By Timothy Gardner and Valerie Volcovici
WASHINGTON (Reuters) -Advocates of clean energy on Thursday decried the final passage of President Donald Trump’s tax cut bill by the House of Representatives as a reversal of course on the energy transition, while fossil-fuel interests rejoiced.
Trump’s fellow Republicans in the House passed the bill 218-214 and it now heads to the president’s desk. Trump is expected to sign it on Friday.
The legislation sharply cuts access to a 30% tax credit for solar and wind power projects that had been set to run until 2032 and which developers had relied on.
Research firm Energy Innovation projected that the bill would result in a fall of 300 gigawatts of U.S. electricity capacity, as demand soars for the first time in two decades, driven by growth in data centers and artificial intelligence.
Meanwhile, demand for power from data centers is estimated at upward of 100 GW, according to nonprofit group American Clean Power.
The bill’s passage “is a dramatic swing in federal policy, disrupting the good-faith investments of American companies that are powering our economy and creating hundreds of thousands of jobs,” said Jason Grumet, ACP’s president.
Jefferies global investment bank said in a research note to clients that the phaseout of the wind and solar subsidies will lead to a “medium-term rush” to claim credits, which could speed the roll-out of projects for a couple of years. After that period, investors will need to reassess such projects without them.
It said nuclear and geothermal power, energy sources that the Trump administration favors for dependable electricity generation, received better access to credits in the legislation. Battery storage projects will also retain the full tax credit through 2033 and phase out fully by 2036.
The “longer runway” for those baseload resources to use the tax credits won praise from the Data Center Coalition, whose members include Amazon and Microsoft.
Mike Sommers, the president and CEO of the American Petroleum Institute, the top oil and gas lobbying organization, said Congress had advanced Trump’s “energy dominance agenda” of maximizing oil and gas output.
Production of oil and gas had already hit a record during the administration of former President Joe Biden.
“We applaud Congress for unleashing our nation’s oil and natural gas resources, and we look forward to President Trump signing this bill into law,” Sommers said in a release.
COAL GETS A BREAK
Some tax credits favored by the oil industry, like those for hydrogen and carbon capture, were preserved in the bill.
The bill also mandates sales of oil and gas drilling rights in federal lands and in waters off Alaska and the Gulf of Mexico, which Trump has renamed the Gulf of America.
It allows coal used in steel making a new production tax break of 2.5% of costs that could be worth hundreds of millions of dollars for the industry. It also reduced royalty rates that coal companies have to pay when mining on public lands.
Rich Nolan, the president and CEO of the National Mining Association lobbying group, said the bill supports “today’s mining industry which stands ready to create additional jobs and revenues for our economy.”
Daniel Francis, a director with Generate Capital, said the focus for wind and solar industries will shift to states and communities.
“Ultimately the impact of the bill will be to move decisions down the federal chain from Congress to states, counties and cities,” he said. “Because economies run on power, because voters care about their power bills, and there is no alternative.”
(Reporting by Timothy Gardner and Valerie Volcovici in Washington; Additional reporting by Lisa Baertlein in Los Angeles; Editing by Matthew Lewis)
Comments