Photo credit: Yaya Ernst/Shutterstock
February 19, 2020
Valentine’s Day is over, but green energy advocates and electric vehicle trade groups are still hoping to play matchmaker.
At a closed-door gathering in the nation’s capital last month, representatives from close to two-dozen renewable energy, electric vehicle, and environmental advocacy organizations began the early stages of handicapping which Republican senators might be willing to join Democrats in supporting lucrative tax credits for the various green sectors – most of which were axed at the last minute late last year.
The discussion, which insiders emphasized was and remains in its initial stages, focused on potentially attracting support from GOP senators who represent states with relatively high numbers of jobs along the green supply chain: namely Arizona, Colorado, Indiana, Iowa, Louisiana, North Carolina, Ohio, and Tennessee. Together the states boast more than a half-million jobs in manufacturing, selling, and installing solar panels, wind turbines, batteries, energy efficiency devices, and electric vehicles.
But GOP senators, under intense green-energy opposition from the White House, may no longer be willing partners or, even if they are, have the influence to make sure that clean-energy tax credits make it into a final bill. And that means that such credits for green energy sectors may soon be a thing of the past.
The Grassley Factor
Until last year, Sen. Chuck Grassley had been a critical partner for renewables groups: a powerful Iowa Republican who agreed to back tax credits for wind energy, and allow other green initiatives, in exchange for similar subsidies for biofuels – a major interest for Iowa corn farmers, who sell most of their crops not for food consumption but ethanol production. And, crucially, with more than 40 years in the Senate, Grassley had the influence to make sure the credits got passed.
The senator, however, last year managed to extricate himself from the long-running arrangement: When the White House in December detonated a bipartisan tax deal that would have introduced a range of ambitious new tax incentives for electric vehicles, solar energy, wind energy, and battery storage, Grassley – amid furious last-minute deal-making to revise the bill – effectively decoupled Iowa’s biofuels credit from the other green incentives.
Where the various energy tax incentives had once been lumped together and renewed for only a year at a time, Grassley managed to extend the biofuels tax credit, so important to his state, by three years. Wind, by contrast, won merely its usual one-year extension. Solar and electric vehicles got nothing new at all.
Grassley, in other words, now doesn’t need to seek another deal with green energy groups – he won’t need to return to the bargaining table on biofuels until the end of 2022. And in the meantime, he’s stepping down from his chairmanship of the Finance Committee, the body that most directly oversees the issue of tax credits.
The Iowa senator, once a reliable partner for renewables like wind energy, is now off the market. That’s left green groups scrambling to find a new champion to help secure much-needed GOP votes – with remarkably slim pickings.
“He was very reliable,” a renewable energy lobbyist said. “Now, I don’t know. The House has been a lot easier to identify Republicans who are interested and willing to go to bat for clean energy.”
Liam Donovan, a Republican lobbyist specializing in tax policy and energy at Bracewell, offered a similar assessment:
“On Senate Finance, where are your natural allies? No one obvious jumps out,” Donovan said.
Green Energy's Next Plan
Some Republican senators appear to be in play: Sen. Cory Gardner, for example, who hails from green-tinged Colorado and is fending off a 2020 election challenge from former Demoratic Gov. John Hickenlooper, has helped spearhead a bill that would create a standalone tax credit for battery storage.
“I support the renewable energy community that is thriving in Colorado and across the country, and will continue to support federal policy that fosters innovation and technology maturation in the energy sector,” Gardner said in a statement. “That’s why I’m the lead Republican of the storage Investment Tax Credit bill, as well as a leader of multiple storage research, development and deployment bills.”
Sen. Lamar Alexander of Tennessee, meanwhile, co-sponsored a bipartisan bill last year that would have extended tax credits for electric vehicles. With close to 10,000 jobs along the EV supply chain in Tennessee, and an $800 million Volkswagen factory for electric vehicles now under construction, a spokesman told Cheddar in a statement that “one of the Senator’s main components in his plan on environment and renewable energy are electronic vehicles.”
Hitting the Brakes
There are also signs of retrenchment, though. As the Trump administration has called for ending virtually all tax incentives for green energy and electric vehicles in its latest budget proposal, some Republican senators that once clearly supported certain green tax credits now appear to have hedged.
“That’s what looms over all of this. We saw the way these negotiations played out and the apparent reluctance within the White House to really go there on any of these clean-energy issues. That’s going to color the willingness of some of these Republicans to engage on these issues this year,” Donovan said. “I don’t think Republicans are in the same place that they might’ve been when these incentives were originally enacted.”
For example, although Senator Alexander spearheaded the bill on EVs last year, his spokesperson appeared to hedge the lawmaker’s support for EVs this year by couching it in terms of the more mainstream Republican stance on climate change and clean energy: general support for research and development.
“His strategy takes advantage of the United States’ secret weapon: our extraordinary capacity for basic research, especially at our 17 national laboratories,” the spokesman said.
As a renewable energy lobbyist put it: “That’s concerning.”
Renewable energy, electric vehicle and environmental advocates and trade groups hope that they might also be able to leverage so-called “technicals:” errors that are leftover from the 2018 GOP-led tax overhaul that have since hit retailers and restaurants especially hard. But the technical corrections alone, without other issues like biofuels, may not be enough – especially in the face of intense White House opposition to electric vehicles and renewable energy.
“You’re not going to put things on the table that were non-starters the last time,” Donovan said.
Other Republican senators that green groups might have hoped to charm have signaled that they’re not interested, at least so far. Asked about the nearly 30,000 clean-energy jobs in his state of Louisiana, for example, Sen. John Kennedy’s office responded by forwarding two letters he’d co-signed in the past six months expressing deep skepticism over tax credits for electric vehicles.
Less is known about Sen. Michael Crapo, a longtime Idaho Republican who is expected to succeed Grassley as chairman of the Finance Committee, putting him in a particularly powerful position on tax credits. Idaho doesn’t boast large renewable energy or EV manufacturing, but it draws 81 percent of its electricity from renewable resources – second only to Vermont – and the electric utility Idaho Power last year announced plans to stop depending on coal-fired electricity and instead use wind, solar and hydroelectric power. Crapo in 2011 also joined senior Democratic senators in sponsoring a bill that sought to boost electric vehicle development by expanding the criteria for EV tax credits.
“Crapo’s a cypher on this,” a conservative-leaning energy industry lobbyist said. But, he continued, the renewable energy industry in Idaho is still relatively nascent. “Even if you don’t take the White House budget seriously, which I don’t, it signals political priorities. And why would you create a story by getting crosswise with the administration unless it’s to your political benefit – because you’re running for election in a state like Colorado. It’s not a natural issue for Republicans, even if it ought to be.”