House to consider repeal of Investment Tax Credit and Production Tax Credit

Two of the most important clean energy policies driving the U.S. energy transition are once again under threat, as the House Ways and Means Committee set to overturn long-term tax credits as created by the Inflation Reduction Act (IRA). The cuts are proposed under a bill called the “Build it in America Act.”

“In less than a year these pro-business, pro-growth policies have spurred more than 65 gigawatts of clean energy manufacturing announcements around the country,” said Abigail Ross Hopper, president and chief executive officer of the Solar Energy Industries Association (SEIA). 

“Repealing the IRA will destabilize the $35 billion solar market and harm thousands of small businesses in the process. More than 255,000 Americans rely on their solar and storage job to support their families, and Congress must act to protect them,” said Ross Hopper.

Ways and Means Committee Chairman Jason Smith introduced the Build It in America Act (H.R. 3938), which contains the potentially devastating cuts to clean energy incentives. The Investment Tax Credit offers a 30% credit for installed system costs, from residential to utility-scale projects, while the Production Tax Credit incentivizes electricity generation from clean sources.

The “Build it in America Act” contains cuts to the two cornerstone tax credits. The Act also makes cuts to the federal electric vehicle tax credit, both for new and used EVs. Furthermore, the Act terminates Superfund funding, which helps support the treatment of hazardous waste in the United States.

The full package of proposed laws, which are a clear bane to the environment and the clean energy transition, can be found here.

“As we traveled to communities across this country, Americans from all walks of life – workers, parents, farmers, and small business owners – have shared their concerns with today’s chronically high prices, climbing interest rates, labor shortages and supply chain failures, as well as the challenge of competing with China,” said Chairman Smith.

“These policies will provide relief for working families, strengthen small businesses, grow jobs, and protect American innovation and competitiveness,” concluded Chairman Smith in a press release.

However, Smith’s view on the effect of these critical incentives on U.S. jobs, energy supply chains, and small businesses may be an inverse from reality.

Since the new clean energy incentives have been announced, over 21,000 new U.S. manufacturing jobs have been created, along with nearly $200 billion in capital investment.

“Despite strong opposition from some House Republicans, the vast majority of this new investment is bringing economic development to rural counties in red states all across the nation,” said Jason Grumet, chief executive officer, American Clean Power Association. “We’re confident that the clean energy tax provisions will be sustained as lawmakers continue to see the benefits their constituents are enjoying from new jobs and affordable, domestic clean power.”

This is the second attempt by a coalition of House members to overturn the Investment Tax Credit and the Production Tax Credit, two policies that are at the core of the United States push toward low cost, carbon-free electricity. The first attempt, which smuggled IRA cuts into the debt ceiling raise bill, was thwarted in negotiations that led to expedited environmental reviews for energy projects of all types. 

(Read: “Senate passes debt ceiling bill in mixed bag for energy and environment”)

“We urge Congress to remove the Inflation Reduction Act’s solar and storage credits from the House Ways and Means tax package,” said Ross Hopper.