Tax Plan Threatens Health, Environment, and the Clean Energy Economy

The technology that we choose to invest our tax dollars in determines the future of innovation, jobs, and the very infrastructure of our economy. In the U.S., the scale of tax incentives for the energy sector have overwhelmingly favored the dirty fossil fuel industry, reinforcing continued pollution that contributes to health hazards and environmental disasters that impact many, especially communities of color and low-income communities.

The Republican tax plans proposed by the House and Senate not only uphold the status quo fossil fuel economy that is deepening our global climate crisis, but also threaten the health of communities and the security of a viable renewable energy future.

The tax plan released by the Republican-controlled House earlier this month clearly targeted the renewable energy sector for the chopping block. The proposal gutted major supports for the sector, including the renewable energy production tax credit (PTC), which benefits wind, solar, geothermal, and other renewable energy projects.

Already scheduled to phase out by 2020, the House tax plan would cut the existing PTC incentives by one-third. The bill also is set to repeal the investment tax credit (ITC) for big solar projects, and the $7500 electric vehicle purchaser credit which has benefited consumers and electric vehicle manufacturers.

The PTC and ITC help to finance construction of renewable energy projects, and allow companies to attract investment. Bloomberg and Goldman Sachs projected that ending the PTC would disrupt wind energy development, cutting new wind projects in half. Existing wind projects represent $50 billion in investment and tens of thousands of jobs, mostly in rural communities.

While the House tax plan sent shockwaves across the renewable energy industry, the Senate bill attempted to leave these subsidies in place. The Senate plan maintains the PTC, ITC, and electric vehicle tax credits. Land-based wind energy production in the U.S. is concentrated in the Midwest and in the Great Plains, and 3 Republican senators from the region—Grassley (Iowa), Thune (S. Dakota), and Heller (Nevada)—have stated their opposition to altering the wind energy tax credits.

While the Senate plan could preserve these important incentives, the credits could be horse-traded if the 2 bills enter reconciliation. The fact that the credits are being threatened is enough to create market uncertainty that would make present renewable energy development more difficult. Large-scale wind and solar projects have long timelines and require massive capital investments up-front. An uncertain financial climate could threaten long-term investment for projects that bring jobs and tax revenues to many rural communities across the country.

At the same time as this risk is felt by renewable energy champions, both bills maintain fossil fuel subsidies that sustain the dirty energy economy intact. The Republican tax plans do not alter the estimated $14.7 billion per year in federal tax subsidies for oil, coal, and gas industry. These sacrosanct subsidies reflect the close ties of the fossil fuel industry to the government. Oil, gas, and coal industry contributed over $117 million to candidates, parties, and PACs in 2016, nearly all of which went to Republicans.

Transition to a clean energy economy that empowers communities means both investing in the infrastructure for a renewable energy economy, and divesting our taxpayer support of the fossil fuel industry. These subsidies allow corporations to rake in billions of dollars in profit and exploit public resources, and threaten the health of communities who live on the frontlines of fossil fuel production. Communities like indigenous peoples fighting the Dakota Access Pipelines, or families of color in Houston who live near toxic chemical plants and have endured Hurricane Harvey, bear the disproportionate cost of our fossil fuel economies.

The Republican tax plan clearly prioritizes maintaining profits for polluting fossil fuel industry over the health of communities. The cost of the tax plan is estimated at $1.5 trillion in additional federal debt over the next decade. The government will thus be examining nearly every public program to offset the costs of the tax plan.

This could add fuel to the administration’s intent to massively cut the Environmental Protection Agency—an intent made clear in its budget proposed earlier this year that outlined cutting EPA funding by a third. Such a cut would dramatically reduce the agency’s ability to conduct its work cleaning up toxics in communities, enforcing the Clean Water Act, and protecting our natural resources.

This tax plan is not about a future of clean energy for all. It is a vision of a future that maintains the profits of the powerful fossil fuel industry while potentially undermining progress that has been made to support a growing renewable energy sector. The massive cost of the plan also increases the chance that other key programs to protect our health and environment will be guillotined.

Congress can choose to invest in a future of clean energy and healthy communities, or one that drives the world over the cliff of pollution and climate change. The Republican tax plan is clear on which future it invests in.