Renewable Energy Is Surging. The G.O.P. Tax Bill Could Curtail That.
By BRAD PLUMER and JIM TANKERSLEY
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WASHINGTON — The Republican tax bills moving through Congress could significantly hobble the United States’ renewable energy industry because of a series of provisions that scale back incentives for wind and solar power while bolstering older energy sources like oil and gas production.
The possibility highlights the degree to which the nation’s recent surge in renewable electricity generation is still sustained by favorable tax treatment, which has lowered the cost of solar and wind production while provoking the ire of fossil-fuel competitors seeking to weaken those tax preferences.
Whether lawmakers choose to protect or jettison various renewable tax breaks in the final bill being negotiated on Capitol Hill could have major ramifications for the United States energy landscape, including the prices consumers pay for electricity.
Wind and solar are two of the fastest-growing sources of power in the country, providing 7 percent of electricity last year. Sharp declines in the cost of wind turbines and photovoltaic panels, coupled with generous tax credits that can offset at least 30 percent of project costs, have made new wind and solar even cheaper than running existing fossil-fuel plants in parts of the country.
In different ways, direct and indirect, the House and Senate bills each imperil elements of that ascension. A Senate bill provision intended to stop multinational companies from shifting profits overseas could unexpectedly cripple a key financing tool used by the renewable energy industry, particularly solar, by eroding the value of tax credits that banks and other financial institutions buy from energy companies.
The House bill’s effects would be more direct, rolling back tax credits for wind farms and electric vehicles, while increasing federal support for two nuclear reactors under construction in Georgia. Fossil fuel producers are under little pressure in either bill and some would stand to benefit: The Senate legislation would open the Arctic National Wildlife Refuge in Alaska to oil drilling, while a last-minute amendment added by Senator John Cornyn, Republican of Texas, would allow oil and gas companies to receive lower tax rates on their profits.
The tension between new and old energy was on display this week at a White House event to promote the Republican tax legislation, where a coal plant employee from North Dakota thanked President Trump for a provision in the House bill that would drastically reduce the value of the production tax credit for wind.
“The production tax credit has destroyed the energy market, especially in the Midwest,” the employee, Jessica Unruh, who is also a state representative, told the president. “Wind production has really eroded our state tax base and replaced coal production when it comes to electricity production.”
The wind industry has warned that the House language, which would reduce the wind tax credit to 1.5 cents per kilowatt-hour, from 2.4 cents, and change eligibility rules, could eliminate over half of the new wind farms planned in the United States.
“We would see a drastic drop-off in wind installations,” said Michael Goggin, the senior director of research at the American Wind Energy Association. “We’re already seeing orders put on hold and projects not able to get refinancing. Even the threat of this bill is having a chilling effect.”
The tax bill joins a host of federal policy changes proposed by the Trump administration that could crimp the growth in clean energy. Those include a proposed Environmental Protection Agency rollback of President Barack Obama’s Clean Power Plan for reducing carbon emissions and the looming possibility that Mr. Trump will impose tariffs on imported solar panels, which could increase the cost of solar power.
“There is a perfect storm of bad news that impacts investor confidence in renewables,” said Trevor Houser, a former Obama administration climate official who now tracks energy economics as a partner at the Rhodium Group. “It is shaping up to be a pretty rough 2018.”