Clean energy is under attack even where it’s booming

Tax credits for clean-electricity generation and manufacturing are set to vanish under a plan proposed last week by congressional Republicans. Meanwhile, lawmakers in states such as Texas and Arizona—home to some of the country’s biggest renewable-energy projects—are considering clamping down with tougher permitting and rules.

The shifting political landscape threatens to slow a booming business. Developers have built $145 billion in solar, wind and battery-storage projects since expanded federal tax credits were approved in 2022, while manufacturers have invested $73 billion in 94 factories that are now operating, according to the industry group American Clean Power.

Those efforts have made a dent. Wind and large-scale solar output exceeded coal generation last year for the first time, comprising about 16% of U.S. electricity generation.

Now, congressional Republicans trying to meet Trump’s call for a “big, beautiful" tax-and-spending bill are scrounging for dollars in the clean-energy sector. To extend tax cuts from his first administration that would otherwise expire, they are searching for trillions of dollars in spending cuts and curbs on tax breaks.

Their initial proposal includes ending beefy tax credits for wind, solar, storage and clean-hydrogen projects that were enacted in former President Joe Biden’s Inflation Reduction Act. Trump has called the IRA the “green new scam."

Despite an official phase-down over a period of years, new stringent provisions would make it more difficult to qualify for the credits. The bill stalled Friday, blocked by a conservative wing of House Republicans who want, among other things, a quicker wind-down of the tax breaks, but passed out of the House Budget Committee late Sunday.

“The practical effect is an abrupt repeal of these incentives that translates into significant tax hikes that are going to freeze investment," said Jason Grumet, chief executive of American Clean Power.

The fight over clean energy comes as the power industry grapples with how to add projects to meet electricity demand that is rising for the first time in a generation. Data centers for artificial intelligence are popping up all around the U.S. and can require as much power as large cities. New manufacturing is driving demand higher, too.

Rolling back IRA provisions would raise about $500 billion in revenue over a decade, according to the Joint Committee on Taxation. That includes targeting tax credits that buyers have used to lower the cost of switching to an electric vehicle and those for home-energy projects.

The hit to the power sector could prove significant. More than three-fourths of the proposed solar projects and more than one-third of the wind farms in long queues to connect to the power grid needed tax incentives to be economically viable as of January, said Corianna Mah, analyst at Enverus Intelligence Research.

A rollback could be politically tricky.

About three dozen Republican members of Congress have pledged support of IRA provisions in recent weeks because most clean-energy projects are in Republican states. Even credits for nuclear power and geothermal technologies, which are popular among conservatives, would get swept up by a broad sunset of the legislation.

A repeal of the IRA would raise electricity prices on average by more than 10% for residential and business customers in states including Arizona, Kansas, Maine, Nebraska, New Jersey and North Carolina between 2026 and 2032. Natural-gas prices would increase, too. That is according to a study by economic-consulting firm NERA that was released by trade group Clean Energy Buyers Association.

Sheldon Kimber, chief executive of renewables developer Intersect Power, still plans $9 billion in investments this year. He says the industry might be able to win some limited changes to the proposed tax bill.

“I’m not counting on it getting a whole lot better," Kimber said. “I am going down the path of telling my team and my investors that we need to start focusing on dealing with what is not what we wish or imagine."

Meanwhile, lawmakers in Texas are again considering bills that would make projects more challenging. One, since whittled down, would have mandated that wind turbines be located at least eight football fields away from property lines.

Another bill could require existing renewable generators to buy electricity or turn to backup power at times when they aren’t producing, or pay fines.

“It’s making people say long-term Texas is going to be a harder and harder place to develop projects," said Becky Diffen, a partner at law firm Norton Rose Fulbright in Austin, Texas. “It does have a chilling effect on investment in the state."

State Sen. Kevin Sparks, the bill’s author, said utility regulators would have latitude to design a program that wouldn’t harm existing projects, and that Texas has overbuilt renewables and needs more combined-cycle natural-gas plants and possibly nuclear-power projects.

Texas can’t afford to lose wind and solar output, Sparks said, but the legislature so far hasn’t created a market where developers of natural-gas power plants are willing to come spend the capital to build in Texas.

In Arizona, lawmakers are considering bills that would restrict wind farms from operating within 6 miles of residentially zoned property, or from operating within 25 miles of a county or city that opposes their development.

“You don’t have that many counties in Arizona, so you quickly run out of land," said Troy Rule, a law professor at Arizona State University.

With debate continuing over the state and federal bills, it is unclear which proposals will prevail, be watered down or wither. But the challenges are rising.

A report from the Sabin Center for Climate Change Law at Columbia University last year identified at least 395 local restrictions in 41 states, along with 19 state-level rules stringent enough to block renewable-energy projects.