02-07-2025
The US has just exposed the green industry's dirty little secret
The cat is out of the bag. Electricity made from renewable sources is not as 'cheap' as its advocates sometimes claim. It evidently cannot survive without billions annually in tax credits.
That's the message from the latest skirmish over America's renewable energy future, where the House and Senate have unveiled duelling visions for the rollback of energy tax credits – each with its own tempo and tone. The vitriolic reaction from the green lobby, and the predictions of disaster for renewables should any of these changes be passed into law, have exposed just how economically unsustainable even the fiercest backers of these energy sources clearly accept them to be.
Supporters of renewable energy have assured us for years that the wind blows and the sun shines free of charge. But although these technologies have received hundreds of billions in subsidies globally over the past 20 years, proponents still demand more – for a few years, we're told, until renewables can stand on their own feet.
Senate Minority Leader Chuck Schumer said: 'Eliminating these tax credits radically and irresponsibly rolls back all the progress we have made in recent years. It turns America's clean energy boom into a bust.'
But the boom was always something of an illusion. It is often asserted that electricity in the United States made with wind and solar is less expensive than electricity made by natural gas and coal. But rather than declining, average American electricity prices have risen considerably over the past 20 years as wind and solar have entered the electricity mix.
One dirty little secret is that, on a state-by-state basis, nine out of the top 10 states in electricity prices in the United States in 2024 required renewable energy as part of their electricity mix. The bottom 10 states generally did not require renewable energy.
It can cost utility companies more to provide people with electricity using intermittent sources than continuous sources such as natural gas, coal, and nuclear power. The utility company is likely to need to put other energy sources in place, to provide back-up should demand not be met when the wind doesn't blow and the sun doesn't shine.
For instance, when the wind stops, an alternative such as a natural gas power plant will likely need to be turned on to meet demand. Then it's turned off when the wind starts. With America's low natural gas prices, it is always likely to be cheaper to have one set of equipment and to operate one power plant continuously, rather than having it sit idle as the wind blows.
Taxpayers are paying multiple times for renewables. In their electricity bills, they pay not only for wind and solar, but for the backups to the wind and solar. In their tax bills, they pay for the energy tax credits. They also give up faster economic growth when electricity prices rise.
Another dirty secret is that renewable energy is often neither green nor clean. About 70 per cent of solar panels, wind turbines, batteries and their components are made in China, which remains reliant on coal-fired power plants to fuel its industries. Wind turbines kill birds, and, when offshore, can harm sea mammals. Solar power can take over agricultural land, which is likely to drive up the price of food. Green and clean are marketing hype used to push renewables onto unsuspecting consumers.
While both chambers agree on tightening the purse strings by reducing tax credits, the House opts for a cliff-edge approach, while the Senate favours a more gradual wind-down.
The House draws a hard line at Dec 31, 2025. From clean vehicles to home energy upgrades, nearly all credits vanish at the stroke of midnight. Even the clean hydrogen and nuclear incentives face sharp cut-offs, with added restrictions on foreign influence. Transferability of credits? Many are axed. The message is clear: the era of generous subsidies is fast ending.
The Senate, by contrast, offers a more calibrated exit. Clean vehicle credits expire by Sep 30, 2025, but major production and investment credits are phased out over years, some as late as 2036. The Senate also tightens rules on foreign entities, but with more nuanced thresholds and timelines.
Both bills close ranks on national security. Credits are denied to entities with ties to China, Russia, and other adversaries. The clean hydrogen credit in the House bill expires at the end of this year, but in the Senate bill by the end of 2027. Carbon capture faces identical construction cut-offs and foreign ownership bans. But only the House repeals credit transferability, an investor-friendly feature the Senate preserves.
With the end of these tax credits, Americans may well discover that the true costs of renewable energy are higher than utility companies are willing to bear. Developers are already saying that they will halt projects without the tax credits.
If the age of renewable energy tax credits is drawing to a close, Americans will be the beneficiaries. The question is how abruptly Washington will pull the plug – and whether other countries will follow.
