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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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On the budget debate, MethaneSAT’s untimely demise, and Nvidia
Current conditions: The northwestern U.S. faces “above average significant wildfire potential” for July • A month’s worth of rain fell over just 12 hours in China’s Hubei province, forcing evacuations • The top floor of the Eiffel Tower is closed today due to extreme heat.
The Senate finally passed its version of Trump’s One Big Beautiful Bill Act Tuesday morning, sending the tax package back to the House in hopes of delivering it to Trump by the July 4 holiday. The excise tax on renewables that had been stuffed into the bill over the weekend was removed after Senator Lisa Murkowski of Alaska struck a deal with the Senate leadership designed to secure her vote. In her piece examining exactly what’s in the bill, Heatmap’s Emily Pontecorvo explains that even without the excise tax, the bill would “gum up the works for clean energy projects across the spectrum due to new phase-out schedules for tax credits and fast-approaching deadlines to meet complex foreign sourcing rules.” Debate on the legislation begins on the House floor today. House Speaker Mike Johnson has said he doesn’t like the legislation, and a handful of other Republicans have already signaled they won’t vote for it.
The Environmental Protection Agency this week sent the White House a proposal that is expected to severely weaken the federal government’s ability to rein in planet-warming pollution. Details of the proposal, titled “Greenhouse Gas Endangerment Finding and Motor Vehicle Reconsideration,” aren’t clear yet, but EPA Administrator Lee Zeldin has reportedly been urging the Trump administration to repeal the 2009 “endangerment finding,” which explicitly identified greenhouse gases as a public health threat and gave the EPA the authority to regulate them. Striking down that finding would “free EPA from the legal obligation to regulate climate pollution from most sources, including power plants, cars and trucks, and virtually any other source,” wrote Alex Guillén at Politico. The title of the proposal suggests it aims to roll back EPA tailpipe emissions standards, as well.
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So long, MethaneSAT, we hardly knew ye. The Environmental Defense Fund said Tuesday that it had lost contact with its $88 million methane-detecting satellite, and that the spacecraft was “likely not recoverable.” The team is still trying to figure out exactly what happened. MethaneSAT launched into orbit last March and was collecting data about methane pollution from global fossil fuel infrastructure. “Thanks to MethaneSAT, we have gained critical insight about the distribution and volume of methane being released from oil and gas production areas,” EDF said. “We have also developed an unprecedented capability to interpret the measurements from space and translate them into volumes of methane released. This capacity will be valuable to other missions.“ The good news is that MethaneSAT was far from the only methane-tracking satellite in orbit.
Nvidia is backing a D.C.-based startup called Emerald AI that “enables AI data centers to flexibly adjust their power consumption from the electricity grid on demand.” Its goal is to make the grid more reliable while still meeting the growing energy demands of AI computing. The startup emerged from stealth this week with a $24.5 million seed round led by Radical Ventures and including funding from Nvidia. Emerald AI’s platform “acts as a smart mediator between the grid and a data center,” Nvidia explains. A field test of the software during a grid stress event in Phoenix, Arizona, demonstrated a 25% reduction in the energy consumption of AI workloads over three hours. “Renewable energy, which is intermittent and variable, is easier to add to a grid if that grid has lots of shock absorbers that can shift with changes in power supply,” said Ayse Coskun, Emerald AI’s chief scientist and a professor at Boston University. “Data centers can become some of those shock absorbers.”
In case you missed it: California Governor Gavin Newsom on Monday rolled back the state’s landmark Environmental Quality Act. The law, which had been in place since 1970, required environmental reviews for construction projects and had become a target for those looking to alleviate the state’s housing crisis. The change “means most urban developers will no longer have to study, predict, and mitigate the ways that new housing might affect local traffic, air pollution, flora and fauna, noise levels, groundwater quality, and objects of historic or archeological significance,” explainedCal Matters. On the other hand, it could also mean that much-needed housing projects get approved more quickly.
Tesla is expected to report its Q2 deliveries today, and analysts are projecting a year-over-year drop somewhere from 11% to 13%.
Jesse teaches Rob the basics of energy, power, and what it all has to do with the grid.
What is the difference between energy and power? How does the power grid work? And what’s the difference between a megawatt and a megawatt-hour?
On this week’s episode, we answer those questions and many, many more. This is the start of a new series: Shift Key Summer School. It’s a series of introductory “lecture conversations” meant to cover the basics of energy and the power grid for listeners of every experience level and background. In less than an hour, we try to get you up to speed on how to think about energy, power, horsepower, volts, amps, and what uses (approximately) 1 watt-hour, 1 kilowatt-hour, 1 megawatt-hour, and 1 gigawatt-hour.
Shift Key is hosted by Jesse Jenkins, a professor of energy systems engineering at Princeton University, and Robinson Meyer, Heatmap’s executive editor.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, YouTube, 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:
Jesse Jenkins: Let’s start with the joule. The joule is the SI unit for both work and energy. And the basic definition of energy is the ability to do work — not work in a job, but like work in the physics sense, meaning we are moving or displacing an object around. So a joule is defined as 1 newton-meter, among other things. It has an electrical equivalent, too. A newton is a unit of force, and force is accelerating a mass, from basic physics, over some distance in this case. So 1 meter of distance.
So we can break that down further, right? And we can describe the newton as 1 kilogram accelerated at 1 meter per second, squared. And then the work part is over a distance of one meter. So that kind of gives us a sense of something you feel. A kilogram, right, that’s 2.2 pounds. I don’t know, it’s like … I’m trying to think of something in my life that weighs a kilogram. Rob, can you think of something? A couple pounds of food, I guess. A liter of water weighs a kilogram by definition, as well. So if you’ve got like a liter bottle of soda, there’s your kilogram.
Then I want to move it over a meter. So I have a distance I’m displacing it. And then the question is, how fast do I want to do that? How quickly do I want to accelerate that movement? And that’s the acceleration part. And so from there, you kind of get a physical sense of this. If something requires more energy, if I’m moving more mass around, or if I’m moving that mass over a longer distance — 1 meter versus 100 meters versus a kilometer, right? — or if I want to accelerate that mass faster over that distance, so zero to 60 in three seconds versus zero to 60 in 10 seconds in your car, that’s going to take more energy.
Robinson Meyer: I am looking up what weighs … Oh, here we go: A 13-inch MacBook Air weighs about, a little more than a kilogram.
Jenkins: So your laptop. If you want to throw your laptop over a meter, accelerating at a pace of 1 meter per second, squared …
Meyer: That’s about a joule.
Jenkins: … that’s about a joule.
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The Yale Center for Business and the Environment’s online clean energy programs equip you with tangible skills and powerful networks—and you can continue working while learning. In just five hours a week, propel your career and make a difference.
Music for Shift Key is by Adam Kromelow.
If the Senate reconciliation bill gets enacted as written, you’ve got about 92 days left to seal the deal.
If you were thinking about buying or leasing an electric vehicle at some point, you should probably get on it like, right now. Because while it is not guaranteed that the House will approve the budget reconciliation bill that cleared the Senate Tuesday, it is highly likely. Assuming the bill as it’s currently written becomes law, EV tax credits will be gone as of October 1.
The Senate bill guts the subsidies for consumer purchases of electric vehicles, a longstanding goal of the Trump administration. Specifically, it would scrap the 30D tax credit by September 30 of this year, a harsher cut-off than the version of the bill that passed the House, which would have axed the credit by the end of 2025 except for automakers that had sold fewer than 200,000 electric vehicles. The credit as it exists now is worth up to $7,500 for cars with an MSRP below $55,000 (and trucks and sports utility vehicles under $80,000), and, under the Inflation Reduction Act, would have lasted through the end of 2032. The Senate bill also axes the $4,000 used EV tax credit at the end of September.
“Long story short, the credits under the current legislation are only going to be on the books through the end of September,” Corey Cantor, the research director of the Zero Emission Transportation Association, told me. “Now is definitely a good time, if you’re interested in an EV, to look at the market.”
The Senate applied the same strict timeline to credits for clean commercial vehicles, both new and used. For home EV chargers, the tax credit will now expire at the end of June next year.
While EVs were on the road well before the 2022 passage of the Inflation Reduction Act, what the new tax credit did was help build out a truly domestic electric vehicle market, Cantor said. “You have a bunch of refreshed EV models from major automakers,” Cantor told me, including “more affordable models in different segments, and many of them qualify for the credit.”
These include cars produceddomestically by Kia,Hyundai, and Chevrolet. But of course, the biggest winner from the credit is Tesla, whose Model Y was the best-selling car in the world in 2023.
Tesla shares were down over 5.5% in Tuesday afternoon trading, though not just because of Congress. JPMorgan also released an analyst report Monday arguing that the decline in sales seen in the first quarter would accelerate in the second quarter. President Trump, with whom Tesla CEO Elon Musk had an extremely public falling out last month, suggested on social media Monday night that the government efficiency department Musk himself formerly led should “take a good, hard, look” at the subsidies Musk receives across his many businesses. Trump also said that he would “take a look” at Musk’s United States citizenship in response to reporters’ questions about it.
Cantor told me that he expects a surge of consumer attention to the EV market if the bill passes in its current form. “You’ve seen more customers pull their purchase ahead” when subsidies cut-offs are imminent, he said.
But overall, the end of the subsidy is likely to reduce EV sales from their previously expected levels.
Harvard researchers have estimated that the termination of the EV tax credit “would cut the EV share of new vehicle sales in 2030 by 6.0 percentage points,” from 48% of new sales by 2030 to 42%. Combined with other Trump initiatives such as terminating the National Electric Vehicle Infrastructure program for publicly funded chargers (currently being litigated) and eliminating California’s waiver under the Clean Air Act that allowed it to set tighter vehicle emissions standards, the share of new car sales that are electric could fall to 32% in 2030.
But not all government support for electric vehicles will end by October 1, even if the bill gets the president’s signature in its current form.
“It’s important for consumers to know there are many states that offer subsidies, such as New York, and Colorado,” Cantor told me. That also goes for California, New Jersey, Nevada, and New Mexico. You can find the full list here.
Editor’s note: This story has been edited to include a higher cost limit for trucks and SUVs.