Many House Republicans are now urging budget planners to keep the clean energy tax incentives established during Biden’s administration safe from repeal by Congress. They are especially worried about cuts proposed from the previous Trump administration.
In a letter sent on Sunday, 21 Republican lawmakers highlighted the potential setbacks for the economy and lost investments if tax credits from the 2022 Inflation Reduction Act (IRA) are reduced. They spoke out as the House Ways and Means Committee is preparing to meet privately to decide on budget cuts for Trump’s tax cut plan. This plan is expected to use a process called budget reconciliation, similar to what was used for the IRA, which only requires a simple majority in the Senate to pass. Meanwhile, Congress is working to finalize a bill to fund the current fiscal year and avert a government shutdown before March 14.
“Both our constituencies and the energy industry are concerned about disruptive changes to our energy tax structure,” the lawmakers stated.
The tax incentives under the IRA aim to support various energy projects, including electric vehicles, ethanol production, and renewable energy sources like wind and solar. Most of these incentives were designed to last for ten years, allowing businesses to plan significant projects around them. The Republicans warned that skipping or restricting these tax credits would threaten many of these developments.
However, not all Republicans agree on every aspect of the IRA. Some lawmakers are still skeptical of electric vehicle tax credits. For example, Rep. Don Bacon (R-Neb.) expressed concern mainly for the tax breaks that help Nebraska’s agricultural sector. Nebraska ranks high in ethanol production and wind energy development, and many local farmers benefit from wind projects on their land. He supports maintaining tax credits for biofuels and energy generation, suggesting that investors in IRA projects should be protected. But he does not favor extending tax credits for electric vehicles, arguing that they aren’t popular in the Midwest.
The conservative environmental group Citizens for Responsible Energy Solutions also backed the Republican lawmakers advocating for IRA tax credits. They noted that these incentives have driven billions in private investments, fostering job growth and economic development nationwide.
The letter signifies that more Republicans are joining the effort to protect IRA tax incentives, building on previous communications to House Speaker Mike Johnson. With a narrow Republican majority in the House, any dissent against the repeal of these tax cuts could find a strong ally in most Democrats.
However, the battle over these energy incentives is complex. There is some Democratic support for repealing IRA tax breaks aimed at carbon capture technology. Rep. Ro Khanna (D-Calif.) has teamed up with Rep. Scott Perry (R-Pa.) to introduce legislation targeting these tax breaks, which a study suggested could burden taxpayers with $800 billion in costs over 18 years, mostly benefitting the fossil fuel industry.
Many Republican factions continue to oppose the energy tax credits altogether. The Heritage Foundation’s Project 2025, seen as a guide for the Trump administration, calls for the complete elimination of IRA tax credits, describing them as harmful to free markets. Prominent figures like Elon Musk advocate for ending all government subsidies.
Recently, Wayne Christian, a member of Texas’s oil and gas regulatory commission, wrote an op-ed advocating for the end of energy subsidies, arguing that the focus should be on letting the free market determine energy pathways without government interference.
According to a May 2023 report, U.S. oil companies currently receive around $20 billion in yearly federal subsidies, while the OECD estimates total fossil fuel subsidies in the U.S. to be about $17.8 billion annually.
