The decision to leave tax credits for solar energy and electric vehicles out of this week’s $1.37 trillion spending deal came from the White House on Monday night, according to six sources with knowledge of the negotiations.
Though advocates say they won legislative backing for clean energy tax benefits, the White House rejected incentives including a short extension of the solar Investment Tax Credit and the federal EV income tax credit during its review of the package. A congressional aide confirmed that the White House eliminated these provisions.
The full package of clean energy incentives, including credits for energy storage and offshore wind, was understood to be in play going into the final stages of budget talks on Monday night. Several sources noted that Treasury Secretary Steven Mnuchin had signed off on a plan that included the green tax provisions, but that talks ultimately broke down under pushback from the White House. The White House did not immediately respond to request for comment.
President Trump’s opposition to the electric vehicles credit was known, per reporting from Bloomberg, but sources are still trying to determine the exact source of the administration’s resistance on other clean energy credits.
Both advocates and lawmakers said they were surprised by the abrupt shift in negotiations. “We were really on the doorstep of a deal,” said Robert Cowin, director of government affairs for the climate and clean energy program at the Union of Concerned Scientists.
In the end, wind was the only clean energy technology to win, with a temporary extension of the Production Tax Credit. Supporters of the solar and storage credits, which lawmakers have backed in several bills including the November draft GREEN Act from House Ways and Means Committee Democrats, will now look to 2020.
“It’s unfortunate the White House crushed it at the last minute,” said Stephen Irvin, president and CEO at Amicus Solar, a solar co-operative with 55-local installer member-owners. But alongside executive opposition, Irvin also attributes the snag to shaky bipartisan consensus. In July, Sen. Cortez Masto unveiled the Renewable Energy Extension Act — a bill Amicus lobbied for in Congress — with only Democratic sponsors, for instance.
That bill still lacks Republican sponsors, though its companion bill in the House counts 15 Republicans out of a total 86 sponsors.
“The issue is more of a push to get the GOP involved and get more bipartisan support,” said Irvin. “It doesn’t help that there was an impeachment trial going on right in the background of all of this.”
And though Irvin felt some Democrats “did their job and got leadership support,” others aren’t letting lawmakers off so easily.
Democratic leaders under fire
House Democrats “were given a mandate to fight hard and secure policy victories on climate action, clean energy, and our children’s future,” tweeted Sierra Club Executive Director Michael Brune, in response to the deal. “They failed to deliver.” Brune suggested primarying Democrats in office over the tax credit loss.
The UCS' Cowin, too, called for more commitment from the Democratic Caucus. If lawmakers are serious about climate action, Cowin said, extending the tax credits — one of few climate policy levers that both parties agree on — “wasn’t optional.”
“We’ve got to do better as a community [in] elevating climate change in terms of its priority with lawmakers on both sides of the aisle,” said Cowin. “We also need to see some stronger leadership from Congress.”
One source, who requested anonymity due to the sensitivity of the negotiations, noted that as long as President Trump resides in the White House and Republican support remains tepid, it appears that clean energy tax incentives — or any bill that would move the ball on addressing climate change — are off the table. That dynamic has put pressure back on Democrats figuring out how they plan to navigate this administration and broader opposition.
“I think the result left many in the community wondering [whether] the inclusion of a narrow, bipartisan clean energy tax provision in a $1.4 trillion behemoth of a spending bill [would] actually get vetoed, especially when we know Senate Republicans don’t want to see another shutdown,” according to a clean energy advocate with knowledge of the negotiations.
“Clearly a calculation was made at some point that it wasn’t worth going down that path,” they said.
The congressional aide told GTM that, while the credits are a top priority for Democrats, they weren't in a position to be willing to shut down the government over them.
Another source said that it is hard to see how forcing the White House to veto the giant spending bill over a modest set of clean energy tax credits would have reflected poorly on Democrats. While Democrats in Congress have a lot on their plates at present, the source said, this raises larger questions about if and how the party will fight for climate legislation in future.
“You have major [Democratic presidential] candidates saying, ‘Make me president and I can make Republicans negotiate in good faith.’ But how many times are we going to try that?” they said. “There’s a legitimate group of critics that say, ‘You cannot say you’re serious about climate if you say it’s all got to fit within budget rules and we’re not going to change the filibuster. You simply don’t have a legitimate negotiating partner. So it comes across as terribly naive or disingenuous to say this dynamic will change with a Democratic president there.”
While the cleantech industry and environmentalists are still smarting from the policy loss, sources said they’re hopeful another opportunity to pass clean energy tax credits will arise next year, even as the industry continues to dissect what went awry.
“It was a missed opportunity,” said Cowin. “I’m positive we could have come away with more.”