By Jamie Martin
The Senate has approved a sweeping energy bill, shifting tax benefits toward fossil fuel industries while scaling back support for renewables and energy efficiency.
The legislation boosts tax breaks for oil, gas, coal, and carbon capture, while phasing out or limiting clean energy credits.
The American Petroleum Institute celebrated the move. “This historic legislation will help usher in a new era of energy dominance by unlocking opportunities for investment, opening lease sales and expanding access to oil and natural gas development,” said President Mike Sommers.
The bill expands the 45Q carbon capture tax credit, offering $85 per ton for both enhanced oil recovery and geologic storage, and extends it for projects started before 2033.
Other tax benefits help cover drilling expenses and support coal production, particularly for metallurgical coal used in steelmaking.
Clean energy advocates say the revised bill undercuts climate goals. While the wind and solar excise tax was removed and credit phase-outs delayed, developers still face hurdles. Projects must begin construction by mid-2026 or connect to the grid by 2027.
Further pressure comes from new rules restricting foreign components, especially those from China. This affects solar panels, grid batteries, and clean manufacturing projects, potentially raising costs and delaying development.
Energy storage credits were extended, but China-based restrictions may affect viability. These rules create risks for projects that pair storage with solar energy, according to experts.
Energy efficiency projects also took a hit. The bill removes homeowner and builder tax credits for insulation and HVAC upgrades, raising concerns about increased utility bills and stress on the electric grid.
Hydrogen energy received partial support. The 45V tax credit for clean hydrogen is extended to 2028, but shorter than current law. While it may help “blue hydrogen” made from fossil fuels, green hydrogen faces cost challenges due to higher renewable energy costs.
The bill’s outcome now depends on House approval, where political divides may alter its final form.
Photo Credit: pexels-nataliya-vaitkevich
Categories: National