Senate GOP Tempers House Plan to Repeal Energy Tax Credits

Senate Republicans are proposing to ease some of the energy tax credit rollbacks floated by their House counterparts, though their version of the tax-and-spending bill still would deal a significant blow to the solar and wind industries.

The draft bill the Senate Finance Committee released this week would phase out tax credits for wind and solar beginning next year, favoring tax breaks for technologies that can provide round-the-clock power, such as geothermal and nuclear.

The phaseout would provide more flexibility than the House-passed bill, which would only grant clean electricity investment and production tax breaks to projects that begin construction within 60 days of the law’s enactment and are placed in service by 2028.

Both the House and the Senate bills would end most credits related to electric vehicles and residential energy improvements. Additionally, both versions of the bill largely would restrict prohibited foreign entities or foreign-influenced entities from the tax credit benefits. The House has stricter rules for “material assistance,” which refers to components or critical minerals from those entities used in energy projects.

New clean-energy jobs and manufacturing plants spurred by the credits in Democrats’ 2022 climate law have poured into GOP districts—especially in the South and Midwest. As a result, the rollbacks in the GOP bill are putting some Republicans in a difficult position of choosing between supporting the president’s top legislative priority or pushing for projects in their states.

Clean-energy lobbyists are preparing another major push to loosen the bill’s credit restrictions as the measure soon heads to the Senate floor for a vote. Republicans hope to get it on President Donald Trump’s desk by July 4, and Republican members of the Senate tax writing panel say they’re still discussing changes to the energy credit provisions.

Advanced Energy United—an energy industry association whose members include technology, energy, and car companies—launched a third national advertising campaign in an effort to prevent the repeals, focusing on how the credits help job creation and power bill savings.

“Congress should be unlocking certainty and growth, not locking out projects already underway,” Harry Godfrey, managing director of the association’s federal priorities team, said in a Monday statement. “The Senate must act to protect what’s working.”