As the Senate prepares to field amendments on its version of the so-called “One Big Beautiful Bill Act,” the clean energy industry finds itself facing a bill that is more punitive than prior drafts — and, thanks to its staggering price tag, that creates an additional window of vulnerability for the sector.
The last few weeks have seen furious lobbying activity on the Hill, including fly-ins and meetings with companies and industry groups from around the country. But even so, the outlook for clean energy got worse in the final hours of the Senate’s deliberative process, not better.
The chamber’s last-minute rewrite, unveiled over the weekend, blindsided the clean energy sector by not only accelerating the phase out of tax credits for wind and solar but introducing a surprise excise tax on those projects.
Today, the Senate heads into a “vote-a-rama” amendment process, in order to finalize the bill and secure the 51 votes needed to pass it before Congress’ self-imposed July 4 deadline. At this late hour, the largest outstanding concern for GOP senators is how much the bill adds to the budget deficit, said Jason Clark, CEO of consulting and intelligence firm Power Brief. The debate over how to bring that number down creates a serious risk for clean energy — albeit one that’s getting less attention than the excise tax and the proposed shift to crediting projects based on placed-in-service date, rather than the date they begin construction.
“The biggest challenge Republicans have right now is that many in their own party believe this bill will explode the national deficit,” Clark explained. Given the strong voting block of “fiscal hawks” in Congress, there’s a good chance that last-minute demands for changes like even more cuts to clean energy make it into the final bill.
“The Venn diagram overlap of these fiscal hawks and those that are seeking punitive measures against energy tax credits is substantial,” Clark said. “It’s entirely possible that this group hides behind deficit concerns to continue their attacks on energy during the process to amend the Senate’s bill, and — if it gets this far — in the House.”
That said, when it comes to clean energy incentives, there really isn’t much of the Inflation Reduction Act left to cut. The Senate bill already cuts $560 billion from various tax credits, including domestic manufacturing, the investment and production tax credits, residential and energy efficiency, and electric vehicles.
Further scaling back IRA credits, Clark explained, would likely require Republicans to cut in places where the bill adds spending on energy technologies. According to the Joint Committee on Taxation, additions to IRA credits for carbon capture, biofuels, and oil and gas exploration will add $44 billion to the deficit.
As Clark put it, “fiscal hawks are fishing in the wrong pond if they keep attacking the energy credits to fix their math problem.”
This final iteration of the Senate bill, for example, increases the cap on state and local tax deductions, or SALT deductions, a tweak that costs $143 billion more than the chamber’s initial draft. The more punitive treatment of energy tax credits in the final draft, meanwhile, saves only $15 billion.
Through all four congressional attempts to phase out or eliminate the tax credits, the overall cost of the bill hasn’t changed, he explained. That’s because even the $560 billion in cuts is a small amount compared to the massive cost of other priorities.
The debate so far
Fiscal conservatives in the Senate have already demonstrated their willingness to push for deeper cuts, even at the expense of the Friday deadline to get the bill to the president’s desk.
The initial “motion to proceed” in the Senate on the bill was held up for more than three hours on Saturday evening by a group of fiscal hawks that wanted to secure concessions for further deficit reductions. They only voted to proceed once receiving those assurances from Senate Majority Leader John Thune.
And after a 16-hour reading of the bill requested by Senate Democrats, followed by more hours of debate that stretched into the early hours of Monday morning, the chamber now enters its final amendment process, which could last anywhere from hours or days. (In 2022, for example, the vote-a-rama process to finalize the IRA lasted roughly 16 hours.)
As far as specific amendments that Republicans could offer in an attempt to reduce the cost of the bill, the fossil fuel activist Alex Epstein, who has been instrumental in shaping the energy portions of the Senate bill, has a list of proposals.
Epstein has called for several changes, including requiring that investment tax credit for battery storage projects and all wind and solar projects “commence construction” by the date of the bill’s passage, in addition to the 2027 “placed in service” requirement. He has also called for cutting the 45X manufacturing credit by 25%, and reducing it by 10% a year.
Epstein has repeatedly claimed that such cuts could save “hundreds of billions of additional dollars” — an angle that, despite the lack of supporting evidence in official government estimates, may be particularly appealing to Republicans as they look to reduce the massive cost of the bill.
It’s not clear whether any of Epstein’s proposals will make it to the floor as amendments. But preventing any such additions should be a key focus for the clean energy sector in these final, whirlwind hours, Clark said.
So far, it’s the excise tax that has received the most attention from the wider clean energy industry. But Clark warned that removing it will be an uphill battle — and will likely require a Republican sponsor.
“The reality is that getting any amendment through this process is really, really hard,” he added. “It will mean a lot more if a Republican introduces an amendment to make this bill less draconian.”
