by some senators.
He worked behind the scenes with Murkowski and Joni Ernst (R-Iowa), whose state gets a majority of its electricity from wind farms, to soften some of the cuts ahead of the final floor vote. That includes a carve-out that gives wind and solar projects a one-year extension to begin construction. Projects after that would be required to be placed in service by the end of 2027, echoing language in the Senate's updated text last week.
Sen. James Lankford (R-Okla.), whose state is No. 4 in wind power nationally, said the one-year grace period strikes the right balance between ending the subsidies and not impacting shovel-ready projects.
'Those folks that are already in line, that have already got investment dollars, that are already going — they're going to fall in this one year,' he said. 'They're going to get some construction in the ground in the next 12 months. I don't think they'll have a challenge doing that.'
But the late changes risk further deepening a rift with conservatives who were looking to lock in a stricter eligibility standard embedded in the House-passed bill based on when projects enter into service, while giving them less time to start construction to qualify for credits.
As the House moves to take up the bill this week, Rep. Chip Roy (R-Texas), a leader of the hardline Freedom Caucus, said on X the changes secured by Senate Republicans in 11th-hour negotiations represent a 'deal-killer of an already bad deal.'
In addition to phasing out the credits, Republicans will likely face pressure on another key goal: Cracking down on the ability for Chinese companies to benefit from the subsidies.
Late in the negotiations, Republicans added the new excise tax on solar and wind plants containing parts exceeding certain thresholds from foreign entities of concern. Developers said that tax would have been a death knell for the industry had it not been removed.
Hayes, the former GOP staffer who is also a founding partner at lobby firm Lot 16, said beating back that excise tax was a key win since it would have pushed up energy prices 'and, quite frankly, stood out as one of the more misguided ideas anyone has come up with — from either party — in a very long time.'