The proposed repeal of $570 billion worth of clean energy tax credits is causing some House Republicans to waver in their support for their party’s proposal to raise the debt limit alongside spending cuts.
Ultimately some seem poised to back their party’s debt limit bill in a vote as soon as Wednesday, as groups representing industries that benefit from the incentives for solar, wind, nuclear, biofuels, hydrogen and other climate-friendly energy options don’t appear to be pressing them to sink the legislation as a whole.
But as of Tuesday afternoon there were as many as a dozen Republicans signaling they were either “no” votes or undecided if the provisions revoking certain energy tax credits aren’t removed from the bill, according to sources familiar with the talks. GOP leaders can only afford to lose four votes and still pass the measure over Democrats’ likely unified opposition.
Hints of revolt also underscore the difficulty of undoing Democrats’ signature climate achievement enacted last year.
Repealing tax credits for solar and wind projects is a factor in why Rep. Nancy Mace, R-S.C., plans to vote against her party’s debt limit package, unless House leaders change their tune and agree to changes.
Mace said in an interview Monday that the bill should cut more spending and balance the federal budget, particularly since it represents Republicans’ starting point for eventual bipartisan negotiations. By repealing clean energy credits, Mace also believes the package would raise energy costs, cut manufacturing and jobs in her home state and worsen energy shortages in years ahead.
She noted that South Carolina plays a leading role in manufacturing components for wind energy transmission, and that solar power is widespread in the state both for commercial use and homes.
“We have solar farms, we have residential areas that are heavily dependent on solar,” Mace said. “A lot of folks use it, and that’s only going to raise their energy prices. It’s like, you know, robbing Peter to pay Paul basically.”
Spotlight on biofuels
Midwesterners from states including Iowa, Minnesota and Missouri have balked at getting rid of biofuel tax credits that have long had bipartisan support, pressing leadership for days to spare the incentives, according to multiple sources. The number of holdouts considering a “no” vote if changes aren’t made ranges from the high single digits to low double digits, according to sources familiar with the talks.
In particular, there’s resistance to rolling back a biodiesel credit that was on the books before Democrats’ 2022 law and was extended in that package through 2024. Midwesterners also back a new, “technology neutral” clean fuels tax credit that could benefit ethanol producers starting in 2025.
Biodiesel’s chief component is soybean oil, while corn is the leading U.S. feedstock for ethanol, a lower-carbon alternative to gasoline, meaning the tax breaks benefit both fuel producers and farmers.
Iowa was the top corn-producing state and second largest soybean producer in 2022, while Minnesota was the third largest among states in both categories, according to Agriculture Department data. Illinois was No. 1 in soybeans and No. 2 in corn.
Further, some Midwestern Republicans have expressed concerns about the bill’s provisions targeting a separate tax credit for “second generation” biofuels made from the inedible parts of crops; a new “sustainable” aviation fuel tax credit to incentivize biomass-based jet fuel usage; and a credit for projects capturing and storing emissions from ethanol plants and other carbon-producing facilities like two being built in Iowa.
Minnesota GOP Rep. Michelle Fischbach submitted an amendment to the House Rules Committee, which was meeting Tuesday afternoon on the debt limit measure, that would strike the five biofuels provisions opposed by Midwesterners.
Derrick Van Orden, R-Wis., a freshman who won an open seat by less than 4 percentage points, filed an amendment to strike all of those provisions and more from the debt limit package, including a new tax credit to spur power generation from nuclear plants.
Other Republicans, concerned about more than the fuel-related credits, appear closer to supporting the bill but are making their qualms known.
Oregon Rep. Lori Chavez-DeRemer is “likely to support” the bill, according to her spokesperson, who added she shares constituents’ concerns about pulling back clean energy incentives that could create and support manufacturing jobs at home.
Other lawmakers — like centrist Brian Fitzpatrick, R-Pa. — have long signed onto bills that would expand tax credits incentivizing greener energy production including nuclear power and hydrogen energy. Fitzpatrick has framed the debt limit bill as an opening offer in talks, so he’d be more comfortable voting for things that he might otherwise oppose.
“There’s going to be a lot that goes on between now and then that some people might not like,” he said of the path to raising the debt limit. “But what I care about is what is the end product that’s going to be signed into law.”
Virginia Rep. Jen Kiggans has said she’s undecided on the debt limit package and pointed to her support for wind energy in her district, where Dominion Energy Inc. is spending $9.8 billion to build an offshore wind project.
Political worries
Demand has been surging for the various energy tax credits, as the new Congressional Budget Office and Joint Committee on Taxation estimate of the debt limit package’s fiscal impact makes clear.
What was originally scored as a $271 billion energy tax package over 10 years at the time is now projected to cost $197 billion more during that timeframe. That doesn’t count two extra years the JCT and CBO tacked on in their new estimate, bringing the total to almost $570 billion in tax benefits the Republican debt limit measure would revoke through fiscal 2033.
Voting against favored clean energy benefits could come back to haunt House Republicans in 2024 campaign attacks, and several lawmakers voicing reservations are from more vulnerable districts.
DeRemer’s race is currently rated a “Toss-up” by Inside Elections with Nathan L. Gonzales, while Kiggans’ and Iowa freshman Zach Nunn’s races are considered “Tilt Republican.” Fitzpatrick, Van Orden and and Mace represent districts considered “Likely Republican,” as do Iowa GOP Reps. Ashley Hinson and Mariannette Miller-Meeks.
It’s a concern some have passed along to House Republican leaders, who will be defending a slim majority.
Majority Whip Tom Emmer, R-Minn., who served as the House GOP campaign chief the last two cycles, dismissed concerns about voting against the credits in an interview Monday. He pointed to Republicans having already opposed the expansion last August when it passed the House in a party-line vote.
Emmer noted that he too is among members preparing to vote for the debt limit package despite tax credit concerns. He’s supported extending a tax credit for biodiesel in the past, for example.
“We’ve got to respect that everybody has a … little different level of tolerance,” Emmer said. “It comes down to making sure that we have a solution to this debt ceiling before it becomes a crisis and that it has some significant fiscal reforms, which this does.”
Industry mobilizing
That almost all Senate Democrats and the White House continue to tout clean energy credits is a comfort to industry groups spooked by their entry into the debt limit debate. Plus, there’s an acknowledgment that businesses want to see the debt limit addressed, and Republicans’ bill is being framed as solely an opening bid.
Clean energy industries still don’t want to be caught up in lawmakers’ crosshairs. But that’s happening regardless of the debt limit bill’s fate. West Virginia Sen. Joe Manchin III, a Democrat, said in a Fox News interview Tuesday that he would vote to repeal the 2022 law he championed if he continues to see the Biden administration implement the tax credit rules too liberally.
Trade groups will, at the least, try to take their favored tax credits off the table in debt limit negotiations moving forward, according to sources with knowledge of those plans.
Some trade groups and companies intend to meet this week to align their messaging. Hill offices — especially representing swing districts — are likely to see more pressure while the credits remain on the table in debt limit talks.
Various trade groups have publicly opposed Republicans’ repeal attempt, frequently citing that the credits are fueling new jobs across the country and lowering energy costs.
The American Clean Power Association said Congress shouldn’t waste time on “political messaging bills that do not advance the national interest,” while the Nuclear Energy Institute noted repeal would jeopardize projects already underway.
The American Council on Renewable Energy — whose members include energy, power, banking and technology companies — said in a statement that the move would harm the economy, U.S. competitiveness and climate goals and urged negotiation of a “clean” debt limit increase.
A conservative climate group, Citizens for Responsible Energy Solutions, cheered the GOP’s focus on “out-of-control” debt in a statement and objected to how Democrats’ expansion of clean energy incentives was done in a partisan way. But the group noted its support for “certain provisions aimed at energy innovation” in the law.
Ultimately, House Republicans have waded into an issue that isn’t clear-cut along party lines in the House or Senate. Mace said she’s glad to know fellow Republicans are paying attention to green energy.
“It affects a lot of districts, a lot of states,” she said. “With inflation as high as it is, cost of goods being as high as it is — the last thing we want to do is make energy cost more, after these have already been given out and promised to green energy.”
Aidan Quigley contributed to this report.
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