Clean-energy supporters blast US budget as a setback
Clean energy advocates decried Thursday the House of Representatives' final passage of the President Donald Trump tax cut bill as a reverse in the energy transition. Meanwhile, fossil fuel interests celebrated.
The bill now goes to Trump's desk. Trump is expected sign the bill on Friday. The law drastically reduces the 30% tax credit that developers were relying on for their solar and wind projects. This credit was set to last until 2032.
Energy Innovation, a research firm, predicted that the bill will result in a decline of 300 gigawatts in U.S. electrical capacity as demand surges for the very first time in 20 years, driven by the growth of data centers and artificial intelligent. According to American Clean Power, the demand for electricity from data centers could reach 100 GW.
Jason Grumet said that the bill's passing "represents a dramatic shift in federal policy. It disrupts the good-faith investment of American companies, which are driving our economy and creating thousands of jobs."
In a note of research to its clients, Jefferies global bank stated that the phase-out of wind and solar subsidies would lead to a rush to claim credits in the medium-term. This could accelerate the roll-out for several years. Investors will have to reassess these projects after that time.
The legislation said that nuclear and geothermal energy, which the Trump administration prefers as reliable sources of electricity, would have better access to tax credits. Batteries storage projects will retain their full tax credit until 2033, and then phase it out completely by 2036.
Data Center Coalition members, including Microsoft and Amazon, have praised the "longer runway", which allows baseload resources to take advantage of tax credits.
Mike Sommers, president and CEO of American Petroleum Institute (the top oil and natural gas lobbying group), said Congress has advanced Trump's agenda of "energy dominance" by maximizing oil production.
Oil and gas production had already reached a record level during the tenure of former president Joe Biden.
Sommers stated in a press release that "we applaud Congress for unleashing the nation's natural gas and oil resources." We look forward to Trump signing this legislation into law.
COAL GETS A BREAKTHROUGH
The bill preserved some tax credits that were popular with the oil industry like those for carbon and hydrogen capture.
The bill mandates the sale of oil and natural gas drilling rights on federal lands, in the waters around Alaska, and in the Gulf of Mexico (which Trump has renamed Gulf of America).
The industry could save hundreds of millions by allowing coal to be used in the production of steel. The tax break also reduces the royalty rates coal companies must pay when mining public lands.
Rich Nolan is the President and CEO of National Mining Association, a lobbying group. He said that the bill would support "today's mine industry, which is ready to create more jobs and revenue for our economy."
Daniel Francis, director at Generate Capital, stated that the focus of wind and solar industries would shift to communities and states.
He said that the bill would ultimately have the effect of moving decisions from the federal level to the states, counties and municipalities. Because economies run on electricity, because voters are concerned about their energy bills, there is no other option. Reporting by Timothy Gardner, Valerie Volcovici and Lisa Baertlein from Washington; Additional reporting in Los Angeles by Lisa Baertlein; Editing by Matthew Lewis
(source: Reuters)
