House Ways and Means Republicans unveiled legislation Tuesday that would slash renewable energy and climate tax credits established or enlarged by former President Joe Biden’s Inflation Reduction Act.
The legislation would terminate and modify clean energy and manufacturing tax credits from the IRA, which was passed by Democrats in 2022. The IRA provided hundreds of billions of dollars in tax incentives for clean energy projects, technologies, and incentives. President Donald Trump has vowed to undo many of Biden’s clean energy initiatives.
The text released Tuesday is one part of the multitrillion-dollar tax-and-spending legislation that Republicans aim to pass through budget reconciliation, allowing bills to bypass the filibuster and pass with only a simple majority in the Senate. The centerpiece of the legislative package is an extension of the 2017 Trump tax cuts. The final bill, though, is expected to include provisions that eliminate tax credits or cut spending, to offset tax cuts.
The legislation terminates the $7,500 tax credits under the IRA for the purchase of electric vehicles, known as 30D credits. The Trump administration has targeted policies that boost the electric vehicle industry, claiming the Biden administration has set a de facto “EV mandate” through these policies. The bill also would terminate the tax credit for businesses purchasing or leasing certain electric vehicles.
The bill also repeals the Clean Hydrogen Production 45V tax credit by next year. The tax credit sets a 10-year incentive for clean hydrogen.
Republicans had asked Ways and Means Chair Jason Smith (R-MO) to be cautious when cutting certain clean energy tax credits, as many Republican-led states have received funding for projects and manufacturing through the IRA.
Last week, letters were sent to Smith from Rep. Mariannette Miller-Meeks (R-IA) and Rep. Juan Ciscomani (R-AZ) calling for the panel to spare the Clean Electricity Investment Tax Credit (48E), the Clean Electricity Production Tax Credit (45Y), and the Advanced Manufacturing Production Tax Credit (45X).
The Clean Electricity Investment and Production Tax Credits, also known as technology-neutral credits, offer tax credits for facilities producing and investing in renewable energy. In the proposal released Tuesday, 48E and 45Y are subject to a phase-out period and restrictions related to prohibited foreign entities.
The legislation blocks wind energy from the Advanced Manufacturing Production tax.
Sen. Catherine Cortez Masto (D-NV) spoke ahead of the legislation’s release. Masto said the proposed bill would “jack up prices on American families.”
“Dismantling the IRA clean energy tax credits will kill jobs,” Masto said during a press call hosted by Climate Power on Monday. “It will create chaos in the business community, and it will raise energy costs for families already struggling to get by.”
The committee will hold a mark-up hearing on Tuesday. The House Energy and Commerce Committee will also hold a mark-up on its part of the legislative package, which would cancel climate spending established by the Biden administration.
