The Senate totally fails to terminate the Green New Scam
The Senate bill *looks like* it has a 2027 "placed in service" cutoff for new solar/wind subsidies. But one last-minute lobbyist paragraph makes the cutoff worthless.
Summary: The Senate bill looks like it has a 2027 "placed in service" cutoff for new solar/wind subsidies. But one last-minute paragraph makes the cutoff worthless—because projects making a recoverable 5% investment in the next 12 months are exempt!
As of the evening of June 30, the Senate was set to pass a bill that would cut off subsidies for new solar and wind projects not “placed in service” by the end of 2027. This would have been a huge victory for electricity in America, nevermind the hundreds of billions of future dollars saved by the government.
From my private conversations with Senators, many of them thought they were signing a bill with the 2027 “placed in service” cutoff. But in fact, a last-minute paragraph inserted by lobbyists and agreed to by leadership totally destroys the “placed in service” language.
The paragraph says that the bill’s crucial “placed in service” provisions don’t apply to projects that have already begun “construction” or, most importantly, begin “construction” in the next 12 months.
Under current administrative law, which the bill explicitly preserves:
It is incredibly easy to meet the standard of “construction”: all you have to do is commit 5% of expected project cost to buying re-sellable assets like solar panels.
Once you easily meet the standard of “construction” you have a 4 year “safe harbor” to be “placed in service” and start collecting subsidies. Therefore a “construction cutoff” of July 2026 is really a “placed in service” cutoff of July 2030.
With the earlier Senate 2027 “placed in service” cutoff—no exceptions—new subsidized solar/wind projects would slow to a crawl by early 2026. And President Trump could ensure that subsidies would terminate during his term.
Under the final Senate bill's exemption for projects in "construction" by July 2026, new unreliable projects will spam our grid at least through 2030. Big Green now has 12 months to initiate as many subsidized projects as it wants using the insanely-easy-to-meet "construction" threshold.
Once they declare "construction"—e.g., in July 2026—they'll have 4 years (e.g., July 2030) to "place in service." And then some of those projects, e.g., most wind projects, will get 10 years of subsidies. So we'll still have wind subsidies on Donald Trump's 94th birthday!
Here's how much worse the Senate bill just got:
Yesterday afternoon: “Placed in service” by 12-31-27—with new subsidized solar/wind projects stopping very quickly, and Trump being able to let subsidies truly end.
Today: "Placed in service" by July 4, 2030 at the earliest—with new subsidized solar/wind projects absolutely spamming the grid and ripping off taxpayers like never before, and Trump having no control over whether the subsidies end.
At minimum, the Senate bill if it becomes law is a disaster for our grid and the budget. But that’s the best-case scenario.
Realistically, by extending eligibility for new subsidies well beyond President Trump’s term, the Senate bill makes it likely that future administrations and Congresses will extend solar and wind subsidies yet again—just as previous ones have done for over 30 years!
The current bill is a solar/wind lobbyist's dream. (Though of course they are complaining it’s not enough.) It does not terminate the Green New Scam in any way, shape or form. It absolutely perpetuates it. And offensively so, I might add, by keeping the “placed in service” cutoff language so many people courageously fought for, then totally undoing it with a single last-minute lobbyist paragraph that makes it worthless.
I know from my communication with several Senators that many Republican Senators (and I am almost certain most) did not know about the last-minute paragraph and its implications. I am not sure what the balance of responsibility here is, but obviously something needs to change very dramatically.
In the meantime, please share this with your Senators and especially your Representatives who are now taking up this issue.
Debunking the argument that the administration will somehow stop the subsidies
As I write this I am hearing claims that the Senate’s extension of solar/wind subsidies isn’t a big deal because the Administration can or will do something to stop the flood of new subsidies—e.g., change the definition of “construction” to be more onerous.
This is simply not true, at least not within the law.
The lobbyists who inserted the clever language negating “placed in service” also cleverly inserted language that the definition of “construction” cannot change for the subsidy-seeking projects!
‘‘(J) BEGINNING OF CONSTRUCTION.—For purposes of applying any provision under this paragraph, the beginning of construction with respect to any property shall be determined pursuant to rules similar to the rules under Internal Revenue Service Notice 2013–29 and Internal Revenue Service Notice 2018-59 (as well as any subsequently issued guidance clarifying, modifying, or updating either such Notice), as in effect on January 1, 2025.
More broadly, as I argued in a previous post, it is a terrible idea to rely on the executive to restrict subsidies Congress won’t.
It necessarily relies on the Administration to interpret the law in a highly aggressive and therefore controversial way. This can easily fail due to multiple kinds of challenges.
Legal challenges: If the Administration interprets the law in a highly aggressive and controversial way, it will legitimately be subject to powerful legal challenges.
Consistency challenges: Aggressive and controversial interpretations of the law can easily end up harming people the Administration doesn’t want to harm, which can cause them to pull back. E.g., Foreign Entity of Concern (FEOC) provisions harming nuclear energy.
Constituency challenges: Aggressive and controversial interpretations of the law can legitimately anger important constituencies. E.g., if utilities are set to unexpectedly lose $50 billion due to an aggressive interpretation, they will rally all their resources to get that interpretation changed. This is far easier than winning the legislative battle subsidy-seekers are currently winning.
It is not ethical or reasonable to rely on the Administration to effectively cut subsidies that Congress explicitly extends. What this Administration can and should be relied upon to do is enforce a clear “placed in service” termination that occurs before President Trump leaves office.
Whether or not that happens will now depend on the House and the President.
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Absolutely disgusting!