Senate Bill Targets Wind and Solar Industries with New Tax and Federal Subsidy Repeal

The Senate has proposed a bill that not only ends federal subsidies for wind and solar energy but also imposes a new tax on future projects, a move that industry groups say could devastate the renewable power industry. The bill would rapidly phase out existing federal tax subsidies for wind and solar power by 2027, and the new tax could depress deployment even further by raising costs an additional 10 to 20 percent. The Senate bill would also eliminate federal tax credits this year for consumers to buy electric vehicles and to install solar panels and heat pumps in their homes.

Key Takeaways:

• The Senate bill proposes to end federal subsidies for wind and solar energy by 2027, which could derail hundreds of projects under development and hundreds of dollars in manufacturing facilities.
• The new tax provision could affect a large number of companies, particularly those with supply chains tied to China, and has been described as "carelessly written and haphazardly drafted."
• Wind and solar projects are the fastest-growing new source of electricity in the United States, accounting for over 60% of new electricity capacity this year, and are essential to meet soaring electricity demand.
• The repeal of federal subsidies alone could cause wind and solar installations to plummet by as much as 72 percent over the next decade, according to the Rhodium Group.
• The new tax could raise costs an additional 10 to 20 percent and will "create uncertainty and freeze the markets," according to Jason Grumet, chief executive of the American Clean Power Association.
• The Senate bill also eliminates federal tax credits for consumers to buy electric vehicles and to install solar panels and heat pumps in their homes.
• The bill preserves tax credits for sources of emissions-free electricity that can run at all hours, such as nuclear reactors, geothermal plants, and industrial-scale batteries.
• Renewable energy companies say shifting away from Chinese components will be challenging due to unclear requirements.

Statistics:

• The Senate bill proposes to end federal subsidies for wind and solar energy by 2027.
• The new tax provision could depress deployment by raising costs an additional 10 to 20 percent.
• Wind and solar projects account for over 60% of new electricity capacity this year.
• The repeal of federal subsidies alone could cause wind and solar installations to plummet by as much as 72 percent over the next decade, according to the Rhodium Group.
• Renewable energy investments plan for $100 billion in investments across Republican-held districts.

Sources:

• "This is how you kill an industry," said Bob Keefe, executive director of E2.
• "It came as a complete shock," said Jason Grumet, the chief executive of the American Clean Power Association.
• "I strongly recommend fully desubsidizing solar and wind vs. placing a kind of new tax on them," said an influential activist.
• "It should be removed," said Neil Bradley, the group's chief policy officer.
• "The latest Senate draft bill will destroy millions of jobs in America and cause immense strategic harm to our country!"