The GOP's big spending bill could kill renewable energy projects

The Verge

01-07-2025

Senate Republicans today passed a sweeping spending bill that narrowly avoided punitive tax measures on renewable energy but still threatens to stall its growth in the US.
After wrangling over hundreds of amendments for more than 24 hours in a so-called 'vote-a-rama' on Monday and Tuesday, Senate Republicans advanced the bill with provisions that make it near impossible for many renewable energy projects to qualify for tax incentives Congress passed in 2022. But a last-minute amendment eliminated a proposal to impose a new excise tax on solar and wind projects, which industry groups and advocates warned could have done even more to cut jobs and raise electricity bills.
The fate of renewable energy projects — many of them in Republican districts — was a major sticking point that nearly stopped GOP lawmakers from reaching an agreement on the 'One Big Beautiful Bill Act' that's a key pillar of Donald Trump's agenda. As passed, the Senate bill could have wide-ranging effects on many Americans' lives, including cuts to Medicaid and food assistance programs, a spectrum auction that could slow down Wi-Fi speeds, massive funding increases for Trump's mass deportation campaign, and much more. (A 10-year moratorium on state AI laws was dropped at the last minute.) It's now headed back to the House to vote on any changes that have been made to the text since it passed its own version of the bill in May.
The fate of renewable energy projects — many of them in Republican districts — was a major sticking point
'There's this push and pull between [GOP] members who … see the importance of doing things for their constituents, and a kind of ideological argument at a national level' that vilifies wind and solar energy, says Nat Keohane, president of the Center for Climate and Energy Solutions (C2ES).
Clean energy and climate advocates are still outraged by the bill's slashing of incentives for renewables — on top of other language that gets rid of energy efficiency programs, guts protections for public lands, and winds down tax credits for electric vehicles.
The bill nearly passed with a measure that could have devastated renewable energy companies. On Friday night, a surprise proposal was added for an excise tax on solar and wind projects. The tax would have essentially penalized developers who failed to meet requirements barring 'material assistance from prohibited foreign entities.' In other words, they'd have needed to prove that their supply chains weren't tainted by any materials or business ties to foreign governments the Trump administration deemed unacceptable — including China, which dominates supply chains for solar components and wind turbines. 'It's almost spiteful,' Keohane says of the plan.
The proposed tax was dropped this morning. But some advocates worry that introducing and removing the excise tax was a red herring, drawing attention away from other measures that could still derail renewable energy projects.
Most prominently, the bill sets aggressive deadlines for any wind and solar developers hoping to take advantage of Biden-era tax credits for carbon-pollution-free energy. Biden committed the US to slashing greenhouse gas pollution roughly in half from peak levels by the end of the decade under the Paris Agreement. To reach that goal, Congress passed the Inflation Reduction Act (IRA), which expanded tax credits for pollution-cutting technologies including renewables, in 2022.
Today, the Senate passed language that stipulates that solar and wind projects would need to either start construction within a year of the bill's enactment or be placed in service by 2027 in order to qualify for IRA tax credits. Many projects would struggle to meet that truncated timeline given the long lead times needed to secure financing and permits and connect to the power grid.
Republican districts actually stand to benefit the most from IRA incentives for new solar and wind farms and factories. The tax bill's future seemed to hinge largely on getting Sen. Lisa Murkowski (R-AK) on board with these limits, as well as cuts to Medicaid and food assistance programs. Murkowski co-sponsored the amendment to toss out the excise tax on renewables and eventually voted in favor of the bill — giving Republicans the 51-50 vote they needed to succeed (with Vice President JD Vance casting the tiebreaking vote).
The fact that solar and wind — favorite punching bags of Trump and other right-wing culture warriors — were targeted rather than other carbon-pollution-free sources of electricity, like nuclear reactors, is telling. Trump, who campaigned with support from the fossil fuel industry, has been particularly vitriolic against wind and solar energy. Misleading claims about renewable energy projects harming wildlife and inaccurate claims about wind and solar leading to power outages have been flagged by researchers as leading talking points in disinformation campaigns about climate change.
Secretary of Energy Chris Wright repeated similar tropes in an op-ed he published in the New York Post last week in support of the bill. Before Trump tapped him for his current role, Wright was CEO of Liberty Energy, a major oil and gas service provider that claims that roughly 10 percent of total US primary energy production comes from wells it fracks. Wright also used to sit on the board of a nuclear energy startup with OpenAI CEO Sam Altman. Trump has signed executive orders aimed at speeding the development of new nuclear technologies.
Tech giants, including Google, Microsoft, Meta, and Amazon, are also banking on nuclear energy to power data centers that are expanding to support the computing needs of AI. The growth of AI, domestic manufacturing, and the electric vehicle industry has led to electricity demand jumping for the first time in more than a decade in the US.
That issue — on top of the health and climate risks posed by fossil fuel pollution — is a big reason why advocates say this is the worst time to kill new renewable energy projects. It could take years or decades to commercialize new nuclear technologies, but wind turbines and solar panels are already mature technologies.
'At a time when we need new energy more than ever, Republicans are punishing the plentiful wind and solar power that can be quickly added to the grid,' Manish Bapna, president of the nonprofit Natural Resources Defense Council, said in a press release.
Solar and wind together reached a milestone last year, when they produced more electricity than coal for the first time in the US. Gas still makes up the biggest chunk of the US electricity mix, however, at around 40 percent of power generation.
'The intentional effort to undermine the fastest-growing sources of electric power will lead to increased energy bills, decreased grid reliability, and the loss of hundreds of thousands of jobs,' American Clean Power Association CEO Jason Grumet said in a press release.
The Senate vote on this bill also reignited Trump's feud with Tesla CEO Elon Musk. Elon Musk posted on X over the weekend that 'a massive strategic error is being made right now to damage solar/battery that will leave America extremely vulnerable in the future' as he renewed calls to create a new political party.