Senate Republicans Balk at House Plan to Gut Energy Tax Cuts

Wind turbines and electricity power lines in Zaragoza, Spain, on Tuesday, Feb. 25, 2025. Europe's top renewable energy developer has focused the bulk of its investments on grid projects in the US, UK and other global markets -- a business that has performed well. Photographer: Angel Garcia/Bloomberg Photo by Angel Garcia /Bloomberg

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(Bloomberg) — Key Senate Republicans are resisting the House’s plan to gut clean energy tax credits, vowing to soften the blow for emerging technologies.

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The pushback comes just a day after House Republicans released a plan to help pay for an extension of President Donald Trump’s tax cuts by cutting more than $500 billion in energy tax credits from former President Joe Biden’s signature climate law.

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The comments from GOP lawmakers mean industries facing a sharp cutoff in federal help still have a chance to preserve their tax incentives for longer.

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The plan “needs refinement,” said Thom Tillis, a North Carolina Republican, who serves on the Senate’s tax writing committee and was one of four Republicans to sign a letter to Senate leadership last month, vowing to defend Democrats’ Inflation Reduction Act’s energy tax credits. “It needs more transitions. It’s not quite what we would author out here.” 

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The House’s plan to phase out a technology-neutral tax credits for green energy projects that begin operating in 2029 is too aggressive and emerging technologies should be given more time, said Senator Kevin Cramer, a North Dakota Republican.

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“I think that the newer credits that have yet to really be applied will need to be extended beyond 2029,” Cramer told reporters in the Capitol Tuesday. “I would expect we will make some changes to try and improve it.” 

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In all, the House bill would save $560 billion by rolling back incentives for clean energy and electric vehicles. Production and investment credits for clean electricity production from energy sources like wind and solar and another credit for nuclear electricity would be phased out, while credits for electric vehicles and hydrogen production would also end.

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The legislation, which the House is aiming to pass by the end of the month, would then go to the Senate, where Republicans can only afford three defections and still pass it.

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The tax credits, which were initially estimated by Congressional estimators to cost $270 billion, have been forecast to cost trillions of dollars over the coming decades. That makes them a tempting target for Republicans seeking to pay for extend tax cuts which are also estimated to cost trillions.

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But the credits are also providing jobs and spurring the construction of factories in numerous GOP districts.

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Emerging Republican pushback means the House plan is likely a “ceiling for changes to the credits,” research firm Capstone LLC wrote in a note to clients. It said additional changes weakening the energy tax cuts could be made by moderate House Republicans before the bill is sent to the Senate.

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Senator Lisa Murkowski, an Alaska Republican and moderate who also signed the April letter vowing to defend the credits, said she anticipated changes. 

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“Anything that comes over from the House, almost by law, we’ve got to redo,” Murkowski told reporters.

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—With assistance from Steven T. Dennis.

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