US House lawmakers have outlined plans to phase out clean energy tax credits and other climate incentives established under former President Biden.
The proposals are intended for inclusion in a broader multi-trillion-dollar budget reconciliation package that reflects President Trump’s priorities.
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The House Ways and Means Committee on Monday (12 May) recommended rolling back several clean energy tax incentives from the Biden administration’s hallmark climate legislation, the Inflation Reduction Act (IRA). The proposal not only decreases the value of the tax credits, including the technology-neutral 45Y production credit and 48E investment credit, but also accelerates their phase-out.
It would also repeal the IRA’s transferability provisions, which allowed clean energy developers to sell tax credits as an alternative source of project financing.
Tax incentives for carbon capture and storage, favoured by the oil and gas industry, would largely remain unchanged, apart from new limitations on foreign ownership.
Separately, the House Energy and Commerce Committee on Sunday (11 May) released its text for the package, aiming to revoke Biden-era Environmental Protection Agency (EPA) regulations, such as emissions restrictions for light- and medium-duty vehicles from 2027.
The proposal also seeks to accelerate permitting for liquefied natural gas exports and allocate over $1.5bn to replenish the Strategic Petroleum Reserve.
“This bill would claw back money headed for green boondoggles through ‘environmental and climate justice block grants’ and other spending mechanisms through the Environmental Protection Agency and Energy Department,” said House energy committee chair Brett Guthrie in a Wall Street Journal op-ed also published on Sunday.
“The legislation would reverse the most reckless parts of the engorged climate spending in the misnamed Inflation Reduction Act, returning $6.5 billion in unspent funds.”
The reconciliation bill would rescind unspent funds from the IRA’s $27bn Greenhouse Gas Reduction Fund, which has been under scrutiny by EPA administrator Lee Zeldin. It would also reclaim unspent funding from nine IRA renewable energy and electrification subsidy programmes, as well as funds available for methane reduction at oil and gas facilities, greenhouse gas reporting and emission abatement at ports, schools and manufacturing facilities.
Earlier this year, more than two dozen Republican members of Congress urged the party to retain some of the IRA’s clean energy tax credits.
Despite Republican lawmakers unanimously voting against the IRA in 2022, red states have been its primary beneficiaries since its enactment. According to the Global Infrastructure Investor Association, the climate law as of 2024 spurred around $115bn in investments and generated roughly 90,000 jobs, the majority of which went to Republican-led states and districts.
The move has also faced backlash from domestic clean energy trade groups that warned the proposed changes could undermine investment and employment.
Solar Energy Industries Association president Abigail Ross Hopper said: “While American businesses are demanding more energy to compete against our adversaries, and consumers are turning to clean energy to hedge against rising electricity prices, these proposals will undermine our nation’s efforts to achieve President Trump’s American energy dominance agenda.
“This legislation will cause hundreds of American factories to close, eliminate tens of thousands of jobs, force electric bills to skyrocket for everyone, weaken the reliability of our electric grid, and eliminate our capacity to compete with China. This disruption would devastate local, red-state economies, with more than 75% of at-risk factories and investments concentrated in these communities.”
