Clean energy manufacturing tax credits will be axed by 2031, while Americans seeking to upgrade their homes to cleaner or more energy efficient appliances will get no further subsidy after the end of this year.
A further $522bn in investment is in the pipeline but is now menaced by the Republican bill’s removal of tax incentives.
And the legislation will as written cost the US 830,000 jobs by 2030 compared with the status quo, Energy Innovation found.
“Killing the tax credits in the Inflation Reduction Act is a direct attack on working Americans.” Other experts have also warned about the devastating consequences of the legislation.
Warring blocs in the GOP have fought for months over the fate of the IRA’s green incentives.
According to experts, a Republican push to eliminate clean energy incentives could have a significant impact on the United States, resulting in the loss of over 830,000 jobs, increased energy costs for American households, and the potential release of millions more tonnes of the climate crisis-causing pollution that heats the planet.
In its current form, a significant tax bill that was approved by the Republican-controlled House of Representatives Thursday morning will destroy important elements of Joe Biden’s climate legislation, which has sparked a record-breaking surge in investment in electric vehicles and renewable energy in the US.
Cleaner vehicle tax credits will expire this year, while incentives for wind, solar, and even nuclear energy projects will be reduced and eventually eliminated by 2032, according to the reconciliation bill. By the end of this year, Americans who want to upgrade their homes to cleaner or more energy-efficient appliances will no longer receive any subsidies, and clean energy manufacturing tax credits will be eliminated by 2031.
Senior director Robbie Orvis of Energy Innovation, a nonpartisan climate policy think tank, stated, “This bill is worse than people envisioned – it pulls the rug out from facilities banking on these incentives, it raises everyday household costs by hundreds of dollars, and it undercuts any sort of action on climate change.”.
The extent to which this will erode the US’s standing cannot be overstated. It couldn’t have come at a worse moment, given the rising cost of electricity, tariffs, and inflation. The bill is extremely harmful. “.”.
Since the 2022 Inflation Reduction Act was passed, over $320 billion has been allocated, primarily to Republican-held districts, for the construction of electric vehicles and new clean energy projects. An additional $522 billion in investment is planned, but the Republican bill’s elimination of tax breaks now threatens that investment.
Orvis stated that these changes could jeopardize an investment of half a trillion dollars. We discovered that these adjustments would lower the US GDP by more than $1 trillion over a ten-year period. “”.
The bill also comes after the Trump administration attacked green spending for months, cutting off energy efficiency programs and grants and loans with a climate focus.
According to a former senior Department of Energy official, “all of that adds up to the same effect: it’s going to raise prices for everyone.”.
The House’s ways and means committee passed the bill, which would increase Americans’ energy bills by stifling new renewable energy, which is frequently the least expensive source of new electricity generation, according to a nonpartisan think tank called Energy Innovation. Republicans are currently debating how much to cut the IRA’s tax credits. By 2035, the typical household’s expenses would increase by over $230. In addition to this, Donald Trump has imposed tariffs in an effort to force the US to “drill, baby, drill” for more oil and gas at the expense of solar and wind, which he has deemed “ugly” and “disgusting” and has prohibited from federal lands and waters.
“The environment will suffer as a result of all of this,” Orvis stated.
Additionally, the new bill will increase US pollution emissions by 260 million tonnes in 2035 compared to what they would have otherwise done, surpassing Spain’s total yearly emissions. The US is reducing pollution far too slowly to prevent the worst effects of heatwaves, floods, droughts, and other disasters brought on by global warming, even though emissions would still decrease overall.
Additionally, Energy Innovation discovered that the legislation will, as written, cost the US 830,000 jobs by 2030 in comparison to the current situation. This covers the direct loss of jobs in industries like the production of solar panels and electric vehicles, the indirect loss of jobs due to a decline in investments and the demand for clean energy, and the induced reductions in consumer spending brought on by layoffs, increased fuel prices, and other third-order effects.
“The Inflation Reduction Act was thoughtfully designed to provide well-paying jobs in coal, underserved, and deindustrialized communities. Ted Fertik, vice president of manufacturing and industrial policy at the labor and climate advocacy group Blue Green Alliance, stated, “We have seen that it is doing just that, creating good jobs you don’t need a college degree to get and opening up pathways to the middle class across the nation.”. “Working Americans are directly attacked by the elimination of the tax credits in the Inflation Reduction Act. “”.
The legislation’s disastrous effects have also been cautioned about by other experts. According to an analysis released Monday by the industry group Solar Energy Industries Association (SEIA), the reconciliation bill would eliminate about 300,000 jobs in the solar and energy storage sectors by 2028.
The organized labor movement is speaking out against the megabill more and more. “Blue-collar Americans shouldn’t have to pay for billionaire tax cuts with their jobs,” stated the president of the Building Trades Unions of North America this week. Additionally, the president of a Washington state electrical worker union wrote an opinion piece last week supporting the IRA.
GOP factions have been engaged in months-long conflict over the IRA’s green incentives. Some hardliners are calling for an even faster phaseout of clean energy programs, while some moderate Republicans who support the IRA proposed reconciliation language meant to preserve its green credits.
The latter group has criticized the IRA for being anti-populist; Texas congressman Chip Roy has called it the “green new scam,” while Oklahoma congressman Josh Brecheen has called it “nothing more than a massive, taxpayer-funded gift to green energy lobbyists and their leftist billionaire employers.”.
However, the tax cuts in the reconciliation bill are anticipated to disproportionately benefit the wealthy, while the rollback of IRA credits is anticipated to increase household expenses and reduce employment, especially in red districts, which have benefited from the great majority of the investment sparked by the IRA.
The Trump administration’s efforts to undermine regulations limiting pollution from vehicles, trucks, and power plants and to thwart other attempts to address the climate crisis have been exacerbated by the Republican legislation, which would effectively repeal the climate bill.
According to a different study by Rhodium, another energy research group, the combined effect of all these measures is expected to cause up to 730 million tonnes of additional pollution over the next ten years, which is more than the bill itself.
“This is about as bad as it gets,” Rhodium associate director Ben King stated. After this, there’s no reason why a solar or wind developer would pick the US over China. Apart from the fact that they dislike the policies, it’s unclear what the policy objectives are; the proposals are like chopping off the nose to spite the face.
Reporting was contributed by Michael Saintao.
