Published on November 3rd, 2017 | by Joshua S Hill0
Long-Awaited US Tax Reform Signals Continued Undermining Of Renewables
November 3rd, 2017 by Joshua S Hill
United States Republicans finally published their proposed tax plan this week to much ballyhoo and recriminations, not just among Democrats but also throughout the country’s renewable energy industry, which caught the short end of the stick and will likely lose thousands of jobs and billions in investments if the bill passes.
Any tax plan proposed by the Republicans was going to receive a lot of hate from across the aisle if for no other reason than the Republicans are the ones who proposed it, which means that the primary beneficiaries are not middle-class or low-income households, but the richest few. The proposed bill — the Tax Cuts and Jobs Act — has been in the works for literally years, and hands massive benefits to companies and the wealthy. To quote Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget, from The Washington Post:
“I do think this is a sensible framework. It emphasizes the need for corporate reforms and how our tax system works. But this is still a deficit-exploding tax cut at a time when the deficit is at near-record levels.”
Unfortunately, the proposed bill also takes a shot at the country’s renewable energy industry — not outright war, but some serious engagements nonetheless. As Bloomberg New Energy Finance put it:
“The tax overhaul proposed in the U.S. House is a better bet for oil and gas companies than solar developers or electric car buyers, keeping with President Donald Trump’s decidedly fossil-fuel friendly views.”
While the proposed bill does cut tax rates almost in half for most corporations and expands the opportunities for businesses of any stripe to write off equipment, that’s about as good as it gets for the renewable energy industries. Not just does the bill keep in place tax breaks and provisions for oil and gas companies, but it modifies tax credits for renewable energy technologies such as wind, solar, and geothermal.
According to the Union of Concerned Scientists, the proposed tax bill — which, in its draft form, could be modified as early as this weekend — “would eliminate the electric vehicle tax credit, axe the permanent 10 percent Investment Tax Credit for solar and geothermal power, and reduce the Production Tax Credit for wind power by more than a third.” That’s the most concise description of the impact on the renewable energy industry and its familial electric vehicle industry — reading through the bill’s text (PDF) is not for the faint at heart.
“This tax bill should be dead on arrival,” proclaimed Michelle Robinson, director of the Clean Vehicles Program at the Union of Concerned Scientists. “It has a few powerful winners — the very wealthiest Americans and corporations — and it would leave millions worse off.”
“It’s a mistake for House leaders to target electric vehicles and renewable energy in this tax bill. These provisions show how little concern the authors of this bill have for the real-world consequences of their proposals.”
Scrapping the $7,500 credit for electric vehicles is an obvious problem — one that needs to be addressed. But the changes to the Production Tax Credit (PTC) and the Investment Tax Credit (ITC) are less obvious but equally dangerous.
“Weakening the PTC and ITC would reduce the number of wind and solar projects that get built, stalling the amazing progress the country’s made on shifting to cleaner sources of electricity,” continued Robinson. “While building a wind project can take a year or less, the planning of those projects can take several years. Taking away the inflation adjustment and commence construction provisions of the PTC could effectively pull the rug out from the large number of projects that are in advanced stages of development and the jobs, investments, and tax revenues in rural communities that go along with them.”
The proposed bill modifies the phase-out period for onshore wind and fuel cell projects which, according to the American Wind Energy Association (AWEA), will risk over $50 billion in planned investments and 50,000 US jobs. As the AWEA explains, “The bill changes the terms of PTC qualification defining start of construction. Investors who put billions of dollars into factory orders and construction contracts cannot go back in time to meet the revised requirements.”
“Despite comments to the contrary, this proposal reneges on the tax reform deal that was already agreed to, and would impose a retroactive tax hike on an entire industry,” said Tom Kiernan, CEO of the AWEA.
“The House proposal would pull the rug out from under 100,000 U.S. wind workers and 500 American factories, including some of the fastest growing jobs in the country. We expect members of the House and Senate to oppose any proposal that fails to honor that commitment, and we will fight hard to see that wind energy continues to work for America.
“The House language would have a chilling effect on private investment in U.S. infrastructure. No American job is safe if Congress can change the terms of business contracts years after agreements are signed and billions of dollars are spent. Private capital commitments supporting over $50 billion in manufacturing and construction activity are at serious risk under this plan. These investments were made based on the rules of the 2015 phase out. Changing the rules in the middle of the game would be disastrous for American workers building wind turbines and farmers and ranchers harvesting the wind.”
The proposed House Ways and Means Committee tax bill has raised the agita of many throughout the industry, and experts tasked with monitoring and guiding the country’s energy industry and environment.
“House Republican tax writers are bent on padding polluter profits, leaving us to pay the price,” said Ana Unruh Cohen, director of government affairs at the Natural Resources Defense Council.
“Their plan barely touches huge tax giveaways for fossil fuels. But it would zero-out cost-effective electric vehicle tax credits and weaken tax credits for wind and solar that are creating jobs, spurring innovation, meeting consumer demand and cleaning up the air. That’s reckless. Congress should put clean energy back in the driver’s seat, for the good of our communities, economy and future generations.”
“The energy credit provisions detailed in the House Ways & Means Committee’s tax proposal released today are an assault on what has been one of the nation’s most important economic drivers, the US renewable energy industry,” said Gregory Wetstone, American Council On Renewable Energy (ACORE), President and Chief Executive Officer.
“Over the past six years, the renewable energy sector has been the largest source of domestic private sector infrastructure investment, with nearly $100 billion in investment over the last two years alone. Current tax law has been essential to this growth, including the bipartisan tax law compromise in 2015 in which wind and solar credits phase down and out over the next few years.
“The House tax bill abandons this bipartisan compromise, substantially reducing the value of the wind tax credit and phasing out a long-term solar credit. Most destructively, the bill imposes new criteria for how wind projects qualify for the tax credit, retroactively overruling Treasury Department guidance that has been relied upon by companies supporting tens of billions of dollars in recent domestic infrastructure investment.”