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Let’s play out what could happen as the House Ways and Means Committee does its work.
One of the most important fights over the Inflation Reduction Act’s survival has finally arrived. But it’s not playing out in the open. It’s happening behind the closed doors of a powerful House committee in charge of tax policy.
The House Ways and Means Committee is writing its version of Republicans’ budget reconciliation bill, the centerpiece of President Donald Trump’s legislative agenda. The committee could release that text as soon as mid-May. And other than a few broad outlines — the text will extend Trump’s tax cuts for the wealthy, and it will increase the deficit by no more than $2.8 trillion — nobody has any idea what it will say.
Whatever the final text, though, will give us the first real sense of how likely the Inflation Reduction Act’s tax credits are to survive in the Trump tax bill. After months of speculation and tea leaf-reading, the House Ways and Means Committee’s draft will represent an opening position of sorts for Republican leadership — and illustrate just how close to repeal the majority is willing to get.
The committee could take a scorched-earth approach, cutting essentially every IRA tax credit in order to force members to fight to get policies back into the final bill. Or it could reform some tax credits so significantly that it effectively repeals the IRA, even if many policies remain on the books.
It could also reform some credits — such as the electric vehicle and clean electricity tax credits — while leaving most others untouched.
The most important suggestion of what will be in the final version came on Thursday in a new letter addressed to Jason Smith, the Ways and Means Committee chairman, and signed by 38 House Republicans. The letter demands the IRA’s full repeal — essentially heralding a potential new “anti-IRA” caucus within the GOP.
“We are deeply concerned that President Trump’s commitment to restoring American energy dominance and ending what he calls the ’‘green new scam’ is being undermined by parochial interests and short-sighted political calculations,” the letter says.
The letter writers focus their ire on subsidies for “wind and biofuel[s] … carbon capture and hydrogen … [and] solar and electric vehicles” that they say form the backbone of the bill.
So far, House Republicans have largely written letters about the IRA to call for its preservation. Last summer, 18 House Republicans wrote to Speaker of the House Mike Johnson to ask him to move gingerly around any “repeal or reform” of the tax credits should Republicans win the November election.
“We must reverse the policies which refine American families while protecting and refining those that are making our country more energy independent and America more energy secure,” the letter said.
Since then, the number of pro-IRA voices in the GOP has risen. Last month, 21 House Republicans wrote to Johnson again in support of the law. But their language was slightly changed, advising that any reforms proceed in a “targeted and pragmatic fashion.” They did, however, oppose “premature credit phase outs” or restrictions on transferability.
Speaking earlier this week at a Semafor event, the Illinois Republican and Ways and Means member Darin LaHood imagined phasing out some of the energy tax credits earlier.
“The approach we’'re looking at now is how you have an appropriate ramp-down [of IRA tax credits] that allows for businesses and companies to continue to be active in this space, but also saves money," LaHood said.
He added that there is a “bullseye” on the clean energy law, and said that “we’ll see” whether any of its provisions are preserved.
Whatever form the final law takes, this legislative vehicle will likely determine the fate of the IRA’s energy tax credits and other climate spending. Trump has lambasted the IRA, and some Republicans believe that its tax credits should be repealed to pay for their tax cuts for wealthy earners.
Ways and Means will not automatically control the final product. Ultimately, they will have to reconcile their version of the text with what’s written by their counterpart, the Senate Finance Committee. Other committees will oversee the IRA’s environmental grants and loans. (My colleague Emily Pontecorvo wrote about the first markup — from the House Transportation and Infrastructure Committee — on Tuesday.) But the Senate has a more forgiving budget target than the House does, which means the Ways and Means Committee is where the IRA could go to die. That’s because it oversees tax policy — and therefore manages the IRA’s all-important tax credits.
The committee also has a spending problem. The legislative process Republicans have chosen to pass their budget bill, known as reconciliation, begins with establishing binding spending limits for committees in both the House and the Senate. That process wrapped up last month.
Under the guidelines passed by the House earlier this year, the Ways and Means Committee can expand the deficit by as much as $4.5 trillion. But simply extending the 2017 tax cuts’ expiring provisions will cost $4.4 trillion — and the committee wants to do more besides, including expanding the deductions that people can claim for their local and state taxes. The committee will struggle to pay for everything it wants to do — and it could look to repealing parts of the IRA to fix it.
It doesn’t help that Representative Jason Smith of Missouri, the Ways and Means chairman, has called the IRA “welfare for the wealthy and well-connected.”
The committee’s conservative bent — and the fact that GOP lawmakers broadly want to stay on track to pass a bill by the end of the summer — mean that the IRA tax cuts are especially vulnerable during this period.
Most of the IRA’s tax credits are due to sunset in 2032. But one measure — a technology-neutral credit to support new clean electricity generation — could run for much longer than that.
Under the law as it stands today, that credit is supposed to last until the United States eliminates much of the greenhouse gas emissions produced by its power grid as compared to 2022 levels. Even if the credit remains in place, that could take another 30 or 40 years to happen, by one estimate — making the tech-neutral tax credit one of the most important climate policies in the law. The IRA’s power sector policies are responsible for more than 80% of the law’s emissions-reducing impact.
That also makes it among the most expensive policies in the law. When Republicans talk about ending tax credits early, the tech-neutral tax credit is an obvious target. Two lawmakers from North Dakota — Representative Julie Fedorchak and Senator Kevin Cramer — are working on language to phase out some tax credits in five years, Axios Pro has reported.
That would shut down the credit by 2030. But ending the credit by then could reshape what kind of energy technologies the law supports. Republicans tend not to see all zero-carbon electricity equally — while they often champion nuclear and advanced geothermal generation, many look less favorably on wind and solar power.
But by terminating the tech-neutral tax credit at the end of the decade, Republicans could help essentially the very technologies they don’t want. There are no new nuclear or geothermal projects in the development pipeline across the country, and new ones are unlikely to crop up until the late 2020s at the earliest. Under the law, energy projects must be “placed in service” by the time a tax credit expires, meaning that virtually no new nuclear or geothermal projects could qualify.
New nuclear projects will face especially serious trouble if the Trump administration guts the Department of Energy’s in-house bank, the Loan Programs Office, as now seems likely.
At the same time, there are plenty of new solar and battery projects planned across the country. Developers of these projects could rush to get them into service before a potential 2029 sunset date. The industry even has experience hurrying projects to completion: It often had to do so during the 2010s, when the solar investment tax credit faced repeated expirations.
Other Republicans have suggested terminating the law’s transferability clause. Under the IRA as it stands today, companies can sell their tax credits to other firms that can better use the subsidy. Depending on how it’s implemented, that reform could hurt the IRA by reducing the value of its tax credits, because companies will have to adopt more complicated financial structures in order to claim a given subsidy. Historically, solar and wind developers have more experience adopting these arcane structures than the nuclear or geothermal industries, which have fewer projects under their belt.
Speaking at a Heatmap event on Thursday, Republican Senator John Curtis of Utah said he was still hopeful that the IRA would survive without significant cuts.
“I don’t think that makes it through the House,” he said when asked if the Ways and Means Committee could slash the IRA tax credits outright. “There’s a lot of insecurities in the Republican Party about not cutting and about where the boundaries are.”
We’ll have a much better sense of where those boundaries are soon.
Editor’s note: Updates to reflect Ways and Means delaying its markup.
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And more of the week’s most important conflicts around renewable energy.
1. Nantucket County, Massachusetts – The fight over Vineyard Wind is back with a vengeance. But can an aggrieved vacation town team up with conservative legal activists to take down an operating offshore wind project?
2. Henry County, Virginia – A fresh fiasco around a solar farm is renewing animus against solar projects in the Commonwealth of Virginia.
3. Calcasieu Parish, Louisiana – Solar developer Aypa is now suing this parish on the grounds it allegedly used zoning rules in an unfair and biased manner against one of its projects.
4. Outagamie County, Wisconsin – If at first you don’t kill the solar farm, try and go after the substation.
5. La Paz County, Arizona – Republicans in Congress are helping at least one area open up for more solar development.
6. Idaho – The federal government will officially re-do its review of the LS Energy Lava Ridge wind farm.
7. Monterey County, California – The EPA is finally getting more involved in the Moss Landing battery plant cleanup, after the agency declared this week it approved a new comprehensive remediation plan under CERCLA, a law that also governs the Superfund program.
More than $760 million from the Inflation Reduction Act’s Green and Resilient Retrofit Program is still caught in legal limbo — but no one seems to have noticed.
When a federal judge put an injunction on the Trump administration’s efforts to freeze Inflation Reduction Act funding back in April, many grantees were able to pick up their clean energy projects where they left off. But not everyone.
Some 100 low-income housing providers that won more than $760 million in grants and loans from the IRA’s Green and Resilient Retrofit Program to make critical safety and energy upgrades to their buildings are still in limbo. The U.S. Department of Housing and Urban Development will not respond to their questions about if or when projects can move forward, and also fired all of the third-party contractors that had been hired to implement the program.
While these developers are certainly not the only ones locked in a bureaucratic standstill — a lawsuit aiming to unlock money from the Greenhouse Gas Reduction Fund is still wending through the courts, and many states are waiting to hear whether they’ll ever get funding for their home energy retrofit rebate programs — their plight has so far been overlooked, raising the risk that the money could quietly disappear.
The Green and Resilient Retrofit Program addressed a known funding gap for affordable housing preservation. Low-income housing providers operate on tight margins and often struggle to pay for regular maintenance, let alone to make upgrades to their buildings. On top of that, many of the buildings that receive other subsidies from HUD are barred from taking on debt for improvements.
“So what do you do if your building is now 40 years old and it needs upgrades?” Juliana Bilowich, the senior director of housing operations and policy for Leading Age, a nonprofit focused on affordable senior housing, said to me. “There are some housing communities that haven’t had air conditioning for years because the HUD budget won’t support it, or it’s broken and it needs to be upgraded, but there’s no funding they can get to do that.”
That was the case for The Towers, a 20-story senior living center in New Haven, Connecticut, except the building was nearly 60 years old. While its individual apartments have air conditioning, there’s no HVAC system serving the hallways where residents have to wait for the elevator. “The summertime is horrible,” Gus Keach-Longo, the president and CEO of The Towers, told me.
While the building has made cosmetic improvements over the years, it hasn’t done major efficiency or structural work outside of installing LED lightbulbs, Keach-Longo told me. A recent assessment of the building scored it at a 7 out of 100 for energy efficiency. In addition to an HVAC solution, the building needed a new roof and windows.
The Green and Resilient Retrofit Program looked like it could be a lifeline for Towers residents. For one, it was uniquely flexible. The funds could be used for a wide range of projects, as long as they reduced the building’s emissions, improved its energy or water efficiency, or made it more resilient to flooding, extreme heat, or other weather-related hazards.
Billowich called the program a “linchpin” for buildings that didn’t have the ability to go to the bank and get a loan. “This was the way that housing communities were going to be able to continue operating.” Applicants planned to insulate their pipes so they didn’t burst during a cold front, or replace their windows to save money on energy and protect residents from wildfire smoke. The funds could also be leveraged to raise additional money for other kinds of repairs. The resulting energy savings could then be put toward expanding services for residents.
The $1 billion program was divided into three streams of funding. A building owner could get up to $750,000 per property under the “Elements” stream to supplement existing retrofit plans with green upgrades like solar panels. The “Leading Edge” stream supplied up to $10 million for more involved projects and required the building to ultimately meet a green certification, such as Passive House or LEED. The “Comprehensive” stream was designed to facilitate more complicated, full-building retrofits that required significant technical assistance to plan. Grantees could get up to $80,000 per unit, or $20 million total, but they would have to work with HUD-employed contractors that would scope out and oversee the project.
Department of Housing and Urban Development
The Towers applied for a Comprehensive grant and was one of just a few properties to win the full $20 million. But since signing a contract for the award last July, Keach-Longo said his team has “heard almost nothing.” They were supposed to be assigned a Multifamily Assessment Contractor, or MAC, the term for the HUD-employed contractor that would oversee the project, but the Biden administration never got to it. When the Trump administration came in, it halted the program as part of the larger IRA funding freeze. On February 12, HUD terminated its contracts with all five of the companies it had selected to serve as MACs, including big consulting firms like Deloitte and Ernst and Young. HUD did not respond to emailed questions for this story.
Margaret Salazar, the CEO of REACH Community Development in Oregon, has also been “stuck in a holding pattern” regarding her organization’s two Comprehensive awards. “We want to do right by what we’ve communicated with residents that we are making these repairs. We want to involve them in the process. And now we’re hanging out there without any path forward,” she told me.
When the funding freeze first went into effect in March, an affordable housing operator in the Boston area called the Codman Square Neighborhood Development Corporation, which had won an Elements grant, joined a lawsuit filed by five other nonprofits that challenged Trump’s pause. In April, the district court judge overseeing the case issued a preliminary injunction barring HUD and other agencies from maintaining any program-wide freezes.
The agency complied, in part. HUD sent a letter to awardees notifying them of the injunction and resumed processing reimbursements for Elements and Leading Edge grants. Ron Budynas, the chief operating officer for an affordable senior housing provider called Wesley Living, which won 10 separate awards from the program, told me he’s been able to proceed with his three Elements projects. He’s already completed one, upgrading an apartment complex in Lexington, Tennessee, with high efficiency heat pumps, and is now working on the others, installing solar and battery backup systems at two other properties in Tennessee.
His remaining seven are Comprehensive projects, however, and are “a whole different story,” he said. “Every time I’ve written to the [Green and Resilient Retrofit Program] staff, the only answer I get back from them on the Comprehensive grants is ’we’re still waiting for direction from headquarters.’”
Budynas was much further along than Keach-Longo at The Towers by the time Trump came into office. He said he was already working with a MAC and had completed a capital needs assessment on five of the properties; the next step was to scope out the work. He told me he contacted HUD after the court’s injunction and asked whether his team could put together the scope for one project to move it forward, but the agency told him no, since the program rules say that the MAC has to do it — even though it had fired all of the MACs.
Then the reconciliation bill that Congress passed earlier this month rescinded $138 million from the program — money set aside for administrative costs and technical assistance, i.e. to pay for the MACs. “How do we go forward if the MAC has to do the scope and they don’t have any money to pay the MAC?” Budynas said. Six of the seven Wesley Living properties that won Comprehensive awards receive HUD subsidies that preclude them from using other types of financing, “so there’s no way for us to update those properties if the Comprehensive doesn’t go forward,” he said.
It’s unclear whether any of this will be addressed in the lawsuit, since the only plaintiff in the case that challenged HUD — Codman Square — has been able to progress with its Elements award. I reached out to Democracy Forward, the nonprofit legal organization that is representing the plaintiffs, but it declined to comment.
Beth Neitzel, a partner at the law firm Foley Hoag, which is not involved in the case, told me this might be an unfortunate gray area for the Comprehensive award winners. She said the lawyers could argue that HUD is violating the terms of the injunction, but the government could respond that no one in the case is being injured by its actions.
“I don’t know if that will carry the day. It seems pretty clear they are violating the terms of the preliminary injunction by not unfreezing that fund,” Neitzel said. “But there is that potential wrinkle that they will argue that’s not an issue here because nobody here has standing to challenge that.” As a matter of law, she added, it’s irrelevant that HUD fired the contractors overseeing the program since the program itself was congressionally mandated.
Meanwhile the grantees wait, and the consequences of the delay stack up. Salazar, of REACH in Oregon, told me the organization missed out on an opportunity to get additional funding from the Portland Housing Bureau because it hadn’t been able to scope out the project with its MAC.
“This isn’t just money on the line. This is the future of these affordable housing communities,” Bilowich said. “That is a blue issue, that’s a red issue, that’s everybody’s issue. And so we need a solution, and this was the most efficient and cost-effective solution that everybody had come up with.”
On FERC’s ‘disastrous misstep,’ the World Court’s climate ruling, and 127 SMRs
Current conditions: The U.S. Northeast faces more flash flooding as cooling temperatures usher in rainfall • Scandinavia’s weeks-long heatwave continues, with temperatures reaching nearly 90 degrees Fahrenheit • The death toll from China’s heavy rains rose to 34, with as many as 80,000 people displaced.
The U.S. Federal Reserve board decided on Wednesday to hold interest rates steady at between 4.25% and 4.5%, in defiance of President Donald Trump’s call for looser policy. This also added to the headwinds facing renewables developers.
When borrowing costs are higher, it’s harder to lure investors to back projects. That dynamic is even more challenging for construction projects that take even longer and therefore accrue more interest, such as nuclear reactors or hydroelectric upgrades. “Developers rushing to build solar and wind energy between now and next summer to take advantage of tax credits will have to pay out these higher interest costs as they build,” Advait Arun, senior associate of energy finance at the Center for Public Enterprise and a Heatmap contributor, told my colleague Charu Sinha.
Interior Secretary Doug BurgumJohn McDonnell/Getty Images
In a secretarial order on Tuesday, Secretary of the Interior Doug Burgum directed his department to eliminate policies that give “preferential treatment” to wind and solar. The directive also orders the agency to consider withdrawing “areas onshore with high potential for wind energy development” from federal leasing and to ramp up studies on the effects of wind turbines on migratory birds.
“These policy changes represent a commonsense approach to energy that puts Americans’ interests first,” Burgum said in a statement. “Leveling the playing field in permitting supports energy development that’s reliable, affordable, and built to last.” The move “will result in higher energy costs, increased blackouts, job loss, and billions of dollars in stranded investments, further delaying shovel-ready projects supported by a domestic heavy manufacturing supply chain renaissance that spans 40 states,” said Stephanie Francoeur, a spokesperson for the green group Oceantic Network. “Crippling affordable and reliable wind energy makes no economic sense and undermines the administration’s ‘all-of-the-above’ energy strategy.”
Ford’s vehicle sales rose 14% to more than 612,000 in the last quarter, according to earnings that bested analysts’ expectations on Wednesday. But EV sales dropped 31% to just 16,438. The company told Electrek that demand for its F-150 Lightning had slumped and the Mustang Mach-E faced a recall, preventing the spike in Ford’s EV sales GM saw in the last quarter. But that isn’t stopping the Detroit giant from investing more in EVs.
Ford CEO Jim Farley teased an upcoming announcement about the company’s “plans to design and build breakthrough electric vehicles in America.” Farley said Ford wouldn’t compete with South Korean or Japanese brands in the mass-market EV space, but rather would invest in the truck and SUV market. More details are set to come at an event in Kentucky on August 11.
The White House nominated an executive from Southern Company to serve in the open seat on the Nuclear Regulatory Commission. Ho Nieh, who serves as the utility giant’s vice president of regulatory affairs, previously led the NRC’s Office of Nuclear Reactor Regulation before joining Southern right as the company completed work on the only two new reactors built from scratch in the U.S. in a generation, the pair of Westinghouse AP1000s at the Alvin W. Vogtle Generating Station in northern Georgia.
The nomination, now subject to Senate approval, came a month after Trump fired Democratic Commissioner Christopher Hanson in a move that critics said violated the NRC’s legal independence from the White House. Trump will now have another seat to fill. On Tuesday, Annie Caputo, a Republican commissioner who Trump initially appointed in 2017, abruptly resigned amid a series of dramatic overhauls at the agency that include demands from the Trump administration that the regulators “rubber stamp” new reactors. In her farewell email to NRC staff – a copy of which I obtained and published on my Substack newsletter, Field Notes – she said she planned to focus on her family.
Helion has started work on what could be the world’s first nuclear fusion power plant in Washington State. The Microsoft-backed startup broke ground on the facility, called the Orion plant, in Chelan County, east of Seattle, and set a goal to deliver power to the tech giant’s data centers in the state by 2028. Microsoft and Helion made history in May 2023 with the world’s first power purchase agreement for nuclear fusion, with Helion promising to deliver up to 50 megawatts of electricity following a ramp-up period of one year. The project is set to hook onto the Washington grid.
Helion isn’t the only fusion startup in the race to deliver power first. In December, Commonwealth Fusion Systems announced plans to build its debut power plant in Virginia. Those ambitious promises explain why investors have pumped $2.5 billion into fusion energy over the past two years, according to newly released industry data.