House proposes early phase out of IRA clean energy tax credits

AI generated summary

The U.S. House of Representatives Ways and Means Committee has proposed a budget plan that includes significant cuts to clean energy tax credits established by the Inflation Reduction Act (IRA). This proposal, set to be voted on soon, suggests an early phase-out of the 48E Investment Tax Credit and the 45Y Production Tax Credit starting in 2029, with projects not operational by the end of 2028 facing reduced credit amounts. The phase-out schedule would see credits decrease to 80% in 2029, 60% in 2030, 40% in 2031, and ultimately 0% in 2032. Additionally, the proposal seeks to repeal the transferability of tax credits and cut the 25D residential tax credit for homeowners installing solar or energy storage systems.

Supporters of the IRA argue that these tax credits have spurred over $131 billion in private investments in clean energy, leading to the announcement of around 400 large-scale projects and the creation of approximately 110,000 permanent jobs. Critics of the proposed cuts warn that such changes could undermine investor confidence, lead to job losses, and increase energy costs. The proposal is projected to reduce spending by about $6.5 billion from the Biden-era legislation, raising concerns about its impact on domestic energy production and the overall clean energy sector.