Yesterday, the Ways and Means Committee of the U.S. House of Representatives introduced the first draft of its section of the GOP’s “one big bill,” and it takes a chainsaw to tax credits for clean energy and transportation. In this draft, nearly all of the federal clean energy credits are taken away from Americans, the result of which would be higher energy costs we all would be forced to pay, and fewer options for taxpayers to reduce their tax bills.

Here is a brief summary of how the draft policy would harm Americans through repealing key tax credits:

• Tax credits for electric vehicles (personal and commercial) would mostly be taken away after this year, depriving Americans of 7 years of availability, generally, and hundreds of billions of dollars of credits and reduced transportation costs
• Tax credits for residential energy efficiency, solar, and batteries would be taken away after this year, depriving American households of 7-9 years of availability and more than 100 billion dollars
• The availability of commercial tax credits for businesses, governments, schools, nonprofit organizations and more to install or produce clean electricity would be cut very short, with most future clean energy projects ineligible for the full credits
• Tax credits for businesses to manufacture wind energy components get taken away 5 years early
• Tax credits for businesses, governments, schools, nonprofit organizations and more to install geothermal heat pump credits would get 3 years of availability taken away
• A provision known as transferability of commercial tax credits would be taken away on various timelines, depending on the specific credit, so the credits will be worth less and harder to monetize

This draft proposal harms American households and is also anti-business. Here are a few reasons why Congress must rethink this reckless approach to energy policy:

1) Clean Energy Tax Credits Lower Energy Costs For Everyone

Clean energy tax credits lower energy costs for all Americans, not just those directly filing for the tax credits. Recent research by multiple independent expert firms has found that repealing the clean electricity tax credits would raise energy costs for consumers and worsen inflation. Repealing two of the biggest tax credits is estimated to raise household energy bills by around $6 billion annually in the next five years and $25 billion annually by 2040. Put another way, annual household utility bills could increase by more than $110 on average, and businesses could see at least a 10% increase in energy costs, which would be passed on to consumers. One of these studies found that North Carolinians, South Carolinians, and Tennesseans would be particularly hard hit by higher electricity prices, facing 10-15% higher prices for residential customers in 2026 and 2029 without the major clean energy tax credits. Without these tax credits, commercial and industrial customers in these states would be paying 15-22% higher electricity prices in 2026 and 2029.

2) Clean Energy Tax Credits Are Incredibly Effective At Reshoring Manufacturing and Spurring The Economy and Job Growth Nationally and Especially in the Southeast

The current energy tax credit law is spurring the largest expansion of factory construction in American history. Companies have announced and advanced 751 new projects, $422 billion in investments, and 406,007 new jobs in the clean energy and clean vehicle industries across the nation since August 2022, when many of the clean energy tax credits were either extended or initially created. 

Looking specifically at our region of the Southeast, in North Carolina, Tennessee, South Carolina, Georgia, and Florida, we have benefited with announcements totaling more than $73 billion in private investment into the clean energy industry supply chain, and more than 92,000 new clean energy jobs.

Repealing or compromising the clean energy and clean vehicle tax credits would jeopardize or reverse this growth. For example, expert research has found that eliminating the clean vehicle tax credits would put as much as 100% of planned construction and expansion of U.S. electric vehicle assembly and half of existing assembly capacity at risk of cancellation or closure, and could put 29-72% of battery cell manufacturing capacity currently operating or online by the end of 2025 at risk of closure, in addition to 100% of other planned facilities.

3) Clean Energy Resources Are Best Positioned to Meet Near-Term Energy Demands for Economic Growth

Power demand is surging with economic growth, seen most dramatically in domestic manufacturing and the computing needs for AI. Solar and battery projects are already in grid interconnection queues and can be built to supply these needs much faster than any other sources of new generation. Large solar and battery projects can typically be online less than 18 months after contracts are signed and permits approved, whereas gas power plants typically take multiple years and nuclear plants take over a decade. 

You don’t need to take our word for it…the trade group for investor-owned utilities, Edison Electric Institute, says “In the event of a significant reduction in these tax credits, it is estimated that nearly 75 gigawatts of planned new generation capacity will be cancelled between 2025 and 2032. While some of the planned renewable generation will shift to natural gas, it is not enough to meet the anticipated energy demand during this time frame.”

Republicans in Congress Must Fix This Mess

If the goal of this bill is to lower costs for working families and grow American businesses, this draft bill not only fails miserably, but completely backfires. This bill is widely expected to be a party-line bill, meaning if it’s Republicans who pass it, then it’s Republicans who will bear the blame of these cost increases on Americans and business-stifling policies. It’s also Republicans who can fix it, starting today. Indeed, quite a number of Republican members of Congress have already put themselves on the record in support of continuing the tax credits and keeping the positive impacts the credits bring about (i.e. here, here, and here).

Today is the bill’s first hearing in the Ways and Means Committee. It is expected that the bill will be taken up on the House floor next week, and then will be taken up by the Senate next month. Each of these steps gives opportunities for legislators to fix this mess and preserve the good energy policy that is demonstrably working in favor of Americans.

Please take a moment to email or call your members of Congress, asking them to stand up for consumers and defend clean energy tax policy.

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The post The House GOP’s Energy Policy Would Increase Your Bills and Raise Taxes appeared first on SACE | Southern Alliance for Clean Energy.

The House GOP’s Energy Policy Would Increase Your Bills and Raise Taxes