What Ways & Means proposed to do to IRA clean energy tax credits

The House Ways & Means Committee's first proposal for the IRA clean energy tax credits (and other items under the committee's purview have now been published (committee markup will come tomorrow). CCL will have more to say about it soon, but here's a quick and dirty summary of what they proposed:

45Y/48E/45U: production & investment tax credits for clean electricity and existing nuclear phase out starting 2029 to zero in 2032. Tax credit transferability is repealed (this was useful for relatively small developers who don't have big tax liability – they could instead transfer the tax credits to big financial institutions, making them easier to take advantage of).

Deadlines are changed from commencing at construction (with 4 year safe harbor) to placed in service. Jesse Jenkins says this is a huge reduction in timeline & big increase in risk for project developers (and “goodbye advanced nuclear industry”)

30D: $7500 new EV tax credit ends 12/31/25 except for vehicles sold by manufacturers who have produced less than 200,000 qualifying vehicles, cumulatively. “That means basically Rivian, Lucid, Slate. Maybe Hyundai or Kia for a hot minute,” says Jesse Jenkins. Those smaller EV companies get an extra year, with the tax credit ending instead on 12/31/26.

25E: $4000 used EV tax credit ends 12/31/25 (was 12/31/32)

45W: $7500 commercial EV tax credit (which also applied to leased EVs) ends 12/31/25

30C: $1000 or 30% residential EV charger tax credit ends 12/31/25 (was 12/31/32)

25C: Home energy efficiency/heat pump tax credits end 12/31/25

25D: 30% rooftop solar & battery tax credit ends 12/31/25 (was 12/31/34)

45L: Up to $5000 new efficient homes tax credit ends 12/31/25 (unless already under construction, in which case it's 12/31/26)

45X: advanced manufacturing tax credit ends 12/31/31 for most technologies, except wind components, for which it ends 12/31/27

45Q: carbon capture tax credit only amended to exclude prohibited foreign entities (which also applies to most other tax credits, including 45Y/48E/45U)

45V: clean hydrogen tax credit ends 1/1/26 (was 1/1/33)

Again, watch for more about this from CCL in the next 24 hours. Quick take is that it could be worse and it could be a lot better.

6 Replies

Emily Pontecorvo also summarized the proposed changes nicely at Heatmap:

@Dana Nuccitelli : Thanks a ton for sharing this quick summary Dana! Our chapter meets tonight and your summary is really helpful for discussion.

I know you said it could've been a lot worse, but my brain can't move past “it could've been a lot better”. Eagerly awaiting upcoming strategy from National on this front.

-Shekhar, Alameda County Chapter

@Dana Nuccitelli Thanks, Dana, for this quick summary. It seems to me the only way this result could have been worse is if they repealed all IRA tax credits immediately. Very disappointing. Looking forward to the CCL legislative staff reading on next steps and whether our chances of turning this around in any way is possible as the reconciliation process progresses.

@Dana Nuccitelli Can this still be changed on the House side? Or is the only point of influence now the Senate? Thank you-Jan

Yes it can @Janice Schaper (although the Senate is the better bet). We'll have more to say about it later today.

Rhodium published a preliminary analysis of the Ways and Means Committee's proposed changes to the IRA clean energy tax credits.

…will raise energy costs for American households by as much as 7% in 2035, stifle energy technology innovation, increase pollution, and could put a meaningful portion of half a trillion dollars of new manufacturing, industrial, and clean electricity investments across the country at risk.

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You can also see a summary of Ways & Means' proposed changes similar to mine above but in table form from Shuting Pomerleau at the American Action Forum here. Shuting estimates the budgetary savings from the proposed IRA clean energy tax credit changes:

The House Ways and Means Committee’s draft of its reconciliation legislation proposes a significant paring back of about 60 percent of the Inflation Reduction Act energy tax credits, which would raise about $515 billion in revenue from 2025–2034.

The proposal would repeal some energy credits immediately, including all clean vehicle credits, the alternative fuel vehicle refueling property credit, all residential energy efficiency credits, and the clean hydrogen production credit, which would raise approximately $306 billion from 2025–2034.

It would also add phaseouts and restrictions to several credits, including the clean electricity production and investment credits, the clean fuel production credit, carbon sequestration credit, nuclear power production credit, advanced manufacturing production credit, and the credit for certain energy property, which would raise about $210 billion from 2025–2034.

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The question before Congress: are those budgetary savings worth raising Americans' monthly energy bills, imperiling tens of thousands of domestic manufacturing jobs, reducing our energy security, and increasing pollution? 🧐

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