The “Big Beautiful Bill” — Climate And Energy Provisions

From THE MANHATTAN CONTRARIAN

Francis Menton

On Thursday (May 22) the House of Representatives passed, by a narrow margin of 215-214, what is referred to as the “Big Beautiful Bill” — a massive compendium of taxing and spending measures that can now seek to avoid the filibuster in the Senate on grounds of being a “budget reconciliation.” The BBB is well over a thousand pages long (go here for full text), and covers a huge range of subjects.

Most summaries of the BBB that I have seen never get to the important subject of subsidies for so-called “green” energy — wind turbines, solar arrays, grid-scale batteries, hydrogen production, and so forth. That is understandable given the large number of important issues covered in the bill. However, the green energy subsidies are a gigantic issue. They consist of generous tax credits for wind and solar facilities that have been around for a long time, plus a barrage of subsidies and handouts created by the so-called Inflation Reduction Act of 2022. In a post that I wrote at the time of enactment of the IRA, I linked to an analysis that estimated the green energy handouts of just the IRA alone at approximately $370 billion (although I noted that the IRA handouts were un-capped and could end up being far more than that).

Since the wind and solar generators can never contribute meaningfully to the electrical grid, the hundreds of billions in subsidies are basically a dead weight loss to the economy and the people. Getting rid of them needs to be a top priority for the Republican Congress. And yet there has been serious doubt as to whether the Republicans could muster the political will to rescind them. So I thought I would take my own look at the bill to see how they are treated.

Somewhat to my surprise, the BBB as passed by the House appears to repeal and rescind essentially all of the green energy handouts from the IRA. The IRA had added a collection of new sections to the Clean Air Act to create various massive funds for handouts to “greenhouse gas reduction” efforts. Go to section 42101 et seq. of the BBB (you will need to scroll down a long, long way to get there), and you will find that one by one these handouts will be repealed. Excerpt:

SEC. 42101. REPEAL AND RESCISSION RELATING TO CLEAN HEAVY-DUTY 
              VEHICLES.

    (a) Repeal.--Section 132 of the Clean Air Act (42 U.S.C. 7432) is 
repealed.
    (b) Rescission.--The unobligated balance of any amounts made 
available under section 132 of the Clean Air Act (42 U.S.C. 7432) (as 
in effect on the day before the date of enactment of this Act) is 
rescinded.

SEC. 42102. REPEAL AND RESCISSION RELATING TO GRANTS TO REDUCE AIR 
              POLLUTION AT PORTS.

    (a) Repeal.--Section 133 of the Clean Air Act (42 U.S.C. 7433) is 
repealed.
    (b) Rescission.--The unobligated balance of any amounts made 
available under section 133 of the Clean Air Act (42 U.S.C. 7433) (as 
in effect on the day before the date of enactment of this Act) is 
rescinded. . . .  

And the bill continues for section after section of same, with successive parts relating to things like a “greenhouse gas reduction fund,” a “low emissions electricity” program, a fund to address “air pollution in schools,” a fund for “diesel emissions reductions,” and so forth.

How much real money do these things add up to in the aggregate? That is a difficult figure to get a handle on. As indicated above, the total of green energy handouts in the IRA was estimated at the time of its passage at $370 billion. But in the New York Times of Thursday, May 22, we find a chart with an estimate that is far larger for how much would be rescinded by the BBB:

According to this chart, the government had announced some $829 billion of “low-carbon energy investments” since the IRA, of which $320 billion had already been spent, and $529 billion remained “pending.” So it looks like the BBB, if it makes it through the Senate, will be undoing over $500 billion in wasteful green energy spending.

And then there is the separate issue of tax credits for the production of electricity using wind and solar. These things have been around for long periods — since 1978 for the so-called “investment tax credit” for both solar and wind, and since 1992 for the so-called “production tax credit” for wind. The BBB would impose a deadline of 60 days from enactment of the bill for start of construction of any project to qualify for the credits, and a 2028 deadline for completion of any such project. Believe it or not, those deadlines would be likely to mean that these tax credits would effectively be ended immediately except for projects that have already qualified. This is from the website of Utility Dive, May 22 citing analysis from investment bank Jeffries:

The bill terminates the 48E investment and 45Y production tax credits for non-nuclear clean energy projects placed in service after 2028, with no phaseout period. Projects must begin construction within 60 days of the bill’s enactment — likely later this year — to be eligible for the credits. . . . [T]he truncated eligibility window leaves a “near impossible” pathway for non-nuclear developers to qualify for the 48E and 45Y credits, Jefferies said.

Over at Reuters, we find lamentations for the prospective end of the green energy boom and all of its endless benefits to the people. For example, Reuters quotes one Abigail Ross Harper of the Solar Energy Industries Association:

“If Congress does not change course, this legislation will upend an economic boom in this country that has delivered an historic American manufacturing renaissance, lower electric bills, hundreds of thousands of good-paying jobs, and tens of billions of dollars of investments primarily to states that voted for President Trump.”

Well, Abigail, what kind of a “boom” only comes into being when there are hundreds of billions of government dollars to support it, and disappears immediately when the handouts are withdrawn? It’s the kind of boom that is a massive wealth destruction, and that needs to be ended as soon as possible.