Repeal or not? Trump intra-party dispute over US clean energy tax credits turns ugly

With the future of US clean energy tax credits at stake, a group of Republicans in Congress who want to rescind them are accusing supportive party lawmakers of trying to preserve the “left’s green welfare agenda” as embodied in the 2022 climate law.

Their backing for continuation of incentives is complicating efforts to unify language in President Donald Trump’s proposed “big, beautiful” tax and spending bill that Republicans aim to finish by 1 June.

The party is using a process called budget reconciliation that requires a simple majority in both chambers, which would allow them to pass the package without Democratic votes.

Still, with thin majorities, Trump can ill-afford potential Republican defections on his signature legislative initiative.

The increasingly acrimonious intra-party fissures over subsidies may lead him to ramp pressure on recalcitrant lawmakers to back down with the Inflation Reduction Act (IRA). Or, if that fails, broker a compromise that forces him to quietly walk back his oft-stated pledge to rescind it.

The 38 lawmakers in the House of Representatives called for full IRA repeal, asserting such a move would free an estimated $1trn in clean energy subsidies that could partly defray the minimum $5trn Trump bill cost over a decade.

In a recent letter to Representative Jason Smith, who chairs the House committee writing the bill, they expressed “deep concern” that Trump’s “commitment to restoring American energy dominance and ending what he calls the ‘green new scam’ is being undermined by parochial interests and short-sighted political calculations.”

They highlighted the party ran and won on a “promise to completely dismantle the IRA” in November last year.

Trump was elected to a second, and final four-year term. Republicans gained narrow 220-213 and 53-47 control in the House and Senate, respectively.

“Despite our previously unified stance, some members of our conference now feel compelled to defend wind and biofuel credits, advocate for carbon capture and hydrogen subsidies, or protect solar and electric vehicle giveaways,” they wrote.

The IRA contains eight major energy subsidies, each of which “inflates energy costs” and “props up unreliable energy sources while displacing dependable, proven energy like coal and natural gas,” the letter said.

The lawmakers further slammed their fellow Republicans who want at least some tax incentives preserved.

“How do we retain some of these credits and not operate in hypocrisy? The longstanding Republican position has been to allow the market to determine energy production,” they wrote.

“If every faction continues to defend their favoured subsidies, we risk preserving the entire IRA because no clearly defined principle will dictate what is kept and what is culled,” the letter said.

Last month, 21 House Republicans wrote Smith calling for support of an all-of-the-above energy policy approach, warning that “both our constituencies and the energy industry alike remain concerned about disruptive changes to our nation’s energy tax structure.”

They noted IRA subsidies cover a 10-year period, which “allows energy developers to plan with these tax incentives in mind.”

These timelines have been relied upon when it comes to capital allocation, planning, and project commitments, all of which would be jeopardized by premature credit phase outs, according to their letter.

Speaker Mike Johnson, the top House Republican, has been cautious, saying in February the party’s approach to rescinding IRA would be “somewhere between a scalpel and a sledgehammer.”

In the Senate, four prominent moderate Republicans warned the party leadership there against a “full-scale” repeal, arguing each existing tax credits should be evaluated on its merits and ensure certainty for businesses that have made “meaningful US investments based on the current credit structure.”

Republican lawmakers who want IRA axed must be careful not to engender too much bad blood with colleagues as this could complicate agreement on other priority issues for the party and Trump.