Washington • In a surprising turn of events, Senate Republicans voted to strip away substantial tax incentives for renewable energy projects, challenging the foundation of President Joe Biden’s climate law enacted in 2022. This move primarily affects investments in solar power, battery manufacturing, and other green technologies, many of which are situated in Republican-led districts.
Despite warnings from industry leaders and some within their ranks, nearly all Republican senators supported the measure, which is part of President Donald Trump’s extensive domestic policy agenda. Critics argue that cutting these clean energy credits could result in significant job losses in red states and elevate electricity costs across the country.
A last-minute compromise by a few Senate Republicans allowed for a brief extension of existing tax benefits for wind and solar companies. However, this concession was not enough to prevent a potential slowdown in clean energy development.
Jason Grumet, CEO of the American Clean Power Association, expressed concern, stating, “The intentional effort to undermine the fastest-growing sources of electric power will lead to increased energy bills, decreased grid reliability, and the loss of hundreds of thousands of jobs.”
Sen. Jim Justice, R-W.Va., acknowledged hearing from businesses about the potential job impact but maintained that the bill was beneficial. He emphasized the need to “make it a level playing field” for all energy types, including fossil fuels. Notably, the final bill introduces a new tax subsidy for metallurgical coal, used in steel production.
While the bill retains some tax incentives for technologies like batteries and nuclear reactors, the widespread reduction of subsidies for solar, wind, and electric vehicles represents a blow to efforts aimed at mitigating climate change. The decision has left Democrats and environmentalists reevaluating the resilience of the 2022 climate law, known as the Inflation Reduction Act.
Sen. Ron Wyden, D-Ore., who was instrumental in crafting the clean energy tax credits, commented on the situation: “It is bizarre that Republicans go home and see high-skill, high-wage jobs in their communities, often for the first time, with clean energy sources, and they pretend it doesn’t matter.”
Despite previous appeals from some Republicans to preserve these green tax credits to protect jobs, the majority voted to significantly reduce the support for renewable energy. The bill, still requiring approval from the House, awaits President Trump’s signature.
Trump’s administration has demonstrated clear hostility toward climate action, with companies already canceling approximately $15.5 billion in planned investments. This stance aligns with Trump’s personal disdain for wind and solar projects, which he has criticized as inefficient and unattractive.
The legislation also imposes new constraints on tax credits for manufacturing facilities producing wind turbines, solar panels, or batteries, and swiftly ends incentives for consumers purchasing electric cars or installing solar panels at home.
Many renewable energy companies, expecting broader bipartisan support, were taken aback by the outcome. In Texas, for example, solar and battery installations have played a crucial role in reducing blackout risks during heatwaves, highlighting the importance of these technologies.
The vote reflects a broader struggle within Trump’s multitrillion-dollar bill, which encompasses wide-ranging policy changes beyond energy, including health care and tax reforms. Energy policy, as a result, did not emerge as a top priority for many legislators.
Despite the setbacks, some components of the climate law remain intact. Tax credits for battery storage, nuclear power, and other “clean firm” electricity sources are preserved, albeit with new restrictions. These technologies, while slower to deploy, could play a pivotal role in long-term climate change mitigation.
This article originally appeared in The New York Times.