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Much may depend on the Senate’s tolerance for fuzzy math.
House Republicans passed a budget blueprint Thursday morning that lays the groundwork for the party to begin drafting legislation to enact President Trump’s agenda. Now the fight over the Inflation Reduction Act’s clean energy tax credits begins in earnest.
The blueprint is merely a set of instructions for writing the eventual budget bill, laying out topline numbers for tax cuts and spending reductions — it doesn’t contain any actual policies. Trump’s biggest priorities are to extend the tax cuts he enacted in 2017, pass new tax cuts on tips and overtime pay, and to boost spending on immigration control and defense.
The resolution that Republicans passed allows for all of the above. In total, it enables Congress to craft a bill that would increase the national debt over the next decade by more than $5 trillion.
The good news for the IRA tax credits is that the framework only requires lawmakers to craft legislation that would produce $4 billion in savings — a relatively small amount that doesn't exert much pressure on cutting the tax credits. The bad news is that Senate Republicans have given their word to budget hawks in the House that they will aim to cut much more than that — at least $1.5 trillion in spending. House Republicans, for their part, are eager to do at least $2 trillion in deficit reductions.
According to a “menu” of budget proposals that made its way around the Hill earlier this year, Republicans estimate they could save anywhere from $3 billion to $800 billion by repealing IRA tax credits, depending on how many and which ones are cut.
Lawmakers could also go after other climate-related policies, like cutting grant programs from the Department of Energy and Environmental Protection Agency. “Most of the funds have been obligated,” meaning they’re legally committed to grantees, “so there’s not much left to rescind,” Alex McDonough, a lobbyist with Pioneer Public Affairs, told me in an email. “We’ll see what they do with a possible rescission package, but even that would be a drop in the bucket compared to the trillions they want for offsetting tax cuts.”
Lobbyists on Capitol Hill and other experts I’ve spoken with over the past two weeks disagree about how much the numbers matter when it comes to whether and how much of the IRA will be repealed. Some felt the budget math would take priority, while others told me that if any of the tax credits were killed or saved, it would be for political reasons over anything else.
Though the biggest political target seems to be the electric vehicle tax credits, “anything with a price tag is at least somewhat vulnerable,” McDonough said. Lawmakers could also opt to make certain credits more difficult to access or phase them out earlier rather than fully repeal them.
McDonough also said the lobbying that companies and trade groups have been doing around the manufacturing and clean electricity tax credits appeared to be working, and will ratchet up even more in May. “Appealing to ‘all of the above’ and ‘energy dominance’ is working because everyone knows how badly we need new generation to meet rapidly rising demand and a lot of the clean energy resources happen to be the quickest to deploy,” he said. “Utilities want it too, which is also very important.”
On Thursday, Republican Senators Lisa Murkowski of Alaska and John Curtis of Utah sent a letter to their party’s leadership asking them to preserve tax credits that spur manufacturing, reduce energy costs for consumers, and give certainty to businesses that have already made investments in the U.S. based on the credits. Thom Tillis of North Carolina and Jerry Moran of Kansas also signed the letter. It was the first major show of support for the tax credits in the Senate, following a similar letter signed by 21 Republicans in the House.
Republicans are trying to enact Trump’s agenda using a special process called budget reconciliation, which will enable them to pass it with a simple 51-vote majority rather than the 60 votes required to overcome a filibuster. The party currently has 53 seats, so four Republicans coming out in favor of preserving IRA tax credits is a good sign for the law. Similarly, the Republicans have a seven-seat majority in the House, and so those 21 who like the IRA could have quite a bit of influence.
But the other big open question for the future of the IRA — and frankly, for the future of the Senate — is whether Republicans will proceed with the fuzzy math they are using to calculate the cost of the bill. When the Congressional Budget Office scores the extension of Trump's 2017 tax cuts, it will use what's called a "current law baseline," and estimate that they will cost the government more than $3 trillion dollars over the next ten years. Senate Republicans, however, have asserted that extending the 2017 tax cuts is free and will have no impact on the deficit, using a different scoring method called a “current policy baseline.”
The reason this matters for the IRA is that the budget reconciliation process has strict rules. If lawmakers were forced to recognize the true cost of the tax cut extensions in drafting the budget bill, they would have to make several trillion dollars’ worth of additional spending cuts in order to align with the blueprint they passed this week. In that scenario, it’s hard to see how any of the IRA could survive.
But if Republicans unify around this fuzzy math and carry it all the way to the final vote on the bill, which would be unprecedented, they could face a showdown with Democrats, who will say the bill doesn’t comply with the reconciliation rules. In that scenario, they’ll be faced with a choice either to go back to the drawing board or take the nuclear option — essentially changing how the Senate operates.
“There will be a majority vote on whether the Senate wants to change its precedents going forward, forever, and basically open up reconciliation to whatever policies the majority wants to enact going forward,” Charlie Ellsworth, another lobbyist for Pioneer Public Affairs, told me.
Expect to hear a lot more about this debate over the cost of the tax cuts once lawmakers return to Washington on April 28 after a two-week recess. Republicans have said they want to get the budget bill to Trump’s desk by Memorial Day. McDonough doesn’t think that’s in the cards, and expects it to happen by the August recess at best. But he expects the House Ways and Means committee to push out a first version of the bill in May, so we’ll see what the first proposal is for the fate of the IRA tax credits then.
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And more on the week’s biggest conflicts around renewable energy projects.
1. Jackson County, Kansas – A judge has rejected a Hail Mary lawsuit to kill a single solar farm over it benefiting from the Inflation Reduction Act, siding with arguments from a somewhat unexpected source — the Trump administration’s Justice Department — which argued that projects qualifying for tax credits do not require federal environmental reviews.
2. Portage County, Wisconsin – The largest solar project in the Badger State is now one step closer to construction after settling with environmentalists concerned about impacts to the Greater Prairie Chicken, an imperiled bird species beloved in wildlife conservation circles.
3. Imperial County, California – The board of directors for the agriculture-saturated Imperial Irrigation District in southern California has approved a resolution opposing solar projects on farmland.
4. New England – Offshore wind opponents are starting to win big in state negotiations with developers, as officials once committed to the energy sources delay final decisions on maintaining contracts.
5. Barren County, Kentucky – Remember the National Park fighting the solar farm? We may see a resolution to that conflict later this month.
6. Washington County, Arkansas – It seems that RES’ efforts to build a wind farm here are leading the county to face calls for a blanket moratorium.
7. Westchester County, New York – Yet another resort town in New York may be saying “no” to battery storage over fire risks.
Solar and wind projects are getting swept up in the blowback to data center construction, presenting a risk to renewable energy companies who are hoping to ride the rise of AI in an otherwise difficult moment for the industry.
The American data center boom is going to demand an enormous amount of electricity and renewables developers believe much of it will come from solar and wind. But while these types of energy generation may be more easily constructed than, say, a fossil power plant, it doesn’t necessarily mean a connection to a data center will make a renewable project more popular. Not to mention data centers in rural areas face complaints that overlap with prominent arguments against solar and wind – like noise and impacts to water and farmland – which is leading to unfavorable outcomes for renewable energy developers more broadly when a community turns against a data center.
“This is something that we’re just starting to see,” said Matthew Eisenson, a senior fellow with the Renewable Energy Legal Defense Initiative at the Columbia University Sabin Center for Climate Change Law. “It’s one thing for environmentalists to support wind and solar projects if the idea is that those projects will eventually replace coal power plants. But it’s another thing if those projects are purely being built to meet incremental demand from data centers.”
We’ve started to see evidence of this backlash in certain resort towns fearful of a new tech industry presence and the conflicts over transmission lines in Maryland. But it is most prominent in Virginia, ground zero for American hyperscaler data centers. As we’ve previously discussed in The Fight, rural Virginia is increasingly one of the hardest places to get approval for a solar farm in the U.S., and while there are many reasons the industry is facing issues there, a significant one is the state’s data center boom.
I spent weeks digging into the example of Mecklenburg County, where the local Board of Supervisors in May indefinitely banned new solar projects and is rejecting those that were in the middle of permitting when the decision came down. It’s also the site of a growing data center footprint. Microsoft, which already had a base of operations in the county’s town of Boydton, is in the process of building a giant data center hub with three buildings and an enormous amount of energy demand. It’s this sudden buildup of tech industry infrastructure that is by all appearances driving a backlash to renewable energy in the county, a place that already had a pre-existing high opposition risk in the Heatmap Pro database.
It’s not just data centers causing the ban in Mecklenburg, but it’s worth paying attention to how the fight over Big Tech and solar has overlapped in the county, where Sierra Club’s Virginia Chapter has worked locally to fight data center growth with a grassroots citizens group, Friends of the Meherrin River, that was a key supporter of the solar moratorium, too.
In a conversation with me this week, Tim Cywinski, communications director for the state’s Sierra Club chapter, told me municipal leaders like those in Mecklenburg are starting to group together renewables and data centers because, simply put, rural communities enter into conversations with these outsider business segments with a heavy dose of skepticism. This distrust can then be compounded when errors are made, such as when one utility-scale solar farm – Geenex’s Grasshopper project – apparently polluted a nearby creek after soil erosion issues during construction, a problem project operator Dominion Energy later acknowledged and has continued to be a pain point for renewables developers in the county.
“I don’t think the planning that has been presented to rural America has been adequate enough,” the Richmond-based advocate said. “Has solar kind of messed up in a lot of areas in rural America? Yeah, and that’s given those communities an excuse to roll them in with a lot of other bad stuff.”
Cywinski – who describes himself as “not your typical environmentalist” – says the data center space has done a worse job at community engagement than renewables developers in Virginia, and that the opposition against data center projects in places like Chesapeake and Fauquier is more intense, widespread, and popular than the opposition to renewables he’s seeing play out across the Commonwealth.
But, he added, he doesn’t believe the fight against data centers is “mutually exclusive” from conflicts over solar. “I’m not going to tout the gospel of solar while I’m trying to fight a data center for these people because it’s about listening to them, hearing their concerns, and then not telling them what to say but trying to help them elevate their perspective and their concerns,” Cywinski said.
As someone who spends a lot of time speaking with communities resisting solar and trying to best understand their concerns, I agree with Cywinksi: the conflict over data centers speaks to the heart of the rural vs. renewables divide, and it offers a warning shot to anyone thinking AI will help make solar and wind more popular.
The One Big Beautiful Bill Act is one signature away from becoming law and drastically changing the economics of renewables development in the U.S. That doesn’t mean decarbonization is over, experts told Heatmap, but it certainly doesn’t help.
What do we do now?
That’s the question people across the climate change and clean energy communities are asking themselves now that Congress has passed the One Big Beautiful Bill Act, which would slash most of the tax credits and subsidies for clean energy established under the Inflation Reduction Act.
Preliminary data from Princeton University’s REPEAT Project (led by Heatmap contributor Jesse Jenkins) forecasts that said bill will have a dramatic effect on the deployment of clean energy in the U.S., including reducing new solar and wind capacity additions by almost over 40 gigawatts over the next five years, and by about 300 gigawatts over the next 10. That would be enough to power 150 of Meta’s largest planned data centers by 2035.
But clean energy development will hardly grind to a halt. While much of the bill’s implementation is in question, the bill as written allows for several more years of tax credit eligibility for wind and solar projects and another year to qualify for them by starting construction. Nuclear, geothermal, and batteries can claim tax credits into the 2030s.
Shares in NextEra, which has one of the largest clean energy development businesses, have risen slightly this year and are down just 6% since the 2024 election. Shares in First Solar, the American solar manufacturer, are up substantially Thursday from a day prior and are about flat for the year, which may be a sign of investors’ belief that buyer demand for solar panels will persist — or optimism that the OBBBA’s punishing foreign entity of concern requirements will drive developers into the company’s arms.
Partisan reversals are hardly new to climate policy. The first Trump administration gleefully pulled the rug from under the Obama administration’s power plant emissions rules, and the second has been thorough so far in its assault on Biden’s attempt to replace them, along with tailpipe emissions standards and mileage standards for vehicles, and of course, the IRA.
Even so, there are ways the U.S. can reduce the volatility for businesses that are caught in the undertow. “Over the past 10 to 20 years, climate advocates have focused very heavily on D.C. as the driver of climate action and, to a lesser extent, California as a back-stop,” Hannah Safford, who was director for transportation and resilience in the Biden White House and is now associate director of climate and environment at the Federation of American Scientists, told Heatmap. “Pursuing a top down approach — some of that has worked, a lot of it hasn’t.”
In today’s environment, especially, where recognition of the need for action on climate change is so politically one-sided, it “makes sense for subnational, non-regulatory forces and market forces to drive progress,” Safford said. As an example, she pointed to the fall in emissions from the power sector since the late 2000s, despite no power plant emissions rule ever actually being in force.
“That tells you something about the capacity to deliver progress on outcomes you want,” she said.
Still, industry groups worry that after the wild swing between the 2022 IRA and the 2025 OBBA, the U.S. has done permanent damage to its reputation as a business-friendly environment. Since continued swings at the federal level may be inevitable, building back that trust and creating certainty is “about finding ballasts,” Harry Godfrey, the managing director for Advanced Energy United’s federal priorities team, told Heatmap.
The first ballast groups like AEU will be looking to shore up is state policy. “States have to step up and take a leadership role,” he said, particularly in the areas that were gutted by Trump’s tax bill — residential energy efficiency and electrification, transportation and electric vehicles, and transmission.
State support could come in the form of tax credits, but that’s not the only tool that would create more certainty for businesses — considering the budget cuts states will face as a result of Trump’s tax bill, it also might not be an option. But a lot can be accomplished through legislative action, executive action, regulatory reform, and utility ratemaking, Godfrey said. He cited new virtual power plant pilot programs in Virginia and Colorado, which will require further regulatory work to “to get that market right.”
A lot of work can be done within states, as well, to make their deployment of clean energy more efficient and faster. Tyler Norris, a fellow at Duke University's Nicholas School of the Environment, pointed to Texas’ “connect and manage” model for connecting renewables to the grid, which allows projects to come online much more quickly than in the rest of the country. That’s because the state’s electricity market, ERCOT, does a much more limited study of what grid upgrades are needed to connect a project to the grid, and is generally more tolerant of curtailing generation (i.e. not letting power get to the grid at certain times) than other markets.
“As Texas continues to outpace other markets in generator and load interconnections, even in the absence of renewable tax credits, it seems increasingly plausible that developers and policymakers may conclude that deeper reform is needed to the non-ERCOT electricity markets,” Norris told Heatmap in an email.
At the federal level, there’s still a chance for, yes, bipartisan permitting reform, which could accelerate the buildout of all kinds of energy projects by shortening their development timelines and helping bring down costs, Xan Fishman, senior managing director of the energy program at the Bipartisan Policy Center, told Heatmap. “Whether you care about energy and costs and affordability and reliability or you care about emissions, the next priority should be permitting reform,” he said.
And Godfrey hasn’t given up on tax credits as a viable tool at the federal level, either. “If you told me in mid-November what this bill would look like today, while I’d still be like, Ugh, that hurts, and that hurts, and that hurts, I would say I would have expected more rollbacks. I would have expected deeper cuts,” he told Heatmap. Ultimately, many of the Inflation Reduction Act’s tax credits will stick around in some form, although we’ve yet to see how hard the new foreign sourcing requirements will hit prospective projects.
While many observers ruefully predicted that the letter-writing moderate Republicans in the House and Senate would fold and support whatever their respective majorities came up with — which they did, with the sole exception of Pennsylvania Republican Brian Fitzpatrick — the bill also evolved over time with input from those in the GOP who are not openly hostile to the clean energy industry.
“You are already seeing people take real risk on the Republican side pushing for clean energy,” Safford said, pointing to Alaska Republican Senator Lisa Murkowski, who opposed the new excise tax on wind and solar added to the Senate bill, which earned her vote after it was removed.
Some damage has already been done, however. Canceled clean energy investments adds up to $23 billion so far this year, compared to just $3 billion in all of 2024, according to the decarbonization think tank RMI. And that’s before OBBBA hits Trump’s desk.
The start-and-stop nature of the Inflation Reduction Act may lead some companies, states, local government and nonprofits to become leery of engaging with a big federal government climate policy again.
“People are going to be nervous about it for sure,” Safford said. “The climate policy of the future has to be polycentric. Even if you have the political opportunity to make a big swing again, people will be pretty gun shy. You will need to pursue a polycentric approach.”
But to Godfrey, all the back and forth over the tax credits, plus the fact that Republicans stood up to defend them in the 11th hour, indicates that there is a broader bipartisan consensus emerging around using them as a tool for certain energy and domestic manufacturing goals. A future administration should think about refinements that will create more enduring policy but not set out in a totally new direction, he said.
Albert Gore, the executive director of the Zero Emissions Transportation Association, was similarly optimistic that tax credits or similar incentives could work again in the future — especially as more people gain experience with electric vehicles, batteries, and other advanced clean energy technologies in their daily lives. “The question is, how do you generate sufficient political will to implement that and defend it?” he told Heatmap. “And that depends on how big of an economic impact does it have, and what does it mean to the American people?”
Ultimately, Fishman said, the subsidy on-off switch is the risk that comes with doing major policy on a strictly partisan basis.
“There was a lot of value in these 10-year timelines [for tax credits in the IRA] in terms of business certainty, instead of one- or two- year extensions,” Fishman told Heatmap. “The downside that came with that is that it became affiliated with one party. It was seen as a partisan effort, and it took something that was bipartisan and put a partisan sheen on it.”
The fight for tax credits may also not be over yet. Before passage of the IRA, tax credits for wind and solar were often extended in a herky-jerky bipartisan fashion, where Democrats who supported clean energy in general and Republicans who supported it in their districts could team up to extend them.
“You can see a world where we have more action on clean energy tax credits to enhance, extend and expand them in a future congress,” Fishman told Heatmap. “The starting point for Republican leadership, it seemed, was completely eliminating the tax credits in this bill. That’s not what they ended up doing.”