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As the process to extend the 2017 Trump tax cuts approaches its denouement in the House of Representatives, the relative power of the various Republican factions who could hold up or alter the bill may be finally making itself clear.
And it’s the clean energy tax credit supporters who appear to be the weakest.
Three groups of House Republicans have been the most persistently critical of the emerging framework for the tax and spending bill. There are the members of the House Freedom Caucus, led by Texas Republican Chip Roy, who are fuming about the bill’s impact on the deficit. There are the SALT Republicans, a group whittled down to just five members from New York, New Jersey, and California — blue states all, with all the members from competitive districts — who want to raise the deductibility ceiling for state and local taxes, a.k.a SALT taxes, after it was slashed in 2017’s Tax Cuts and Jobs Act.
And then there are the tax credit defenders, a group of moderate Republicans from largely blue or purple states or districts who want to see at least parts of the Inflation Reduction Act preserved and protected. If that description sounds a lot like the description of the SALT caucus, well, you’re onto something: Every member of the SALT caucus has at one time or another criticized a slash-and-burn approach to dealing with the IRA’s clean energy tax credits.
Both the SALT caucus and the Freedom Caucus have been seen as credible threats to the bill, whose members must be appeased. The SALT caucus stands in a Manchin-esque position, where the five of them together could tank the bill on their own — and where some distance from the Republican party could help them in their districts. For the Freedom Caucus conservatives, the bill presents a pretty clear red line: A handful of them simply do not vote to raise the debt ceiling, which the House language does, and so would have to be appeased with substantial spending cuts.
The SALT caucus appears to have won meaningful concessions, reportedly bringing the deductibility level up to $40,000 for incomes under $500,000. It’s these concessions that seemed to be holding up the bill Wednesday afternoon, as Freedom Caucus members balked over the relative lack of attention their concerns had received. Earlier this week, President Trump was pressuring the SALT caucus to let the bill advance; now he’s putting the screws to the Freedom Caucus. And caught in the middle might be the Inflation Reduction Act.
The solution to bringing the budget harliners on board may be to further fetter and restrict the clean energy tax credits, with Republican leadership reportedly discussing bringing tax credits for projects placed in service after 2028 straight to zero rather than phasing them out gradually.
In the run up to the bill’s drafting, there was much speculation that the core clean energy tax credits of the Inflation Reduction Act could be preserved in large part thanks to the fact that they had sparked investment in Republican congressional districts. In August of last year, well before the presidential election, 18 House Republicans representing a mix of blue states and districts with substantial IRA-linked investments — including Conservative Climate Caucus Vice Chair Buddy Carter’s Savannah, Georgia-based district, with its Hyundai vehicle and battery plant — wrote a letter to Speaker Mike Johnson warning that “prematurely repealing energy tax credits … would undermine private investments and stop development that is already ongoing.” A full repeal, they said, “would create a worst-case scenario where we would have spent billions of taxpayer dollars and received next to nothing in return.”
In March, after some election-related turnover, a similar group wrote to House Ways and Means Committee Chair Jason Smith that “any proposed changes to the tax code be conducted in a targeted and pragmatic fashion that promotes conference priorities without undoing current and future private sector investments.”
But at no point have these members ever seriously threatened to vote against the bill — not even after Smith’s Ways and Means Committee proposed text that would essentially disembowel the climate law. Even going into Wednesday’s Rules Committee meeting, at least one tax credit supporter, Don Bacon of Nebraska, was leaning towards supporting the bill — hardly the kind of defiance that leads to concessions.
Not that the House IRA’s defenders have been entirely silent. After the Ways and Means Committee released its bill text, a smaller group of House Republicans (14 this time) wrote yet another letter, asking their colleagues to “consider” the effects of accelerating phase-outs, scrapping the ability to sell tax credits on the open market, and pushing out projects’ eligibility for tax credits later in their life cycle. This group, led by Virginia Republican Jen Kiggans, no longer included Buddy Carter, who in the interim had launched a campaign for Jon Ossoff’s Senate seat. It also did not include Mariannette Miller-Meeks, the Iowa Republican who chairs the Conservative Climate Caucus and who had signed the previous letters. Miller-Meeks has always shown special interest in biofuels, which arguably fared the best in the Ways and Means language — the phase-out of the IRA’s biofuel tax credit was extended from 2027 to 2031, winning plaudits from industry.
But these objections were exceedingly polite, especially compared to the Freedom Caucus’ characteristic bluster.
While the legislation is still in flux, it may be that the clean energy caucus, such as it was, contained within it the seeds of its own failure.
Of the five SALT caucus members, four signed on to Kiggans’ letter criticizing the original language altering the tax credits. Now, they appear to have won, or at least reached a deal with the House Republican leadership. And that means more fiscal space in the bill — which may be made up for with even stingier tax credits for clean energy. When the time came for choosing, SALT had to be on the menu.
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At Heatmap House’s third session of the day, “Up Next in Climate Tech,” investors Tom Steyer and Dawn Lippert chart a path forward for the clean energy economy.
Tom Steyer is still riding the wave.
The climate investor and philanthropist told the audience at Heatmap House’s third session of the day, “Up Next in Climate Tech,” that he started his investment firm Galvanize in 2021 because “there’s a huge, powerful wave behind us.” And now, after the One Big Beautiful Bill Act and the Trump administration’s regulatory assault on renewables? “Does any of that change? No, it’s better,” Steyer said.
Steyer was skeptical that the oil and gas industry could ultimately compete with clear energy, even with the current administration’s support.
“For the people who never look at the numbers, for the people who don’t pay attention to actual investment decisions, costs, profit margins, you can say whatever you want. But I’ll tell you this: The rig count is down 10% to 20% in 2025 in America. That’s a statement about future profitability” of the oil industry Steyer said, pointing to declining domestic drilling.
For Steyer, the math is simple. A huge portion of demand for oil comes from the transportation sector, and the movement towards electric vehicles is “unstoppable.”
“We’re talking about a commodity with a worldwide price where we’re the biggest producers of oil in the world,” Steyer said. He noted that the U.S. is also the “high-cost producer” compared to countries like Saudi Arabia, which can produce oil more cheaply than in the U.S. shale patch.
So if there’s such a huge market opportunity for clean energy businesses, can they get funded? That’s the challenge fellow investor Dawn Lippert is trying to solve. Lippert is the founder and chief executive of Elemental, a non-profit climate investment firm. The trick she’s trying to perfect is to attract investors beyond the specialized, earlier stage investor group that typically seeds decarbonization, who can fund actual, steel-in-the-ground projects.
“We are trying to finance the energy transition with venture capital,” referring to the broader financing community. “It’s a total mistake.”
Venture capital has catalyzed “a huge wave of technology, invention, and technologies that are really working,” Lippert added. What’s happening now is that those companies are “trying to deploy, they’re trying to build their first plants, trying to build their second plants. It takes quite a lot of capital, and there’s no one to hand it out on the financial infrastructure side. They’re not ready for infrastructure investors. They’re definitely not ready for banks.”
This problem of “bankability,” or the “missing middle,” has bedeviled the climate tech sector for years, as technologically innovative energy projects struggle to get funding from infrastructure investors who want projects that can produce predictable cash flows, not risky venture-stage experiments.
Elemental developed an investment vehicle called a D-SAFE — a.k.a. a Development Simple Agreement for Future Equity — to help solve this problem. The D-SAFE is an investment agreement that can unlock future investment by pointing investment directly at development costs. “A development SAFE says, I’m going to give you dollars, and I’m going to get those dollars back when you hit specific milestones,” Lippert said.
So far, Elemental has done nine D-SAFEs. “We’re trying to create much simpler financial infrastructure so that financial innovation can catch up to where technology innovation is, and we can stop slowing things down,” Lippert said.
The challenge for American climate technology and infrastructure companies will be to compete with state-supported Chinese businesses, Lippert said. “China actually does have a very methodical way of putting a ton of state capital into these companies to get them all the way through. We don’t have that in this country, so we have to be much more creative and make sure that companies where technology is working are not falling into a scale gap just because we can’t get our act together.”
At Heatmap House’s second session, speakers including Senator Brian Schatz of Hawaii looked overseas to spot the clean energy future.
None of the speakers at Heatmap House’s second session at New York Climate Week, “Built to Scale,” minced words when it came to describing the current U.S. policy environment. The global fight to decarbonize is still happening, our guests emphasized — but it might happen without the U.S.
Senator Brian Schatz of Hawaii emphasized in his discussion with Heatmap’s Robinson Meyer that in previous years, he would assure his international colleagues that the U.S. was still fully invested in the climate fight. What about now? “I would say we will be back — but do not wait for us,” Schatz said.
Ricardo Falu, executive vice president and chief operating officer at AES corporation, touched on a similar point while speaking with my colleague Emily Pontecorvo. His company, which invests in clean energy projects in addition to natural gas at home and abroad, has found particular success in Chile, where the regulatory environment has proved especially fruitful for renewables. “In many other countries, you don't need incentives for renewables. They are competitive,” Falu pointed out. “You don’t need the government financing or the government to be involved.”
This isn’t to say that there’s no hope whatsoever for climate progress in the U.S., our speakers made sure to highlight. We might just have to refrain from calling it “climate progress.” Schatz pointed out that the language of affordability will come to define clean energy projects moving forward, echoing what Senator Chuck Schumer said earlier in the day. “Cheap is clean, and clean is cheap,” said Schatz. “We don't have to make a complicated argument.”
This framing from Schatz and Schumer makes perfect sense in the context of the new package of energy proposals from House Democrats announced this morning, fittingly called the Cheap Energy Act. As my colleague Robinson wrote today, “Democrats have reoriented to talking about energy chiefly as an affordability problem.” Schatz summed up the strategy thusly: “We have to just say, ‘See that spike in electricity prices? It’s their fault. Solar is cheap.’”
Data centers and the rapid growth of AI were also top of mind for panelists. The tension between AI growth objectives and renewables didn’t seem to be an issue, however. Rather, our speakers pointed out, data center growth could be an opportunity to invest in a stronger renewables rollout. Jake Oster, director of sustainability at Amazon, told Heatmap’s Katie Brigham that “the first thing we're focused on is energy efficiency in our facilities.”
Carla Peterman, executive vice president at PG&E, was even more unequivocal in her support. “We know that our communities, our society will benefit from having that load and having those data centers,” she remarked. “We don’t want to block bringing them on.”
The Senate Minority Leader addressed the crowd at New York Climate Week, talking about energy costs, extreme weather, and Trump’s “Big Ugly Bill.”
Senate Minority Leader Chuck Schumer kicked off Heatmap House, a daylong series of panels and one-on-one conversations with investors, founders, and policymakers at New York Climate Week, with a rousing condemnation of the Trump administration’s climate policies and a call to action for climate advocates everywhere.
“Why, with AI creating a huge demand for energy, would we cut off the quickest and cleanest way to get new electrons on the grid — solar? It’s the quickest, it’s the cheapest. Why would we do that?,” Schumer asked at the start of our morning session, “The Big (Green) Apple: Building a Climate Ready NYC.” The senator (a born and raised Brooklynite, who has served as a senator from New York since 1998) was of course referring to Republicans’ One Big Beautiful Bill Act, which accelerated the sunsetting of wind and solar tax credits that were previously expanded and extended under the Inflation Reduction Act.
Schumer played a key role in the passage of the IRA, wrangling with former Senator Joe Manchin of West Virginia for months in the summer of 2022 to get the bill over the finish line. At Heatmap House, Schumer described the experience of watching what he deemed “The Big Ugly Bill” roll back many of his hard-fought wins.
“New York remains the climate leader, but Donald Trump is doing everything in his power to kill solar, wind, batteries, EVs and all climate friendly technologies while propping up fossil fuels, Big Oil, and polluting technologies that hurt our communities and our growth,” Schumer said. The administration’s actions are killing jobs, he asserted, while “making it harder and more costly for everyday Americans to live and breathe.”
One of the most tangible ways that Americans across the country are experiencing climate change is through more frequent and more severe extreme weather events such as fires, hurricanes, and floods. Last year, Schumer noted, was one of the costliest on record for natural disasters in the US, totaling about $182 billion of damage. The increasing frequency ing frequency of billion-dollar disasters is hitting ordinary Americans in the pocketbook. “Home insurance costs in a whole bunch of states are skyrocketing because of all of these disasters,” Schumer explained, adding that Americans are beginning to recognize how rising emissions are connected to their own rising costs.
But Schumer is no pessimist, and he charted a path forward for Democrats to take back the Senate and resurrect the clean energy policies in the IRA. “All of us must fight back, connecting the dots with the American people. When electricity goes up, it’s because of what Trump did. When your home insurance goes up, it’s because of what Trump did, when it’s going to be harder to make your house cheaper because it’ll consume less energy, it’s because of what Trump did.”
With the cost of living weighing heavily on many Americans, Schumer said now is the time to “harmonize the message” around prices and Trump’s energy policies. And he paired that call to action with a bold promise indeed. “If we take back the Senate, all the good things we’ve done in the IRA will be fully and completely restored, and we’ll go even further than that.”