Senate version of Trump bill would hit renewable energy industry with new tax
The latest version of the bill containing President Trump's second term agenda would hobble the renewable energy industry with a new excise tax, in addition to speeding up the sunsetting of tax credits and other benefits.
The additional tax on wind and solar projects, which appeared on page 558 in the version of the bill released over the weekend, is estimated to increase consumer energy prices 8% to 10% and would tax clean energy businesses an additional $4-$7 billion by 2036, according to an analysis by the American Clean Power Association.
The tax would apply to all projects that go into construction after June 16 through 2036, and it would also apply to projects that are placed into service after 2027, even if they already are under construction.
Alaska Republican Sen. Lisa Murkowski told Politico Monday that she planned to introduce an amendment that would tie eligibility for the wind and solar tax credits to a project's construction start date, rather than its service date. The Senate is currently holding a marathon vote series on proposed amendments to the bill.
These wind and solar projects would have to pay the tax if a certain percentage of the value of their materials are sourced from prohibited foreign countries, like China. The provision is ostensibly designed to boost domestic manufacturing, but developing these projects by working around Chinese components would be cost prohibitive, and some data and AI companies — which require prodigious amounts of energy — could turn to China or other countries for reliable and affordable power sources, according to clean power experts.
The Senate bill also scales back or eliminates renewable energy tax breaks that have been in place since 2005 and revised and expanded a few times since then, including in the 2022 Inflation Reduction Act. The most recent expansion contained tax breaks for individuals for electric vehicles, wind and solar development, and energy efficient appliances and provided tax credits for clean electricity-generating projects that went into service from 2023 through the end of 2032.
Both the Senate and the House would end the renewable energy tax credits, but the Senate would accelerate the timeline in the House version, which would end the tax credits for renewable energy projects placed in service after 2028, a year later than the Senate would.
Eliminating the existing tax credits would likely kill up to 72% of the new wind and solar installations that were to be completed in the U.S. over the next decade, according to analysis from Rhodium Group, a research firm.
Tesla CEO Elon Musk, who until Saturday was silent on the bill after his social media spat with President Trump over the House version, said of the Senate bill that it was "Utterly insane and destructive."
"It gives handouts to industries of the past while severely damaging industries of the future," he said in a post on X. And he predicted it would "destroy millions of jobs in America and cause immense strategic harm to our country!" Musk also said, "A massive strategic error is being made right now to damage solar/battery that will leave America extremely vulnerable in the future."
According to Politico, President Trump asked Senate Majority Leader John Thune to further "crack down" on wind and solar energy by phasing out clean energy credits faster, rather than sunsetting the tax incentives more slowly, which moderate senators favored. Some asked for help easing the hit their states would take as a result of cancelled projects, job losses and higher energy prices.
The renewable energy industry, manufacturing unions and even some conservatives also criticized the new tax.
Conservative energy expert Alex Epstein, advocates ending the green tax credits, but he appeared to be taken by surprise by the excise tax, saying in a post on X, "I just learned about the excise tax and it's definitely not something I would support."
The U.S. Chamber of Commerce also quickly condemned the tax.
Neil Bradly, the Chamber's executive vice president, said on social media, "taxing energy production is never good policy, whether oil & gas or, in this case, renewables. Electricity demand is set to see enormous growth & this tax will increase prices. It should be removed."
The North American Building Trades Union, in a statement, called the bill potentially "the biggest job-killing bill in the history of this country."
"Simply put, it is the equivalent of terminating more than 1,000 Keystone XL pipeline projects," the statement continued. "In some cases, it worsens the already harmful trajectory of the House-passed language, threatening an estimated 1.75 million construction jobs and over 3 billion work hours, which translates to $148 billion in lost annual wages and benefits."
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