House Draft Tax Bill Would Modify Key Energy Tax Credits, Grant Programs and Permitting Process

Some energy segments fare better than others in the tax title of the House draft. But overall, the changes (outlined below) will negatively impact the development of renewable energy projects in the U.S. Electric vehicle manufacturers and buyers are hard hit by the early termination of popular consumer credits. The solar energy sector will lose a tax credit incentivizing the purchase of solar panels by homeowners, and both solar and battery manufacturers could lose access to key manufacturing credits well before their termination date if they use components or critical minerals imported from certain foreign countries, including China. Another provision accelerates the phase-out of a tax credit for the production of nuclear power to 2032 – earlier than any new projects are expected to come online. That is bad news for technology companies investing in nuclear plants that could provide clean power to meet the needs of high-energy-demand data centers. Oil and gas companies that have invested in green energy might also be disadvantaged by that change and by early termination of the tax credit for hydrogen production. Utilities developing renewable energy say that proposed limits on the transferability of certain tax credits will result in higher customer bills. And foreign investors in U.S. green energy facilities could be impacted by provisions that restrict access to certain credits by entities from foreign adversary nations.