The News
US energy lobbying groups are regrouping after an unsuccessful outcome from the first round of budget negotiations in the House of Representatives, hoping their message about the economic benefits of clean energy tax credits will be better received in the Senate.
Yet their setback this month masks a deeper shift that has taken place over the past several years: Now that clean energy is a multibillion-dollar business, and traditional oil and gas and utility companies are making major investments in low-carbon tech, there’s a more well-funded bench of lobbyists than there was during US President Donald Trump’s first term. The budget talks will put the persuasive power of these groups to the test.
The reconciliation bill still has a few more hoops to jump through before it reaches a vote in the full House, most likely this weekend. But in its current form it prescribes a fairly grim fate for Inflation Reduction Act tax credits, most of which would be phased out early and constrained by far stricter domestic sourcing requirements. That’s in spite of a full-court press by a medley of K Street and advocacy groups, representing everyone from Big Oil to Big Solar, that have spent weeks haranguing Republicans about the job-creation and energy security value of the credits.
“Despite how many positive things are happening with these credits,” said Andrew Reagan, president of the advocacy group Clean Energy for America, “there’s still a gap in terms of that message being fully understood by everyone in Washington.”
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Tim’s view
The expansion of the IRA-lobbying tent to include the full panoply of energy sub-sectors could risk diluting their overall message of retaining as many of the tax credits as possible, and groups like the American Petroleum Institute still aren’t going to bat for solar and wind credits.
But Reagan said the country’s looming energy deficit has helped keep their messages unified. “The clean energy industry is no longer just a siloed, optional part of the broader energy economy,” he said. “It’s a fundamental building block, and because we’re seeing such unprecedented demand for electricity, we’re not in a position where we can afford to pick and choose.”
When the budget talks move to the Senate next month, insiders expect Sens. Lisa Murkowski (R-Alaska) and John Curtis (R-Utah) to do much of the heavy lifting in favor of the IRA among their colleagues. For any of their colleagues still on the fence, the most effective strategy in winning them over is to keep stories about the benefits as local as possible, said Lisa Jacobson, president of the Business Council for Sustainable Energy, a coalition of companies and trade associations. And that strategy is easier to pull off now than it was in the pre-IRA period, she said, since the credits are already being heavily used.
“[The US] put up a big sign with the extension of the energy tax credits saying ‘come and invest here.’ People relied on that to make hundreds of billions of dollars of investment,” she said. “We don’t want chaos in our economy.”
Room for Disagreement
Everyone involved in these negotiations is clear-eyed about the fact that whatever version of a budget first passes, the House will be the most conservative version possible, to open with a strong hand against the moderating force of the Senate. And while a growing number of centrist Republicans have been willing to speak out in defense of the credits, none of the top House Republican leadership is willing to cash in all of their political capital on these credits when every spare cent is needed to win more prominent — and, in the context of budget negotiations, more revenue-impacting — fights over issues like Medicaid and the local tax deductions known as SALT. Energy is still a second- or third-tier issue, and the world’s most compelling economic arguments can’t move the needle much when the House majority is as razor-thin as it is.
Notable
- The offshore wind industry scored an important victory Monday when the Trump administration lifted a stop-work order on the huge Empire Wind project off the coast of New York.