The U.S. House of Representatives Ways and Means Committee has submitted its proposed budget plan, which includes cuts and reductions of core clean energy tax credits and incentives from the Inflation Reduction Act (IRA). The proposal is expected to be voted on Tuesday.
The proposed budget includes an early phase-out of the 48E Investment Tax Credit and the 45Y Production Tax Credit beginning in 2029. Any projects “not placed in service” by December 31, 2028 will qualify for lower credit amounts.
The phase-out was originally designed to begin in 2031, lowering less rapidly than the new proposal. The House proposed the tax credits phase down to:
- 80% in 2029
- 60% in 2030
- 40% in 2031
- 0% in 2032
The House budget also calls for repeal of transferability. Under the transferability provision, tax credits can be sold to entities with a tax appetite in exchange for cash.
The 25D residential tax credit is also cut in the House budget proposal, with any projects not placed in service by the end of 2025 being ineligible, should the bill pass. The 25D credit is available directly to homeowners who install solar or energy storage at their home, though many residential solar providers opt for filing for the 48E Investment Tax Credit instead.
The bill would also rescind any unspent funds from the $27 billion Greenhouse Gas Reduction Fund, administered by the EPA. Trump-appointed EPA director Lee Zeldin attempted to rescind the funds, which included the $7 billion Solar For All program, but federal courts directed the agency to honor the disbursed funds.
E2 said the IRA and its associated tax credits have led to more than $131 billion in private-sector investments into clean energy projects and factories nationwide. About 400 large-scale clean energy projects have been announced since the tax credits were passed, which would create at least 110,000 new permanent jobs across the United States, said E2.
“My company and countless others made investment decisions based on the presence of these tax credits. Stripping them away now will risk undermining successful American businesses, the people we employ and the communities where we operate,” said Michelle Knox, chief executive officer, WindSolarUSA, based in Springfield, Ill.
“Weakening clean energy tax credits would send a chilling signal to investors that back solar and battery projects and make it harder to complete projects that are well into development,” said Erik Lensch, chief executive officer, Leyline Capital. “Abrupt policy reversals undermine confidence and could lead to job losses, higher costs, and stalled development.”
Reuters reports the proposal cuts about $6.5 billion in spending from the Biden-era legislation.
“This measure would hike energy bills — not lower them; reduce domestic energy production — not increase it; and put workers out of jobs — not create them through American manufacturing,” said Jackie Wong, senior vice president for climate and energy at Natural Resources Defense Council.
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