The crackdown on green subsidies created or expanded through the 2022 Inflation Reduction Act, which was passed by Democrats and signed by former President Joe Biden, came as part of the revised reconciliation bill, the text of which wasn’t released until late Wednesday night.
Republicans have long vowed to roll back Biden’s climate bill, despite concerns from lawmakers in their own party and major industry players who have said the tax credits are key for domestic energy development.
The cancellation of these credits will help offset a range of tax cuts in the legislative bill, including the extension of the 2017 Trump tax cuts.
The passage of the bill, which is now headed to the Senate, marks a win for conservatives such as Rep. Chip Roy (R-TX), who called for a complete repeal of the clean tax credits and criticized the Ways and Means Committee proposal to begin phasing out the credits in 2029.
Although some in the party objected to the clean energy cuts included in the original version of the bill, the final version included steeper cuts.
The revisions specifically end technology-neutral tax credits for all projects unless they are able to start construction within 60 days of the bill’s enactment and are placed in service by the end of 2028.
Additionally, the bill denies subsidies for expenditures for certain wind and solar leasing arrangements, adding to Republicans’ crackdown on renewable energy sources.
Democrats have insisted that these credits benefit all types of carbon-free energy, including nuclear, geothermal, and hydropower — energy sources generally viewed more favorably by conservatives. However, Republicans have said the credits have primarily been used to support renewables such as wind and solar, sources they have said should now be able to survive in the market without federal backing.
Centrists saw one small win in the revised bill for nuclear energy, which was facing strict phase-outs of related subsidies by 2031 — a timeline nuclear advocates said would threaten new domestic buildout.
Nuclear developers are still subject to the updated 2028 phaseout timeline, but they will be eligible for the credit if they have only started construction by that date and are not yet in operation.
The bill would extend a tax credit for existing nuclear reactors until 2031, two years later than House Republicans previously proposed. Additionally, it would only allow transferability — the process that allows companies to sell tax credits to a third party — for nuclear energy.
The relief followed a plea from Energy Secretary Chris Wright for Congress to protect support for nuclear energy, as the administration has repeatedly emphasized its importance in carrying out its energy dominance agenda and supporting its efforts in the race for artificial intelligence.
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The energy secretary was called into a meeting with House Republicans on Wednesday night, Politico reported. Lawmakers in the meeting said Wright helped “brainstorm” ideas for the updated text.
With the bill headed to the Senate, the strict phase-outs of the clean energy tax credits could be revised again, as numerous Republicans in the upper chamber have voiced their support for keeping these subsidies in place.
