US House Proposes Budget with Major Rollbacks on Climate and Clean Energy Efforts

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By Valerie Volcovici and Nicolai Groom

WASHINGTON () – On Monday, U.S. House representatives unveiled strategies aimed at phasing out incentives for clean energy, reducing expenditures on electric vehicles and renewable resources, and recovering various climate-focused funding streams. This move comes as part of the Republican efforts to enact a multitrillion-dollar budget aligned with former President Donald Trump’s objectives.

The House Committee on Energy and Commerce presented a plan that is scheduled for voting on Tuesday. This proposal aims to generate approximately $6.5 billion through the elimination of certain climate-focused provisions within the Biden administration’s extensive Inflation Reduction Act legislation.

In the meantime, the House Ways and Means committee suggested eliminating or phasing out multiple beneficial tax incentives from former President Joe Biden's main environmental legislation. This includes discontinuing consumer benefits such as the credit for purchasing electric vehicles and the tax break for enhancing home energy efficiency. Additionally, they plan to gradually reduce various significant clean energy subsidies with an aim to have them expire by 2031, as stated in a document published on Monday.

Industry groups for solar and wind power stated that these actions would result in job losses within America and contradicted President Trump’s aim to boost domestic energy production.

"As U.S. companies seek additional power to stay competitive with their rivals, and customers opt for renewable energy sources to mitigate increasing electric costs, these plans could hinder our country’s push toward achieving President Trump’s vision of American energy supremacy,” stated Abigail Ross Hopper, who leads the Solar Energy Industries Association, the leading organization for the solar industry.

She observed that the industry has poured billions of dollars into states where Trump was elected.

Trump had campaigned on a promise to end government support for EVs and unwind Biden's sweeping efforts to combat global warming, arguing that the measures are unnecessary and harmful to automakers, drillers and miners. He is also hoping that his first budget since reclaiming office will make good on his promises to slash the federal bureaucracy.

The suggested reductions from the House tax committee encompass an accelerated expiration of the "technology neutral" 45Y tax incentives aimed at wind, solar, and various renewable energy sources. This also includes Republican-preferred technologies such as nuclear and geothermal power.

The credits, which had no expiration previously, would phase down from 80% for a facility placed in service during calendar year 2029, to 60% by 2030, 40% by 2031 and zero after 2031.

Transferability, a provision of the 2022 Inflation Reduction Act that had allowed developers to sell their tax credits and use the funds to finance their projects’ construction, would also be eliminated, according to the proposed draft.

In the meantime, tax incentives for capturing and storing carbon dioxide along with directly extracting CO2 from the atmosphere—referred to as 45Q and supported by the oil and gas sector—were largely preserved but came with certain restrictions regarding foreign control over these initiatives. Additionally, the plan proposed extending a tax break for producing sustainable aviation fuel, which aligns with efforts by biofuel manufacturers aiming to broaden their market reach.

More than two dozen Republicans in the House, along with four GOP senators from states that received billions of dollars in investments because of the IRA, pressed the committee to retain multiple tax incentives.

Certain supporters of clean energy mentioned that although the suggested phase-outs weren't as severe as anticipated, they still represent a significant setback for the clean energy sector.

"Eliminating the IRA’s clean energy tax incentives will result in job losses. Additionally, it will cause disruption within the business sector and increase energy expenses for households that are finding it difficult to make ends meet," stated Nevada Democrat Senator Catherine Cortez Masto, noting that this would particularly impact her state’s growing solar industry.

CLAWING BACK CLIMATE SPENDING

On the other hand, the proposal from the House energy committee would eliminate significant environmental regulations introduced under the Biden administration’s EPA, including a rule that aimed to limit allowable emissions for light- and medium-duty vehicles beginning with the 2027 models.

This initiative encompasses steps designed to expedite permits for exporting liquefied natural gas and allocates over $1.5 billion to the Energy Department for replenishing the Strategic Petroleum Reserve.

This legislation aims to reclaim funds destined for environmentally questionable projects via "environmental and climate justice block grants" and similar expenditure methods managed by the Environmental Protection Agency and the Department of Energy, according to an article published Sunday in The Wall Street Journal by House energy committee chairman Brett Guthrie.

The legislation would additionally cancel the leftover funds in the $27 billion greenhouse gas reduction fund that hasn’t been used yet. This move targets a crucial point for Environmental Protection Agency Chief Lee Zeldin, who argued in later legal battles that these unused resources were being misused.

It would reclaim unused funds from nine different IRA renewable energy and electrification subsidy initiatives, including tribal energy loan guarantees and transmission facility financing, and eliminate undeployed IRA resources from the Energy Department’s loan program.

This move would revoke unused money allocated under the IRA for decreasing methane emissions from oil and gas sites and for monitoring greenhouse gases. It also includes cutting financial support aimed at lowering air pollution at ports, industrial plants, and educational institutions, along with reducing costs for low-income areas to adopt clean energy solutions.

"Their plan slashes investments that are reducing energy expenses, fueling an increase in domestic manufacturing, and providing crucial healthcare services to those who need them most," stated Lena Moffitt, executive director of the environmental organization Evergreen Action.

(Reported by Valerie Volcovici and Jarrett Renshaw; Extra reporting by David Morgan and Nichola Groom; Written by Richard Valdmanis; Edited by Andrea Ricci, Nick Zieminski, and Sonali Paul)