Trump has limited options to satisfy Freedom Caucus on tax credits
Illustration: Aïda Amer/Axios
Wind and solar projects could face higher thresholds to claim tax credits or new permitting restrictions in the wake of White House meetings to placate IRA hardliners on reconciliation.
Why it matters: President Trump personally sought to assuage deficit hawks who held up his sprawling budget bill overnight in part because they wanted wind and solar totally cut off from claiming IRA tax credits.
- The hawks left those talks convinced, with Ralph Norman telling CNBC on Thursday that Trump promised to "use his powers to make sure a lot of these subsidies won't remain in effect from here on out."
- But some observers said Trump's options remain limited.
Zoom in: The White House could order the Treasury Department to change existing guidance on what is required for a project to be considered under construction to qualify for tax credits.
- House Freedom Caucus members were enraged by a Senate deal early Tuesday that would allow projects that start construction within a year of the law's passage to qualify for investment and production tax credits.
- After that, the bill would require wind and solar projects to be placed into service to qualify for the tax credits. Projects would be cut off altogether after the end of 2027.
- The Freedom Caucus argued against the idea of Treasury's test to determine when projects commence construction — specifically incurring at least 5% of the total project cost.
Between the lines: Treasury would have a hard time walking back those rules after the bill becomes law and any change would likely spur litigation, according to a tax policy analyst who spoke on condition of anonymity.
- Trump's "lowest-hanging fruit" would be to simply continue to delay or deny permits for wind and solar facilities, the analyst said.
- "The administration has a lot of discretionary authority on when and where and how to issue permits," the analyst said. "There is some more precedent for using that kind of permitting authority to accomplish this."
Our thought bubble: The administration wouldn't be able to refuse tax credits for wind and solar projects under the law.
- Yet Trump has been willing to defy norms and push legal boundaries in the courts.
- And such talk alone has led to further confusion and uncertainty for renewable energy developers.
