GOP bill adds surprise tax that could cripple wind and solar power
- The San Juan Daily Star
- Jul 1
- 4 min read
By BRAD PLUMER
Senate Republicans have quietly inserted provisions in President Donald Trump’s domestic policy bill that would not only end federal support for wind and solar energy but would impose an entirely new tax on future projects, a move that industry groups say could devastate the renewable power industry.
The tax provision, tucked inside the 940-page bill that the Senate made public just into Saturday, stunned observers.
“This is how you kill an industry,” said Bob Keefe, executive director of E2, a nonpartisan group of business leaders and investors. “And at a time when electricity prices and demand are soaring.”
The bill would rapidly phase out existing federal tax subsidies for wind and solar power by 2027. Doing so, many companies say, could derail hundreds of projects under development and could jeopardize billions of dollars in manufacturing facilities that had been planned around the country with the subsidies in mind.
Those tax credits were at the heart of the Inflation Reduction Act, which Democrats passed in 2022 in an attempt to nudge the country away from fossil fuels, the burning of which is driving climate change. Trump, who has mocked climate science, has instead promoted fossil fuels and demanded that Republicans in Congress unwind the law.
But the latest version of the Senate bill would go much further. It would impose a steep penalty on all new wind and solar farms that come online after 2027 — even if they didn’t receive federal subsidies — unless they follow complicated and potentially unworkable requirements to disentangle their supply chains from China. Since China dominates global supply chains, that measure could affect a large number of companies.
“It came as a complete shock,” said Jason Grumet, CEO of the American Clean Power Association, which represents renewable energy producers. Soon after the Senate bill was made public, Grumet said phones started ringing at 2:30 a.m. on Saturday with “everyone saying, ‘Can you believe this?’”
The new tax “is so carelessly written and haphazardly drafted that the concern is it will create uncertainty and freeze the markets,” Grumet said.
Even some of those who lobbied to end federal support for clean energy said the Senate bill went too far.
“I strongly recommend fully desubsidizing solar and wind vs. placing a kind of new tax on them,” wrote Alex Epstein, an influential activist who has been urging Republican senators to eliminate renewable energy subsidies. “I just learned about the excise tax and it’s definitely not something I would support.”
Wind and solar projects are the fastest growing new source of electricity in the United States and account for nearly two-thirds of new electric capacity expected to come online this year. For utilities and tech companies, adding solar, wind and batteries has often been one of the easiest ways to help meet soaring electricity demand. Other technologies such as new nuclear reactors can take much longer to build, and there is a multiyear backlog for new natural gas turbines.
The repeal of federal subsidies alone could cause wind and solar installations to plummet by as much as 72% over the next decade, according to the Rhodium Group, a research firm. The new tax could depress deployment even further by raising costs an additional 10% to 20%, the group estimated.
The Senate bill, which is being debated Sunday, would also eliminate federal tax credits this year for consumers to buy electric vehicles and to install solar panels and heat pumps in their homes. And the bill would impose new restrictions on tax breaks for factories that manufacture wind turbines, solar panels and batteries.
In a statement, the White House praised the Senate legislation for “eliminating wasteful environmental policies” and said that “failure to pass the bill would be the ultimate betrayal.” On June 21, Trump wrote that green tax credits are “a giant SCAM” and should be eliminated, referring to wind turbines “and the rest of this ‘JUNK.’”
Some conservatives voiced support for the bill. If “repealing these subsidies will ‘kill’ their industry, then maybe it shouldn’t exist in the first place,” said Thomas Pyle, president of the American Energy Alliance, a conservative research group that supports fossil fuels. “Extending green giveaways on the backs of American taxpayers is shortsighted and neglectful.”
The latest draft of the Senate bill would preserve tax credits for sources of emissions-free electricity that can run at all hours — such as nuclear reactors, geothermal plants, hydroelectric dams and industrial-scale batteries — through 2036. The bill would also expand tax breaks for biofuels and would enlarge subsidies for companies that capture carbon dioxide from smokestacks and use it to extract oil from underground.
But wind and solar power do not fare well. Projects would only qualify for a federal tax credit worth at least 30% of project costs if they finish construction by the end of 2027. Developers say that deadline could be difficult to meet, even for projects that are already underway, since companies often face delays in obtaining government permits or other obstacles beyond their control.
The bill also creates a complex set of rules requiring developers to prove that they are not using components that can trace back to China or other “prohibited foreign entities.” And, starting in 2027, the bill would impose new excise taxes on companies that fail to meet those requirements, even if they are no longer receiving federal subsidies.
Renewable energy companies say that they have been shifting away from Chinese components and toward using domestically made parts, but that the new restrictions are so opaque that it could be tough for many businesses to prove they are in compliance.
“This puts into complete disarray billions of dollars in investments that we’ve all planned,” said Sandhya Ganapathy, CEO of EDP Renewables North America, a leading wind and solar developer.
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