Ways and Means Hearing Re-Cap: Green Energy Tax Credits

On Wednesday, April 19, the House Ways and Means Committee held a hearing titled “On the U.S. Tax Code Subsidizing Green Corporate Handouts and the Chinese Communist Party.” Chair Jason Smith (R-MO-08) presided, and the committee welcomed testimony from the following individuals:

• Daniel Turner, Executive Director of Power The Future

• Drew Horn, CEO of GreenMet

• Kenny Stein, Policy Director at the Institute for Policy Research

• Vance Ginn, Senior Fellow at Americans for Tax Reform

• Ben Beachy, Vice President of Manufacturing and Industrial Policy at BlueGreen Alliance

During the hearing, Republicans slammed the recipients of the Inflation Reduction Act’s energy tax credits, saying large corporations are raking in most of the benefits. The rhetoric marked a shift for Republicans, who traditionally favor cutting taxes for businesses but are increasingly focused on anti-China policies. Meanwhile, Democrats at the hearing emphasized the negative effects that repeal would have, given the jobs already created. Below are some highlights from the hearing broken down by subject matter.

Section 45Q and Carbon Sequestration

Congresswoman Terri Sewell (D-AL-07) noted that the expansion of section 45Q of the tax code is an example of a sound bipartisan policy that will allow for future large-scale carbon capture and sequestration projects to develop over the next decade. She touted her own bill, the Carbon Capture and Sequestration Act, which was incorporated into last year’s Inflation Reduction Act. But, she acknowledged that there is still more work to be done.  

 In this Congress, Congresswoman Sewell is joining Congressman Schweikert (R-AZ-01) to cosponsor the Carbon Capture and Utilization Parity Act. This legislation will increase the tax credit for carbon capture and utilization to match the incentives for carbon capture and sequestration for both direct air capture and the power and industrial sectors. The legislation establishes parity between 45Q carbon capture tax credits for utilization and sequestration and supports using captured carbon in the manufacturing of products to lower the emission intensity of production. The Senate companion bill was introduced by Sen. Bill Cassidy (R-LA) and Sen. Sheldon Whitehouse (D-RI).

Hydrogen

Congresswoman Beth Van Duyne (R-TX-24) said that many environmental groups are trying to get any hydrogen produced with fossil fuel disqualified from the Section 45V hydrogen production credit. She attributed this to the U.S. Treasury Department’s malpractice of “putting its finger on the scale and picking winners and losers.”

While not having a specific ask, Congressman Ron Estes (R-KS-04) expressed frustration that “President Biden and my colleagues on the left have done everything they can to end hydrocarbons, decimating American energy production and relying on dirtier fuel from foreign adversaries the result has been higher costs for Americans, And, that's even when President Biden admits that we'll be continuing to use hydrocarbons for years to come into the future.”

Renewable Energy Tax Credits

Congressman Schweikert (R-AZ-01) described a project he is working on with his delegation to pump water up on top of nearby mountain cliffs and run it back down so the water becomes a battery. However, under the Inflation Reduction Act, his hydro battery would not qualify for the battery tax credit. That credit is reserved for chemical batteries.

Congressman Blake Moore (R-UT-01) asked Mr. Horn if we have the capacity to domestically produce materials needed to satisfy the Biden Administration’s solar panels, wind turbines, batteries, EVs, and transformer initiatives. Mr. Horn replied that while our regulatory environment is not easy to work with, he believes the U.S. has the resources and technological capability to not only meet our own demand but also to export to the remainder of the globe.

Transmission 

Congressman Kevin Hern (R-OK-01) asked Mr. Stein what the massive green energy subsidies mean for energy costs and grid security. Mr. Stein replied that unreliable energy sources ultimately increase costs to the electricity grid because while solar and wind power seem cheap on the surface, grid-wide, we must pay more for transmission with extra wind turbines, backup gas plants, etc. 

Finally, in his opening statement, Congressman Jimmy Panetta (D-CA-19) acknowledged that the climate crisis has forced us to make significant investments in energy, decarbonization, and streamlined permitting. He continued that to meet the Biden Administration’s 2030 goals, we need to double our transmission line expansions and fast-track the permitting process.

For more information, click here to watch a re-run of Wednesday's House Ways and Means Committee Hearing.