You’re out of free articles.
Log in
To continue reading, log in to your account.
Create a Free Account
To unlock more free articles, please create a free account.
Sign In or Create an Account.
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Welcome to Heatmap
Thank you for registering with Heatmap. Climate change is one of the greatest challenges of our lives, a force reshaping our economy, our politics, and our culture. We hope to be your trusted, friendly, and insightful guide to that transformation. Please enjoy your free articles. You can check your profile here .
subscribe to get Unlimited access
Offer for a Heatmap News Unlimited Access subscription; please note that your subscription will renew automatically unless you cancel prior to renewal. Cancellation takes effect at the end of your current billing period. We will let you know in advance of any price changes. Taxes may apply. Offer terms are subject to change.
Subscribe to get unlimited Access
Hey, you are out of free articles but you are only a few clicks away from full access. Subscribe below and take advantage of our introductory offer.
subscribe to get Unlimited access
Offer for a Heatmap News Unlimited Access subscription; please note that your subscription will renew automatically unless you cancel prior to renewal. Cancellation takes effect at the end of your current billing period. We will let you know in advance of any price changes. Taxes may apply. Offer terms are subject to change.
Create Your Account
Please Enter Your Password
Forgot your password?
Please enter the email address you use for your account so we can send you a link to reset your password:
What happens when America’s biggest source of clean energy pivots to hydrogen?
After the Inflation Reduction Act was signed into law, and initial excitement about its historic investment in tackling climate change turned to deeper analysis, researchers made an alarming discovery. One of the IRA’s big ticket items, a tax credit for clean hydrogen, risks underwriting a major increase in emissions if not implemented carefully. That finding has erupted into a high-stakes debate over how the Treasury Department should define “clean hydrogen.”
Treasury’s decision, which is expected in the coming weeks, will have many implications, but one that deserves more scrutiny is what it could mean for nuclear power, still the largest and most reliable source of carbon-free energy in the U.S.
Nuclear reactors are uniquely well-suited to power hydrogen production, which in turn holds great promise to clean up some of the hardest parts of the economy to decarbonize.
But there's a trade-off: If any of the existing nuclear fleet pivots to making hydrogen, coal and natural gas plants are likely to fill in for that lost power on the grid. That would drive up emissions in the near term and make it harder for states to achieve their clean energy goals.
The debate boils down to whether it’s more advantageous to use our existing nuclear fleet to kickstart a hydrogen economy — likely sacrificing near-term emission reductions in the process — or to shore up a carbon-free grid.
This is what the Treasury Department must grapple with as it writes the rules for the new tax credit. In an exclusive interview with Heatmap, officials from the Department of Energy, which is advising the Treasury, said they want to see existing nuclear plants qualify. But as Daniel Esposito, a senior policy analyst at the nonprofit Energy Innovation, told me, “There's just a lot of layers to how bad this can get.”
Hydrogen already plays an essential, yet small role in the global economy as an ingredient in the production of fertilizer and oil refining. But as the world looks for alternatives to fossil fuels, hydrogen, which burns without releasing carbon, could play a much bigger role by powering industries that are proving difficult to decarbonize with renewable electricity, like shipping, aviation, and steelmaking. The challenge is that it takes energy to make hydrogen in the first place. Today the vast majority is made in a carbon-intensive process involving natural gas or coal.
There is an alternative method, called electrolysis, which extracts hydrogen from water using electricity and doesn’t directly release emissions. But it’s too expensive to be competitive with the fossil fuel version right now. The tax credit in the Inflation Reduction Act could change that, but to qualify, hydrogen producers would have to prove their electricity is carbon-free, too.
That’s where nuclear power comes in.
There are many reasons nuclear plants are considered a good fit for this process. Electrolyzers, the enabling technology for electrolysis, are still relatively new and expensive. Nuclear reactors could power them 24/7, maximizing production.
Nuclear plants are also well-located. They sit near bodies of water, which is necessary for electrolysis. They’re often adjacent to rail lines that could transport the resulting hydrogen. And many are close to heavy industrial sites that could become customers.
There’s potential for efficiency gains — a lot of nuclear reactors already require a bit of hydrogen for their operations, so they could produce their own instead of shipping it in.
And perhaps most thrillingly, nuclear reactors produce a lot of heat. With a more nascent version of the technology called high temperature electrolysis, that heat could be harnessed to boil water into steam, reducing the amount of energy required to extract hydrogen from it.
Unfortunately, there’s one big drawback. The nation’s existing nuclear plants already run at more than 90% capacity. They supply nearly 20% of total annual electricity generation. They don’t exactly have more energy to give.
Esposito and others warn that the hydrogen tax credit is so lucrative that if the Treasury’s upcoming rules allow existing reactors to qualify as a zero-emissions source of electricity, it would create a perverse incentive for nuclear companies to start diverting their power to hydrogen production. Nuclear plants currently earn about $30 per megawatt-hour from energy markets, but Esposito estimates they could earn $60 to $70 per megawatt-hour by producing hydrogen. Though indirectly, this would almost certainly increase U.S. emissions in the near term.
“You could see a world where all of the U.S. nukes pivot to supplying electrolyzers and just print money that way,” said Esposito. “Then you're pulling off 20% of U.S. power, and fossil fuels would be what fill in for that, because we just can't build clean energy fast enough to replace it.”
But Constellation Energy, the country’s largest owner of nuclear plants, with big plans to produce hydrogen, argues that letting its reactors qualify under the tax credit rules isn’t about printing money, but about making clean hydrogen cheap enough that customers actually buy it.
“By lowering the cost of the hydrogen, the tax credit is going to increase the ability of manufacturers and other hydrogen users to decarbonize their operations,” Mason Emnett, senior vice president of public policy at Constellation, told me. “Without that support, there's just not going to be a market for clean hydrogen.”
Top Department of Energy officials seem to agree. “We're very hopeful that [the tax credit] will be applicable to existing reactors,” Dr. Kathryn Huff, assistant secretary of the Office of Nuclear Energy, told me in an interview.
The Department of Energy has long been excited by the synergies between nuclear plants and hydrogen production. In fact, just a few years ago, the agency saw hydrogen as a new market that could save the nation’s nuclear plants, which were shutting down left and right as they struggled to compete with the cheap natural gas of the fracking boom.
But today, natural gas prices are up. There’s a bevy of new government grants and subsidies from the Bipartisan Infrastructure Law and the Inflation Reduction Act to keep nuclear plants open. Now hydrogen looks more like a great business opportunity than a savior for the industry.
Last September, not long after the Inflation Reduction Act was signed, Morgan Stanley issued a report noting that Constellation was poised to unlock new opportunities for its nuclear plants and “attractive returns for hydrogen facilities,” according to S&PGlobal. If the company dedicated just 5% of its capacity to hydrogen production, the report said, it could increase its annual earnings before taxes by $300 to $350 million.
Constellation made its first big move in February, announcing plans to build a $900 million hydrogen production facility in the Midwest that will use 250 MW of its existing capacity. That’s only about 1% of the company’s total nuclear fleet. But to Esposito, it’s a worrisome sign.
“It’s very likely we’d see many other similar announcements,” he told me. “And crucially, as these clean energy resources switch from powering the grid to producing hydrogen, we’d be losing our cheapest existing sources of clean electricity.”
It’s also concerning to climate advocates in Illinois, where Constellation owns six nuclear plants. The state has an ambitious clean energy goal, and is counting on those reactors to be a source of always-available, carbon-free electricity as it shuts down coal plants and builds more renewables.
“Even if it's small, that's still headed in the wrong direction in a world where we are fighting as hard as we can to quickly decarbonize the power sector,” said JC Kibbey, a clean energy advocate with the Natural Resources Defense Council in Illinois.
Constellation doesn’t see that as the company’s problem. Emnett said that much of its nuclear generation is already contracted out to local utilities for the benefit of customers for the next several years, meaning it can’t be “diverted” to hydrogen, at least until those contracts are up. The rest is theirs to sell to whomever wants to buy it. “There's no diversion of electricity,” he said. “There's electricity that is available for use, and we can sell electricity to power a shopping center or we can sell electricity to power an electrolyzer for hydrogen production.”
Constellation also makes the case that if one of its reactors are powering a hydrogen plant on-site, without using the grid at all, there should be no question that the process is carbon-free.
But Rachel Fakhry, a senior climate and clean energy advocate at the Natural Resources Defense Council, said it doesn’t matter whether a hydrogen facility is connected directly to a clean power source or whether it gets power through the grid. The issue is when no new, clean resources have been built to support this big new source of demand. In either case, less nuclear power will be flowing to other customers, and more coal or gas-fired generation will ramp up to fill in the gap. Electrolysis is so energy-intensive that those indirect emissions would be higher than emissions from current hydrogen production using natural gas. “Treasury must account for those induced emissions,” Fakhry said.
Many climate and energy policy experts agree that the resulting hydrogen should not be subsidized, or considered “clean.”
The law itself sends mixed messages to the Treasury about what Congress intended. It says the Department must account for “lifecycle” greenhouse gas emissions from hydrogen production, but it also includes a clause that explicitly permits existing nuclear plant operators to claim the tax credit.
Fakhry argued this should not be interpreted to mean nuclear companies are entitled to the credit. She said one way existing plants could qualify is if they are modified to increase their power output.
Some experts see a middle ground. Adam Stein, director of the Nuclear Energy Innovation program at the Breakthrough Institute, said those induced emissions are not the full picture.
He cited a number of other factors to consider, like the fact that one of the main obstacles to building new sources of clean energy right now is a clogged electric grid. If diverting some nuclear power to hydrogen frees up some room on the grid, that could be a good thing. “The question does not become, in my view, whether nuclear power plants should be eligible for this,” he said. “It’s at what point in the sliding scale of percentage of the tax credit they should be eligible for.” The tax credit is tiered, such that companies can earn different amounts depending on the carbon intensity of their production process.
In a sense, the debate is also about short-term and long-term priorities.
When I asked Huff, the assistant secretary in the Office of Nuclear Energy, whether she felt there were any risks of pairing nuclear and hydrogen, she only noted the shortcomings of not doing so. “I think there are risks in terms of whether or not we can successfully scale up a hydrogen economy,” she said. “There is this risk that it never materializes.”
Her colleague Jason Tokey, the team lead for reactor optimization and modernization chimed in. “As a country, we're not seeking to just decarbonize the power grid, we're seeking to decarbonize the entire economy,” he said. “Clean hydrogen has a critical role to play in that economy-wide decarbonization, and using clean energy sources like nuclear to produce hydrogen really enables that.”
The agency is also excited about the prospect of innovations that could help decarbonize both the grid and the rest of the economy. There are already hours of the day in some places where nuclear plants aren’t needed because there’s so much solar power being produced, said Huff. She said the “operational vision” is to have nuclear operators learn how to switch back and forth between serving the grid and offloading their power into hydrogen when it’s not needed, which will enable more renewable resources to come online. “It is absolutely imperative that we make sure nuclear plants can flex with the grid.”
Emnett said Constellation is planning to test this out at Nine Mile Point, a nuclear plant in upstate New York that received $5.8 million from the DOE for a hydrogen production pilot project.
“We are excited about the possibility of creating flexibility for nuclear plants,” he said. “You can start to think about a system where nuclear with flexible hydrogen production is pairing with variable wind and solar and batteries in a decarbonized future world. And so we're at a point now where we're proving out those capabilities.”
But without the tax credit, he said, “there's just not any conversation, there's no ability to explore the innovation, because we never get out of the gate.”
Whether that gate should be swung open or shut is now in the hands of the U.S. Department of Treasury.
Log in
To continue reading, log in to your account.
Create a Free Account
To unlock more free articles, please create a free account.
And coal communities and fracking villages and all the rest.
Amid last month’s headlines about departures from the Department of Energy, the exits of Brian Anderson and Briggs White received little attention. Yet their departures foreshadowed something larger: the quiet dismantling of federal support for the economic diversification of fossil fuel–dependent regions of the country.
Anderson and White led the Energy Communities Interagency Working Group, created by a 2021 executive order to coordinate the federal strategy to support coal–reliant regions through a global transition to cleaner energy. This Biden-era strategy recognized that communities where employment opportunities and tax bases depend on fossil fuels face serious risks — local levels of prosperity generally rise and fall with production levels — and they require support to build new engines of economic activity.
In contrast, President Donald Trump’s prescription for fossil fuel communities is to produce more fossil fuels. In addition to cutting clean energy incentives, the budget reconciliation bill passed by the House of Representatives last week seeks to directly support fossil fuel production by accelerating leasing and permitting, lowering royalty rates, and repealing the methane emissions fee.
History suggests that Trump’s ability to help fossil fuel communities by boosting production is limited — similar efforts in Trump’s first term failed to significantly alter the trajectory of coal, oil, or natural gas output. But the funding cuts codified in the current reconciliation bill could do real harm by dismantling federal programs that support economic diversification. Communities that depend on fossil fuel industries will be vulnerable to severe economic shocks when demand for their products eventually declines.
The need to help transitioning regions isn’t new, but federal support for struggling communities has long been stigmatized. In 1980, a federal commission urged policymakers to focus less on struggling places and more on helping individuals move to where opportunity existed. President Ronald Reagan used this report to justify cutting federal economic development programs, including proposing to eliminate the Appalachian Regional Commission. Congress did not fully abolish the ARC, but its budget was slashed nearly in half, leading to staff reductions and the phasing out of the programs designed to bolster the economy of the persistently struggling region.
In the decades that followed, manufacturing towns were largely left to fend for themselves as globalization accelerated. A study by MIT’s David Autor and colleagues showed that 86% of the manufacturing job losses from trade shocks in the early 2000s were still reflected in depressed local employment rates in 2019. Most workers didn’t find new jobs or migrate.
If the loss of dominant employers causes “miniature Great Depressions” in local economies across the country, then a rapid decline in fossil fuels spells acute risks for communities that depend on these industries for jobs and public revenues. We see this happening already in coal-reliant regions. In Boone County, West Virginia, coal production declined by over 80% from 2009 to 2019, causing the county’s gross domestic product to decline by over 60%. Three of Boone’s 10 elementary schools were forced to close.
President Trump entered office in 2017 pledging to “bring the coal industry back 100%” with a deregulatory strategy much like the one his administration is pursuing today. But during his first four-year term, domestic coal mining employment fell by 26%, and coal-fired power plant capacity declined by 13%, demonstrating the futility of doubling down on an economic model when macroeconomic forces are working against it.
These outcomes are not inevitable. Four-hundred miles west of Boone, the far more economically diverse Hopkins County, Kentucky was able to weather its own 75% decline in coal production without a comparable economic crash. In Germany’s Ruhr Valley, the German government paired a coal phase-out with over €100 billion in long-term investments — new universities, industrial incentives, environmental restoration, and worker retraining. While some towns in the region are still struggling, the Ruhr Valley’s shift from a coal powerhouse to a more diverse, knowledge-based economy shows that fossil fuel regions can reinvent themselves.
Recent policies in the U.S. began to take similar steps. As part of a broader federal place-based economic strategy, the American Rescue Plan dedicated hundreds of millions to rebuilding coal communities in 2021. Then came the Infrastructure Investment and Jobs Act, which included billions for cleaning up abandoned mines and orphaned oil wells and funding large-scale demonstration projects for carbon capture and hydrogen production. The Inflation Reduction Act added bonus tax credits and carve-outs to grant programs that target fossil fuel communities.
The now-defunct Energy Communities Interagency Working Group helped knit these efforts together. It served as a clearinghouse for funding opportunities, published “how-to” guides for local leaders, and deployed “rapid response teams” to coal regions.
To be sure, the strategy had limitations. Most programs focused narrowly on coal regions and clean energy solutions, and the IWG had minimal funding for its coordinating efforts. But the strategy shift marked real progress and has generated promising early signs, such as an iron air battery manufacturing facility at an old steel mill in Weirton, West Virginia, carbon capture projects in North Dakota and Texas, and “hydrogen hubs” in the Gulf Coast and Appalachia.
Under the Trump administration, that progress is at risk. Government efficiency initiatives have already led to the gutting of federal programs best positioned to support investments in fossil fuel communities, including the Loan Programs Office, the Office of Clean Energy Demonstrations. and the Federal Thriving Communities Network Initiative.
Trump’s budget proposes severe cuts to the federal support for regional economic development, including eliminating the Economic Development Administration, the federal agency dedicated to helping communities strengthen their local economies.
The reconciliation bill passed by the House of Representatives is a step toward codifying those cuts — with reductions in non-defense discretionary annual spending of $163 billion (over 20%) — and it would also eliminate most of the tax credits and grant programs that encourage investments in energy infrastructure projects in fossil fuel communities. Certain policies that are especially well suited for fossil fuel communities, like incentives for enhanced geothermal energy, may be phased out before ever really getting off the ground.
Rolling back support for fossil fuel communities will curb these regions’ opportunities to build new engines of economic prosperity. Without credible, lasting commitments from the federal government, many fossil fuel communities have little choice but to stick to the economic model they know best, despite their vulnerability to the eventual end of fossil fuels.
Revisiting a favorite episode with guest Kate Marvel.
Shift Key is off this week for Memorial Day, so we’re re-running one of our favorite episodes from the past. With Republicans in the White House and Congress now halfway to effectively repealing the Inflation Reduction Act, the United States’ signature climate law, we thought now might be a good moment to remind ourselves why emissions reductions matter in the first place.
To that end, we’re resurfacing our chat from November with Kate Marvel, an associate research scientist at Columbia University and the NASA Goddard Institute for Space Studies. At the time, Trump had just been reelected to the presidency, casting a pall over the annual United Nations climate conference, which was then occurring in Azerbaijan. Soon after, he fulfilled his promise to pull the U.S. out of the Paris Agreement, with its goal of restraining global warming to 1.5 degrees Celsius over pre-industrial levels.
In this episode, we talk with Kate about why every 10th of a degree matters in the fight against climate change, the difference between tipping points and destabilizing feedback loops, and how to think about climate change in a disappointing time. Shift Key is hosted by Robinson Meyer, the founding executive editor of Heatmap, and Jesse Jenkins, a professor of energy systems engineering at Princeton University.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, or wherever you get your podcasts.
You can also add the show’s RSS feed to your podcast app to follow us directly.
Here is an excerpt from our conversation:
Robinson Meyer: I want to dive into tipping points for a second. Are there particular tipping points that are really frightening to you? Because sometimes it feels like that phrase gets used for almost two different things: There are some tipping points where once we start them … these are physical effects in the climate system that once we start, we won’t be able to really reverse them, and I think the Atlantic Meridional Overturning [Circulation] is the classic example, and we should probably explain what that is.
But then there are other tipping points, sometimes, where it’s like once you start them, they don’t only have this cascading physical effect that’s irreversible, but they have a cascading effect on the carbon cycle.
Kate Marvel: Yeah, no, I mean, they all freak me out quite a lot for different reasons. Your point that we use, at least colloquially, tipping points to refer to a lot of bad stuff deserves a little bit more attention — I personally see tipping points getting confused with feedback loops and runaway greenhouse effect.
So, a feedback process is when global warming affects things that exist on the globe, which themselves feed back onto that global warming. So a classic example of a feedback process is ice melt. Ice is super shiny. It’s very reflective. It turns back sunlight that would otherwise fall on the planet and warm it. And we know — you know, science is very solid on this — that when it gets hot, ice melts.
Jesse Jenkins: That’s a good one. Yeah, we’re clear on that.
Marvel: So when ice melts, you take something that used to be shiny and reflective, and now you’ve got darker ocean or darker ground underneath, and so you’re no longer turning back that sunlight. It’s getting absorbed, and that itself feeds back to the warming. That makes the warming worse. So that is an example of what scientists call — and this is the worst terminology in all of science — we call it a ‘positive feedback.’ Because when normal people hear positive feedback, they’re like, Oh, I’m doing a great job. But when scientists say ‘positive feedback,’ we mean ‘destabilizing process that is making warming worse and might lead to catastrophe.’ So I’ll try to say destabilizing feedback and stabilizing feedback, but catch me out on it if I say positive and negative.
So there are a lot of these feedback processes that we understand pretty well. We know that warmer air holds more water vapor — that’s why we’re seeing more intense, extreme downpours. And we know that water vapor is itself a greenhouse gas. So when the planet gets warmer, you’ve got more water vapor in the atmosphere, which itself is trapping more of the heat coming up from the planet. That is an example of a destabilizing feedback.
So there’s a lot of these feedback processes that we understand fairly well. And then there’s some processes that we are not completely baffled by, but we haven’t really nailed down as much. So that’s why clouds are a huge wild card. A lot of the reason we don’t know exactly how hot it’s going to get is we don’t know what clouds are going to do. We don’t know how clouds are going to reorganize themselves. We don’t know if we’re going to get more of this one type of cloud, less of this other type, if they’re going to get more reflective, more absorbent, whatever. Clouds are really complicated, and that’s a feedback process that we don’t necessarily understand.
But feedback processes are already happening in the climate system right now. They are going on as we speak. That makes them different from something like a tipping point. A tipping point is generally defined as something that we break that we can’t fix on any timescale that’s relevant to us. So an example of a tipping point is the disintegration of the West Antarctic Ice Sheet. It turns out that once you break an ice sheet, it’s relatively really hard to make a new one. We can’t just rock up in Antarctica with, you know, freezer guns or whatever Arnold Schwarzenegger had in the Batman movie. We can’t do that. That’s not real. Once we break the West Antarctic Ice Sheet, it’s going to be broken for the rest of our lives, and our children’s lives, and our grandchildren’s lives.
Music for Shift Key is by Adam Kromelow.
It’s not just what they say over the next few weeks — it’s when they say it.
When the Senate returns from recess next week, it will have Trump’s “One Big, Beautiful Bill” to contend with. There’s no doubt the chamber will try to make changes to the omnibus plan to extend and expand Trump’s tax cuts that passed the House last week. The president even told reporters over the weekend that senators should “make the changes they want to make,” and that some of the changes “maybe are something I’d agree with, to be honest.”
Whether those changes include salvaging the nation’s clean energy tax credits will likely depend on a small group of Republican senators who have criticized the House’s near-total gutting of the subsidies and how much they are willing to fight to undo it.
The bill that passed the House would outright eliminate consumer tax credits for electric vehicles, rooftop solar, and both energy efficiency renovations and new energy-efficient homes. It would also kill the clean hydrogen tax credit at the end of this year and give most zero-carbon power plants, including wind, solar, and geothermal, an end-of-year deadline to start construction, among many other damaging provisions.
To date, at least eight Senate Republicans have spoken out against at least some of these changes, but none of them have tied their vote to the issue. The pressure to stick with your party is “enormous” when your vote is the difference between a bill’s success or failure, Josh Freed, the senior vice president for climate and energy at Third Way, told me. “As we saw in the House, the biggest question is whether any Republican Senator, when push comes to shove, has any willingness to try to stop this bill in order to defend energy tax credits.”
Pay attention to what they say over the next few weeks — and when they say it. It’s one thing to speak out when everything’s still up in the air. It’s quite another to keep talking when votes are on the line.
When the budget fight was first heating up in April, four senators led by Lisa Murkowski of Alaska sent a letter to Majority Leader John Thune warning that repealing the tax credits “would create uncertainty, jeopardizing capital allocation, long-term project planning, and job creation in the energy sector and across our broader economy.” The three co-authors were Thom Tillis of North Carolina, John Curtis of Utah, and Jerry Moran of Kansas.
Last week, after the House modified its proposal to phase out the tax credits more aggressively, Murkowski told Politico the Senate was “obviously going to be looking at” the provisions “as well as the final product, and kind of seeing where we start our conversation.” The moderate Republican has a history of supporting environmental policy, and has already broken with her party on at least one vote this year. In February, she was the only Republican who voted in favor of a Democrat-led effort to reinstate 5,500 federal public lands employees that had been fired by the Department of Government Efficiency. (The legislation failed.) Murkowski has also gone her own way to support more efficient energy codes, loans for electric vehicle manufacturers, and the impeachment of President Trump over the January 6 insurrection. But she did not vote for the Inflation Reduction Act in 2022, and if you look at her overall voting record, these occasions of deviating from the party line have been rare.
Tillis, who is a member of the Finance Committee and will therefore be directly involved in writing the tax credit portion of the bill, has made more specific comments. He said he would push to wind down the tax credits more slowly to give businesses more time to prepare. “We have a lot of work that we need to do on the timeline and scope of the production and investment tax credits,” he told Politico in the same article.
While Tillis does not have the same kind of track record as Murkowski, he’s up for re-election next year, and his state has a lot to lose. Some 34 clean energy projects worth $20 billion in investment and tied to more than 17,000 jobs came to North Carolina because of the tax credits, according to the advocacy group Climate Power. Toyota invested in an EV battery manufacturing plant and just started production last month. Several EV charger manufacturers are setting up shop in the state. Siemens Energy is building a factory to make large power transformers, equipment that is essential to expanding the grid and is currently in very tight supply.
Curtis has also continued to rally around the tax credits. He attended a press conference for Fluence, an energy storage company, back in Utah where he told the Deseret News on Tuesday that the House’s changes to the subsidies were “a problem for the future” of energy. “And I think if I have anything to say about it, I’ll make sure that we’re taking into account our energy future,” he said.
When it became clear that the House was considering changes that would effectively repeal the clean energy tax credits in the IRA, Senators Kevin Cramer and John Hoeven of North Dakota, and Shelley Moore Capito of West Virginia chimed in to voice their concerns. Cramer criticized new deadlines the House proposed for ending the tax credits, telling Politico that “it’s too short for truly new technologies. We’ll have to change that. I don’t think it’s fair to treat an emerging technology the same as a 30-year-old technology.”
After the bill passed the House, Jon Husted of Ohio decided it was time to speak up. “You have companies that have already made investments, made commitments,” he told the outlet NOTUS. “Supply chains have been built around them, and we need to phase that out more slowly. I think that they deserve to have at least five years of that credit.” Like Tillis, Husted has an election coming up — and 35 clean energy projects in his state to protect.
The D.C. insiders I spoke to mentioned a few other powerful senators who could play a role in the debate who’ve been mum on the IRA so far. Thune, of South Dakota, has a history of being friendly toward tax credits for wind energy, and was honored by the American Council on Renewable Energy for his support for renewable energy in 2019. Lindsey Graham, chair of the Budget Committee, has also long been a sometimes-ally for climate action in the Senate. His home state of South Carolina has been one of the biggest beneficiaries of the tax credits, with some 43 projects and 22,000 jobs at risk.
Susan Collins also came up repeatedly as one to watch, despite her not saying much of anything publicly about the tax credit changes yet. Collins is up for re-election next year, and while the IRA hasn’t spurred much manufacturing in Maine, it has driven a clean energy boom. The Maine Climate Labor Council, a coalition of unions, estimates there are 145 utility-scale clean energy projects that are either operating or in development that could be eligible for the tax credits. The state has also made a big energy efficiency push in recent years, with the tax credits supporting the expansion of efficiency jobs.
Then there are the potential spoilers. Republicans can only afford to lose three votes on the bill in order to send it back to the House and ultimately to the President’s desk, and the party has already split into a number of factions looking for various tweaks. Some, like Josh Hawley of Missouri, oppose the legislation’s deep cuts to Medicaid. Meanwhile, fiscal conservatives like Ron Johnson of Wisconsin have said they will push to reduce spending even more.
In the House, defenders of the tax credits ultimately cared more about raising the limit on the state and local tax deduction than fighting for clean energy subsidies. We could see a similar dynamic play out in the Senate, where Murkowski and Collins have also expressed concern about cuts to Medicaid. The Senate also can’t afford to change the bill so much that it will lose support in the House, so any changes will have to be surgical. The calculation will be, “What is the smallest thing that the authors of the bill can give these folks to fall back into line so that it is relatively easy to both pass the Senate and then get back through the House?” Freed explained.
Cramer, for his part, is not coming to the rescue for wind and solar, but he may be able to revive support for other forms of clean energy. The North Dakota Senator wrote a letter to Republican leaders in early May railing against the “indefinite entitlement” given to energy sources that depend on the wind and sun, and arguing that the tax credits should prioritize electricity generators on the basis of “reliability,” so as to encourage “geothermal, hydropower, coal and natural gas with carbon capture, and nuclear without excluding wind and solar.”
Capito has barely made a fuss about the energy credits, but she and Cramer will be the ones to watch to see how the Senate deals with the bill’s provision to repeal the Environmental Protection Agency’s greenhouse gas limits for vehicles, as both sit on the Environment and Public Works Committee, of which Capito is the chair. The repeal may not be allowed under the Senate’s rules for budget reconciliation, as it doesn’t have a direct effect on the federal budget. The Senate Parliamentarian hasn’t yet weighed in, but a negative ruling did not stop the two Republicans from leading the fight to revoke waivers granted to California that allowed it to set pollution limits on cars and trucks.
In the end, if any of these Senators wants to take a stand for big changes to the tax credits, they are going to need at least three colleagues to stick it out with them. A more likely outcome, Freed told me, is for them to attempt some smaller adjustments.
“Hopefully they can make it better, but they’re also under enormous pressure to not deviate too significantly from what the House wrote,” he said. “We just need to go in clear-eyed that it's going to be difficult.”
Editor’s note: A previous version of this article misidentified one of the signatories of the letter to Senate Majority Leader John Thune. It’s been corrected. We regret the error.