Why the GOP Debt Ceiling Bill Would Be Disastrous for US Energy

Why the GOP Debt Ceiling Bill Would Be Disastrous for US Energy

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  • The Inflation Reduction Act (IRA) is the defining legislation of our generation–spurring billions of dollars in private sector investments and creating thousands of good-paying jobs across the country. The IRA is making US energy more affordable, reliable, secure, and clean, all while reducing emissions and helping stave off the worst effects of climate change.
  • Despite two-thirds of IRA investments directly benefiting Republican districts and a majority of Republican voters approving of the clean energy provisions, Republican policymakers seem to be ignoring the will of their constituents to play shortsighted political games in Washington.
  • Republican attempts to claw back clean energy incentives are threatening the billions of dollars and thousands of jobs already being generated, undermining American energy security, and dulling our competitive edge.


Since becoming law last year, the Inflation Reduction Act (IRA) has already catalyzed billions of dollars of public and private investment in America. As the largest commitment to clean energy and climate in history, it is destined to create hundreds of thousands of jobs and spur economic growth for decades to come. From the new “battery belt” forming across the American Southeast to dozens of new solar and wind manufacturing plants, it's clear that the Made in America clean energy boom is just getting started. And yet, right as the economic engine of this century is beginning to take off, Republicans are determined to stall it out.

Third Way has been on the front line raising the alarm about Republicans’ dangerous debt ceiling games. We’ve broken down the high costs of default and shown how the Republican House bill would devastate public security. Now, we turn our attention to another damaging aspect of the Republican debt ceiling bill: clean energy tax credit repeals.

In their list of demands for avoiding default, Republicans have included language to repeal nearly 30 different clean energy tax credits. Tax credits that are already hard at work catalyzing private investment and creating good-paying jobs. Driven by political brinkmanship, these Republican ‘claw backs’ would disproportionately target rural and low-income communities, robbing hard-working Americans of economic opportunity and wealth.

In this blog post, we break down why these historic investments in clean energy are critical to building a durable economy that is prepared for this century, and why Republicans’ cynical attempts to claw them back would be disastrous for Americans–including their own constituents.

Biden’s Pragmatic Approach to Climate and Energy Policy

Republican policymakers have attempted to downplay these landmark investments and portray them as a Trojan horse for a far-left agenda. This is nothing short of fantasy. Far from the liberal wish list that it’s characterized as, the Biden Administration’s clean energy investments are smart, pragmatic, and already showing their worth. They align America’s clean energy, national security, and economic goals into a singular pro-growth strategy that provides more affordable, reliable, and secure clean energy.

While significant investment in climate solutions will still be needed, President Biden looked past demands from the far left for a package costing $10 trillion or more and secured a deal for historic energy investments that could be managed and expended responsibly over the decade, prioritizing America’s economic and energy security needs while meeting the political moment.

Contrary to the Republicans' portrayal of Democrats’ clean energy agenda as a re-imagined Green New Deal, focused solely on intermittent technology like wind and solar, these investments encompass a much broader spectrum of technologies. The Biden Administration has set a realistic and well-balanced strategy on the table from the start, putting every tool in our toolbox into play. That includes options like nuclear energy and carbon capture, clean technologies that tend to get more support from Republicans than they do from the far Left.

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This pragmatic approach is delivering what Americans want. Voters across the political spectrum overwhelmingly support the Biden Administration’s clean energy investments, with key provisions that bolster domestic supply chains and provide tax credits for clean energy technologies particularly popular among Republican voters. The Biden approach to clean energy is in the mainstream. Attempts to undo progress on American clean energy are on the extreme.

How New Investments are Improving Energy Security, Reliability, and Affordability

Investments in clean energy enhance our energy security, strengthen reliability, and help insulate the US from external pressures, thus stabilizing energy prices.

Built into these new investments are core provisions aimed at “reshoring” many of the supply chains and production assemblies that were lost over the last forty years. The new Production Tax Credit (PTC) and Investment Tax Credit (ITC) schemes have made innovative “domestic content” bonuses available to developers and manufacturers who procure US-produced materials for their projects. The bonuses–which can range from 2-10%–can amount to tens of millions of dollars in additional tax relief. Taken as a whole, these PTCs and ITCs are a technologically diverse approach to energy policy.

The law has already catalyzed over $240 billion in private sector investment in American manufacturing and is expected to generate another $1 trillion through 2030. By incentivizing developers, manufacturers, and producers with tax credit carrots, the US is now well-positioned to regain critical market share across a broad suite of energy technologies. This competition-centered approach is building energy security through energy diversity.

Of course, a secure energy system is only as strong as its reliability and resiliency. Here too, new investments are strengthening the US’ ability to withstand external shocks. New grant and loan programs are targeting key pieces of our system, such as the electric transformers needed to support our grid, as well as the wires we need to connect it all together. These grid modernization efforts will help us build a modern electrical grid that is “bigger than weather,” preventing blackouts and reducing system stress.

Lastly, by supporting a technologically diverse energy system alongside a stronger and more resilient electrical grid, American households can expect lower and less volatile energy prices over the coming decade. From reshoring supply chains to expanding access to alternative energy sources, new clean energy programs are working to insulate US energy markets from geopolitical adversaries, such as China and Russia. Analysis from the Rhodium group shows that lower energy costs are not exclusive to households that adopt EVs or install heat pumps but will be felt for all consumers as the new investments in clean energy work to drive down traditional electricity and fuel costs.

Disastrous Cuts in the Republican Bill

Unfortunately, by demanding the repeal of nearly 30 clean energy tax credits in exchange for avoiding a national debt default, Republicans in Congress are putting energy security, reliability, and affordability in jeopardy.

The repeals of tax credits to encourage domestic manufacturing like 48C and 45X are particularly perverse, as the clean energy manufacturing industry presents a strategic opportunity for the US to tap into the multi-trillion-dollar clean tech economy while minimizing supply chain disruptions. We’re already seeing these tax credits at work in places such as Arizona, which is rapidly becoming a hub for EV battery manufacturing, particularly around the Phoenix and Tucson areas. A similar story is being written across the country in Georgia, with over a dozen new EV battery and solar manufacturing plants beginning to pop up around the state. What’s more, forty percent of the 48C investment specifically targets “energy communities,” i.e., locations close to a closed coal plant or retired mine. These energy community benefits are intended to support traditional fossil fuel-based towns’, workers’, and households' transition to new good-paying jobs and build economic security. The Republican plan would nix these opportunities.

The Republican bill also aims to repeal the hydrogen production tax credit (45V), threatening to upend the burgeoning new hydrogen industry, which is already forming in Republican states such as Texas, Florida, and South Carolina. It also takes aim at a nuclear power production credit (45U) that is helping keep safe, reliable, carbon-free power plants on the grid and their well-paid workers on the job.

Other repeals include the clean electricity investment (48E) and production (45Y) tax credits that break a 30-year habit of creating tax credits for specific technologies and instead incentivize the diversification of our energy system by expanding eligibility to a new suite of technologies, such as geothermal and utility-scale battery storage. EV tax credits (30D & 45W), which are driving consumer demand and supporting the historic return of American manufacturing; the sustainable aviation fuel credit (40B), a vital tool to decarbonize the hard-to-abate airline sector; and many, many more provisions are also all on the chopping block.

Preserving clean energy incentives isn’t about party, it's about delivering tangible benefits to American families. Many of these individual tax credits actually had bipartisan support at some point in the legislative process. And while President Biden and Democrats may have been the ones to get them over the finish line, Americans of all political stripes will lose if they get repealed. Roughly two-thirds of the projects supported by these credits are in right-leaning districts, bringing jobs and investments back into these communities. Here are three examples of how Republican districts are already benefiting from the incentives Republican lawmakers now want to claw back.

Battery Manufacturing

Project: LGES Gigafactory

Investment: $5,600,000,000

Jobs Created: 2,800

Location: Queen Creek, Arizona

Representative: Andy Biggs (R-AZ-5)

Clean Hydrogen Production

Project: Air Products, Chemicals Inc., AES Corp

Investment: $4,000,000,000

Jobs Created: 1,615

Location: Wilbarger County, Texas

Representative: Ronny Jackson (R-TW-13)

Advanced Manufacturing

Project: Zinc8 Energy Solutions

Investment: $68,000,000

Jobs Created: 500

Location: Ulster, New York

Representative: Marc Molinaro (R-NY-19)


The Republican effort to repeal clean energy incentives in the debt ceiling negotiations is an irresponsible ploy for political leverage that will harm hard-working Americans across the country, especially in rural Republican districts. Attempts to dismiss President Biden’s clean energy investments as a copy of a far-left agenda are distorting the reality. The Inflation Reduction Act is a historic investment in our clean energy future, driven by a pragmatic, mainstream approach that delivers on national priorities that Americans agree on, like domestic manufacturing, energy security, and cleaner air and water. 

  • Clean Energy Finance47


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