Energy Tax Credit Fight Splits GOP in Snag for Speaker

(Bloomberg) -- Moderate House Republicans are lobbying House Speaker Mike Johnson to lessen cuts to several clean energy tax credits in the broad tax and spending bill prior to the GOP’s plans to bring it to the floor next week. 

Virginia’s Jen Kiggans led a statement backed by 13 other GOP lawmakers asking House leadership to make the phase-outs of several clean energy tax credits more generous. She said Thursday the group was still negotiating with leadership over proposed changes. 

“We’re still in discussions about it,” Kiggans said in an interview. She declined to say how she planned to vote on the bill. 

Representative Andrew Garbarino, a New York Republican who also signed on to the statement, said the leadership is looking at an alternative proposal. 

“I’m not happy with the way the bill is written,” Garbarino said. He said he has concerns about how the bill would treat incentives for nuclear energy as well as new restrictive prohibitions on foreign entities such as China. “There is a lot of stuff that is going to be fixed.”

Johnson needs nearly unanimous Republican support assuming no Democrats vote for the massive tax package, which cuts some $560 billion in spending on energy tax credits that were part of the Inflation Reduction Act.

Asked about the prospect of making changes to the energy credits, Johnson didn’t directly answer. 

“The bill is almost in final form,” he told reporters Thursday. “There is a lot of things on the table, a lot of ideas, a lot of possibilities that we have, and we will work through those things deliberately as we always do.”  

Among the changes the lawmakers want is for companies to be given additional time to meet “overly prescriptive” rules that would prohibit any company from receiving tax credits if it has links to China in its supply chains. 

They also called for a shift in when the credits begin to phase down, using the start of construction instead of when projects are placed into service. Analysts say the latter would limit the number of projects that could qualify and could amount to a retroactive tax for some projects that are already being built.

At the same time, some conservative lawmakers are blasting the House tax plan for not repealing the green tax credits more quickly. Among them are Representative Chip Roy, a Texas Republican and budget hawk who has previously said his support is contingent on the “full eradication of Green New Deal IRA subsidies.”

“The House reconciliation bill must change,”  Roy said on X. “Right now, the House proposal fails to meet the moment.”

Separately, Representative Darin Lahood, a Republican member of the House’s tax writing committee, said he was working to preserve credits for the nuclear and hydrogen industry that are set to end in the GOP bill.

“There is a little farther that we can go, and we are going to try and push in the legislative process,” LaHood said in an interview, adding the changes could be made before the bill reaches the House floor or in the Senate after its passage.

The fight over the clean energy tax credits is one of several unresolved issues for the bill, with the fight over the state and local tax deduction being the loudest potentially putting the tax package at risk. Republicans plan to work through the weekend on SALT and other  issues, with plans to bring the bill to the House floor next week. 

(Adds comment from Representative Darin Lahood. A previous version corrected when group of lawmakers want credits to start phasing down in the 10th paragraph.)

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