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U.S. GOP Tax Reform Gives to Nuclear, Takes Away from Wind and Solar

Eager to pass at least one significant piece of legislation in what’s left of 2017, and looking for ways to close challenging math gaps in a budget draft that envisions huge tax breaks for corporations and sole-proprietor tycoons like Donald Trump, the Republican majority in the House of Representatives is proposing to slash tax incentives for renewables and electric cars, while extending a US$6-billion benefit to accommodate a sole nuclear power plant.

Struggling to keep the country’s anticipated deficit over the next decade below $1.5 trillion, the House has drafted “a dirty tax deal for dirty energy,” said New Jersey Sierra Club Director Jeff Tittel. “Trump’s bill is a clear assault on renewable energy, while keeping the bulk of tax credits for the oil and other fossil fuel industries.”

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The House draft “would reduce the wind energy production tax credit to 1.5¢/kWh from 2.3¢/kWh,” Utility Dive reports, a change that would cut anticipated payouts under the program by $11 billion over the next decade. It would also scrap federal tax credits for electric vehicles. A currently open-ended credit for solar, meanwhile, would be reduced and expire in 2027.

However, the Republican House draft extends until 2022 the expiry of a construction tax credit for new nuclear power plants. That will allow the money for the program to be claimed by the only such plant still being built in America, the Southern Company’s overdue Vogtle facility on the Georgia-North Carolina border.

“The country’s renewable energy industry caught the short end of the stick, and will likely lose thousands of jobs and billions in investments if the bill passes,” summarized CleanTechnica.com. Response was swift and scathing.

The American Wind Energy Association accused the House GOP of ripping away “the investment certainty Congress promised wind developers just two years ago.”

“The proposal could represent a significant hit to the wind energy sector,” Kevin Book, managing director of ClearView Energy Partners, told Bloomberg.

The bill would also hurt Tesla, General Motors, and other companies seeking to both inspire and profit from a wholesale transition to electric vehicles. It proposes to end an existing $7,500 federal credit for EV purchases.

“When Georgia ended its $5,000 state tax credit for EVs and replaced it with a $200 registration fee in 2015,” Utility Dive notes, “sales fell 80%.”

“The potential elimination of the federal electric vehicle tax credit will make the electric vehicle mandate in 10 states—about a third of the market—even more difficult to meet,” Gloria Bergquist, a spokeswoman for the Alliance of Automobile Manufacturers, told Reuters.

The National Resources Defense Council’s Luke Tonachel warned that repealing the EV tax credit “would cede U.S. leadership in clean vehicles, putting our companies at a competitive disadvantage and threatening jobs while costing drivers more at the pump and increasing pollution.”

It wasn’t entirely green cutting. The GOP bill would extend tax credits to “geothermal, small-scale wind, and fuel cells that were left out of a 2015 budget and spending deal,” Utility Dive notes. At the same time, it would “align the expiration dates for tax credits for resources such as solar and wind facilities, fuel cells, and combined heat and power plants, by moving the construction start deadline [for eligibility] to January 1, 2022.” Existing tax credits for residential energy efficiency programs would be extended to December 31, 2021.

And there was also a curiously selective strike at a tax benefit enjoyed by the oil industry. “The bill would eliminate a tax credit for enhanced oil recovery (EOR), which pumps water or carbon dioxide into aging wells to extend their productive life,” Utility Dive observes.

That proposal drew immediate pushback from “a wide-ranging group of industry and labour leaders” arguing that “the credits are needed to bring down the cost of CO2 captured from power plants and other industrial sources ‘in order to be economic in [enhanced oil recovery] operations’ and to scale up geologic storage of CO2.’”

Meanwhile, the Canadian Press notes, “a lucrative tax break for drilling costs and special oil and gas industry accounting rules would be preserved” in the reformed tax structure.

Whether any of the proposals will ever find their way into law remains very uncertain, however. The House GOP budget package encountered swift criticism from across America’s partisan spectrum, with Iowa Republican Sen. Chuck Grassley demanding the proposed cuts to wind tax credits be abandoned. Michigan Democrat Sen. Gary Peters wants to exempt the EV credit from elimination.