Sometime in the next 24 hours, the final Senate version of the “Big, Beautiful Bill”—which will principally serve to continue an array of tax cuts originally put on the books in 2017, but which could also contain a variety of other tax and other measures—will likely be locked.
Senators are currently engaged in a “vote-a-rama” on a large number of amendments, plus one final “wrap around” amendment to determine what amendments will be made.
But as of right now, there are at least two problems with the bill on the energy front alone.
Just before senators began voting on the bill, it emerged that a provision had been inserted instituting an excise tax on energy production. This was almost instantly—and rightly— called out by Elon Musk. Senators should oppose this lock, stock and barrel, and in unison.
The other problem with the bill where energy is concerned is its tightening of the phaseout for IRA clean energy subsidies. In gradually getting rid of these, the Senate should prioritize fair treatment of businesses and investors who made decisions based on previous policy—including green subsidies.
I’m opposed to most government subsidies, including these. Consumer choice and markets should determine the mix of our energy supply, not government subsidizing winners and punishing losers.
But businesses that made long-term decisions based on the availability of those tax credits—and especially provisions like the electricity generation (45Y and 48E), hydrogen production (45V), and advanced manufacturing (45X) tax credits— have a legitimate complaint about the rules being drastically changed in the middle of the game. It reminds me somewhat of the 1986 tax reform, which gave insufficient phase out time to provisions related to the commercial real estate business, resulting in significant harm to commercial real estate investors.
The specific content of the BBB is changing minute by minute, but to avoid this problem rearing its ugly head, a phasedown period of something like five or even six years would likely make most sense. The reality is, we’re going to need more energy—all of it—to bring online data centers and beat China in the AI race. And right now, it’s more expensive to build a gas-fired power plant in America. (Thanks to Obama-era regulation, coal is dead no matter how much President Trump may want to revive it.)
But the wind blows and the sun shines plenty in Texas, Iowa, Kansas, Oklahoma, and many other places. And even Alaska is getting into solar.
Punitively taxing electricity generation from greener sources, including wind, is not smart; neither is a too-rapid phaseout of clean energy tax credits given the need for businesses to be able to plan and have some certainty with regard to electricity costs.
Senators should take note of this today—with regard to individual amendments, and the big, final wrap-around amendment that they will have to pass before the House resumes its activity on this legislation.