The tax bills currently making their way through Congress have dire implications for the future of the renewable energy industry in the United States, and in turn, the future of our world’s environment. With a mission to enable people to take energy-wise actions, Simple Energy has witnessed the power of the adoption of energy-efficient products and behavior at the household level. Energy-efficient products play a significant role in the clean energy future of the country, but are only a piece of the puzzle. The development of renewable energy in the form of wind and solar is another key piece of this puzzle, but is under threat by provisions in the proposed tax bills.
The strength of the renewable energy industry in the U.S. economy cannot be understated. The wind and solar energy industries alone generate almost $50 billion in U.S. investment per year1, and create jobs at a rate 12 times faster than the rest of the U.S. economy2. In 2016, wind and solar power generation made up about seven percent of all energy production in the United States3. However, provisions in the Senate and House bills threaten to slow, if not halt, renewable energy’s positive economic impact.
Among the most damaging aspects of the proposed legislation is the Senate bill’s Base Erosion Anti-Abuse Tax (BEAT) provision, a rule that would make banks and other large tax equity investors hesitant to finance projects in ways that entitle them to tax credits, as those credits will be much more difficult to monetize under BEAT. BEAT would apply retroactively as well, essentially clawing back tax credits granted to developers who have already begun wind and solar projects. This rule, leaders in the clean energy space write in a letter to Congress, would cause the tax equity marketplace, the primary method by which most wind and solar projects are financed, to collapse and lead to a “dramatic reduction in wind and solar energy investment and development.”
The House version of the tax bill contains multiple direct punches to the renewable energy industry as well. Current tax incentives for homeowners to install solar panels for their home would disappear in 2021 and drop to 10% for developers. Tax credits for wind energy developers would immediately drop by 40% and be cut by 2019. Under the House bill, the Electric Vehicle $7,500 tax credit would disappear starting after the 2017 tax year.
Rather than strengthening the nation’s economy, the proposed tax bills slash incentives to one of the fastest growing industries in the U.S., while simultaneously bolstering incentives for oil and gas industries. The fires in California, worsening storms, and dying coral reefs are frightening reminders of the worsening effects of climate change. Instead of continuously looking backwards and attempting to resurrect last century’s energy powerhouses, the U.S. has a responsibility to look towards and support the future of sustainable energy production. As a company, we stand in opposition to these harmful provisions in the proposed tax bills—legislation that would put the future of America’s clean energy industry in jeopardy.