Just before 2am on Saturday morning, Senate Republicans passed their $1.5 trillion Tax Cuts and Jobs Act, a hastily written and hurried bill that will affect Americans all across the country and end up increasing the country’s deficit by $1 trillion, while under the radar the bill will also threaten the country’s renewable energy industry.
It would require more time and space than I have available to properly decode the entirety of the recently-passed Senate Republican tax bill, considering that it rewrites a terrifyingly wide swath of the country’s tax code and impacts millions of people — a few for the better, most for the worst. In line with long-held Republican dogma, the rich will get richer and the poor will get poorer. The trickle-down economics that Republicans rely so heavily on has never once been proven but has rather been repeatedly disproved.
Narrowing our focus of the tax bill to its impact on the country’s energy industry, however, reveals that — much like provisions to make health care more difficult — the Republican’s massive tax bill includes hidden attempts to destroy and harm that which they don’t like.
The original House bill which was passed included much heavier restrictions on the renewable energy industry, taking specific aim at tax credits that currently benefit solar, wind, and electric vehicles, while making life easier for the fossil fuel industry. The Senate tax bill overrode these provisions, as we covered earlier last month, but included its own measure to make life difficult for the renewable energy industry.
The provision in question is the Base Erosion Anti-Abuse Tax, or BEAT which, “As drafted, the BEAT program would have a devastating, if unintended, impact on the wind and solar energy investment and development,” according to a joint letter signed and delivered to the Senate by the American Council on Renewable Energy (ACORE) together with the American Wind Energy Association (AWEA), Citizens for Responsible Energy Solutions (CRES), and the Solar Energy Industries Associations (SEIA). According to the joint letter (PDF), “multi-national companies covered under the BEAT provisions, the renewable tax credits would, as drafted, be subject to a new 100 percent tax” on tax equity investments which would see major financial institutions cease participating in tax equity financing.
“It is important to note that, while the BEAT provisions are intended to promote US investment and job growth, the program’s treatment of renewable energy tax credits — which are generated exclusively through investment in US projects — would have the opposite impact, dramatically reducing American wind and solar energy investment and job creation. These sectors are important national economic drivers, generating nearly $50 billion in annual US investment.”
According to Bloomberg New Energy Finance on Monday, around half of the companies that currently invest in tax equity for solar farms, as well as a majority of wind investors, will be impacted by the hamstringing of tax equity investments, potentially risking $12 billion.
“Congress is making the wind and solar industries collateral damage for an anti-tax abuse provision,” explained Michael Rucker, CEO of Colorado-based Scout Clean Energy.
“It’s unrelated and probably inadvertent, but it is increasingly frustrating seeing our nation’s fastest growing industries hobbled as lawmakers develop policies aimed at promoting U.S. economic growth. Without an urgent revision by Congress the renewables finance markets will be broken, and American wind and solar companies and their workers will be left paying the price.”
“Congress should be providing leadership in growing the clean energy industry that is powering small business and job growth nationwide,” added Troy Van Beek, Founder and CEO of Ideal Energy Inc.
“Instead, we’re facing the prospect of a massive loss in investments and jobs in Iowa and across the Heartland because Congress neglected to consider how these specific provisions would impact the renewable energy sector. Worse, this alarming threat to solar developers is both unnecessary and completely avoidable with a simple fix. Even if unintended, lawmakers in Washington must stop overlooking renewable energy jobs and businesses — taking a backward approach to the opportunities for growth that have been afforded by solar and wind energy, both in the Midwest and nationally.”
Fossil Fuels vs. Clean Energy
Unsurprisingly, instead of simply slashing at the hamstrings of the renewable energy industry, the Senate Republican tax bill also goes out of its way to support the fossil fuel industry, backing President Donald Trump’s promises to revitalise the industry regardless of market forces.
The tax bill opens up oil and gas exploration and drilling in the Arctic National Wildlife Refuge (ANWR). In all likelihood, the inclusion of this provision in the tax bill was the means by which Senate Republicans prevented Senator Lisa Murkowski (R-Alaska) from again throwing a monkeywrench into the works as she did with their repeated attempts to repeal Obamacare. In a statement, Murkowski said that, “Opening the 1002 Area and tax reform both stand on their own, but combining them into the same bill, and then successfully passing that bill, makes this a great day to be an Alaskan.”
Further provisions in the Senate tax bill include boosting White House fossil fuel energy initiatives and handouts for the fossil fuel industry.
“While even more troubling revelations have come out regarding the Trump administration’s dealings with foreign powers, the Senate has taken shameful action to ram through President Trump’s abhorrent tax bill,” said Janet Redman, US Policy Director of Oil Change International.
“This disaster of a tax bill will transfer more wealth from the pockets of American families to the bank accounts of billionaires and big corporations. It will dramatically increase inequality and further corrupt our democracy, feeding more dollars to fossil fuel companies and the ultra-wealthy, which they will pour into elections to maintain their grip on Washington.”
“Corporate lackey Senators are literally paying the fossil fuel industry to wreck our climate,” added 350.org Executive Director May Boeve.
“With climate disasters punishing American cities at an increasingly devastating rate and with the gulf between Wall Street and Main Street widening, Senators voted today to give Big Oil and billionaires a massive tax windfall. In the process, their tax plan would blow a $1.5 trillion hole in the budget – roughly the cost of the Iraq War to date. To pay for this treachery, Trump and Congress want to raise taxes on working families and open the Arctic National Wildlife Refuge, the ancient homeland of the Gwich’in Alaska Native people, to drilling. This bill is a shameful giveaway to to the donor class and a cold-hearted sellout of the climate, Indigenous people and the public. Generations will look back at this moment with deep remorse. But this dirty deal is not law just yet. We will continue to fight this callous agenda from the grassroots to the beltway.”
Threatening Public Health & Clean Energy
“The Senate passed a reckless tax cut bill that would threaten the health and clean energy future of millions of Americans,” said Ken Kimmell, president of the Union of Concerned Scientists.
“The bill would cut taxes for the wealthy and profitable corporations at the expense of poor and middle-class families. Ringing in at a price of $1 trillion, the bill would increase the deficit and create more pressure to cut funding for critical scientific research, technological innovation and environmental protection—vital investments that keep Americans safe and the country prosperous.
“The bill would threaten the climate by leaving billions of dollars of fossil fuel subsidies intact while changing the tax code in ways that would jeopardize the financing of numerous clean energy projects under construction and discourage future clean energy investments in wind and solar.”
And though some organizations were willing to acknowledge the fact that the bill was less damaging than the House bill could have been, that was thin comfort for most.
“Despite the progress on reducing the corporate tax rate, the Senate tax package does great damage to the advanced energy industry, which is making significant energy investments right here in the United States,” said Malcolm Woolf, Senior Vice President of Policy for Advanced Energy Economy.
“On the one hand, the Senate bill keeps the 2015 promise to maintain the phasedown of energy credits for wind and solar, which the House tax bill undermined, and maintains the important electric vehicle tax credit as well as authority for tax-exempt bonding. But the bill does not provide equal treatment for technologies like fuel cells, distributed wind, storage, combined heat and power, geothermal, and advanced nuclear, despite the interest of several Senators in doing so.”
“We applaud the reduction in the corporate tax rate and preserving frameworks that support the clean energy sector,” said a joint statement by clean energy leaders from ACORE, AWEA, CRES, American Conservation Coalition (ACC), Conservative Energy Network (CEN), and the Conservatives for Clean Energy (CCE).
“However, we are concerned about provisions that will have a negative impact on clean energy investments, including Base Erosion Anti-Abuse Tax (BEAT) provision and the impact of the corporate Alternative Minimum Tax (AMT) on investment tools that have been critical to the growth of the clean energy sector.
If these provisions are retained, they will result in broad instability and uncertainty for businesses and investors across many sectors, including the clean energy sector. We look forward to working with conferees to address these concerns so that the sector can continue to contribute to vibrant and diverse domestic energy production.”