Ways & Means calls for sweeping revamp of clean-energy incentives
Illustration: Annelise Capossela/Axios
Republicans are proposing a major overhaul of the IRA's clean-energy tax incentives ahead of Tuesday's Ways & Means Committee markup.
Why it matters: Ways & Means' legislative text, released Monday, is the first look at how GOP leaders hope to change and repeal the IRA credits in reconciliation.
- It would phase out many earlier than planned and limit how developers can use them.
Driving the news: The proposal would phase out the IRA's tech-neutral production and investment incentives gradually, ending with projects placed in service before the end of 2031.
- That would nix language from the 2022 climate law that tied the duration of those credits to power-sector greenhouse gas emissions reduction.
- And it would add "prohibited foreign entity" language to a variety of incentives — an apparent effort to root out potential ties to countries like China.
- Also on the chopping block are the IRA's "transferrability" provisions, which let developers transfer credits to third parties, making them easier to monetize.
Our thought bubble: Numerous Republicans have been pushing to save the IRA credits in one form or another.
- It's just a first draft — the Senate will want a word — but we'll call this a mixed bag on that front.
Zoom in: The committee proposed phasing out the 45V hydrogen production tax credit at the end of this year, which would be a major blow to the industry.
- The 45Q credit for carbon capture and 45X incentive for advanced manufacturing — both popular among Republicans — would get curtailed, but not instantly repealed.
- Wind energy components wouldn't be able to qualify for 45X after 2027.
- Republicans also targeted the nuclear production credit, which would be phased out earlier.
- And lawmakers proposed to extend by four years the 45Z clean transportation fuels tax credit and added a prohibition on feedstocks coming from outside North America.
Republicans, as expected, are also seeking to repeal credits for electric vehicles.
- The $7,500 consumer credit — known as 30D — would be repealed at the end of 2026 (it currently runs through 2032 under the IRA).
- In the meantime, the 200,000 vehicle manufacturer cap would be reinstated, potentially making many EVs on the market ineligible next year.
- The bill would also repeal the IRA's commercial clean vehicle incentive at the end of 2025.
The other side: "This measure would hike energy bills — not lower them; reduce domestic energy production — not increase it; and put workers out of jobs — not create them through American manufacturing," said Jackie Wong, NRDC's senior vice president for climate and energy.
