How to phase out Biden-era green energy tax credits is emerging as a key flashpoint among Senate Republicans as they seek to advance their version of the “big, beautiful bill.”
The Senate is taking an approach to the credits for climate friendly energy that is less aggressive than the House but still represents a major rollback of the incentives.
Members who have opposed a full repeal of the credits have signaled that the upper chamber’s approach still goes too far. But Sen. Josh Hawley (R-Mo.) has emerged as a leading voice calling for the subsidies to be phased out more quickly.
Hawley told reporters this week that solar tax credits cost “a gob of money.”
“Funding the Green New Deal is like the least conservative thing I could think of to do,” he said.
The dynamic sets up a difficult task for leadership, as President Trump has said he hopes to sign the legislation by July 4. The discord also comes amid similar policy differences on Medicaid and federal tax deductions in areas with high state and local taxes.
While Hawley, who opposes Medicaid cuts pressed by the right, says the green subsidies should be reduced, lawmakers who have called for leniency said they generally approve of the current approach — but they’d like to see further changes.
“I think that Sen. [Mike] Crapo did a really good job, but there’s more work to be done,” Sen. John Curtis (R-Utah) told The Hill, referring to the Idaho Republican chair of the Senate Finance Committee. Curtis declined to elaborate.
Sen. Thom Tillis (R-N.C.) — who, like Curtis, has called for a “targeted, pragmatic approach” toward the tax credits and not a “full repeal” — told reporters he was generally pleased with what Senate leaders came up with.
“They’ve moved substantially in the right direction,” Tillis, who faces a closely watched reelection race next year, said Wednesday.
He added that he expected to see “a few more adjustments,” particularly in terms of restrictions on energy projects’ reliance on China.
Meanwhile, West Virginia Sen. Shelley Moore Capito (R) said she’s pushing for more flexibility for tax credits for hydrogen energy.
Capito, whose state is home to one of several “hydrogen hubs” set up under the Biden administration, told The Hill on Wednesday that she’s wants to “push the dates back” since the bill would require projects to be under construction by the end of this year to qualify for the credit.
“That’s a pretty tight timeline,” she said. “I’m trying to get the date pushed back. I don’t know if I’ll be successful.”
However, she also said that she’s not willing to torpedo the entire bill over the issue.
“It’s not a hard line for me, but I’m not the only one who has an interest in this,” she said.
The disagreements emerging within the Senate GOP come on top of an impending clash with the House, where the conservative Freedom Caucus says it will not accept changes that water down the House-passed cuts to the tax credits.
The House version included provisions that were expected to kneecap access to some credits, particularly for wind and solar, such as language saying projects could only be eligible if they began construction within 60 days of the bill’s enactment.
The Senate version removed this provision and some others passed by the House, generating pushback among some hard-line conservatives.
“They either fix it or they don’t have my vote,” Rep. Chip Roy (R-Texas) told reporters this week. “The president rightly campaigned on terminating the Green New Scam subsidies. It’s destroying our grid. It’s subsidizing China.”
In the House, a contingent of moderate members were also pushing for leniency on the tax credits, but most of them still lined up to vote for the bill’s more dramatic cuts. It’s not clear which faction will win out in the Senate.
The 2022 Inflation Reduction Act passed by Democrats included hundreds of billions of dollars’ worth of tax incentives for climate friendly energy sources including wind, solar and nuclear energy, as well as emerging technologies such as hydrogen and carbon capture.
Republicans have set out the goal to repeal these credits — partly as a pay-for for tax cuts and partly due to ideological opposition to them.
Democrats have warned that axing the credits would undermine the fight against climate change, contributing more greenhouse gases to a dangerously warming planet. And they argue that fewer renewables on the grid means higher energy prices.
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