Senate's concluding budget negotiations face a fresh danger from deficit concerns, potentially endangering clean energy proposals

The Senate is currently in the midst of a "vote-a-rama" amendment process to finalize the "One Big Beautiful Bill Act." This process, which could last from hours to days, follows significant cuts to various tax credits, including clean energy incentives, totalling $560 billion.

The clean energy industry is facing a bill that is more punitive than previous drafts. One of the most contentious changes is a surprise excise tax on clean energy projects, a proposal that has raised concerns within the sector.

Senate Majority Leader John Thune provided the assurances needed for the fiscal hawks to vote to proceed, despite the bill's potential impact on the national deficit. Many in the GOP believe the bill will add significantly to the budget deficit, with the largest concern being the additional $44 billion that will be added to the deficit due to additions to IRA credits for carbon capture, biofuels, and oil and gas exploration.

Alex Epstein, who has been instrumental in shaping the energy portions of the Senate bill, has proposed several changes aimed at reducing the bill's cost. These include requiring battery storage, wind, and solar projects to commence construction by the bill's passage date, reducing the 45X manufacturing credit, and cutting it by 10% annually. However, it's unclear whether any of Epstein's proposals will be introduced as amendments.

The clean energy sector should prioritize preventing any additional amendments that could make the bill more punitive. Further scaling back IRA credits would likely require cuts in places where the bill adds spending on energy technologies. Epstein claims these cuts could save "hundreds of billions of additional dollars."

Removing the excise tax on clean energy projects remains a key focus for the clean energy sector, but will likely require a Republican sponsor. The more punitive treatment of energy tax credits in the final draft saves only $15 billion, a relatively small amount compared to the overall cost of the bill.

The overall cost of the bill hasn't changed despite the cuts made so far. The clean energy industry is concerned about the potential for deeper cuts to the bill, even with the Friday deadline approaching. The "vote-a-rama" process to finalize the bill could last as long as 16 hours, as it did for the IRA in 2022.

Fiscal hawks in the Senate held up the "motion to proceed" on the bill for more than three hours on Saturday evening, seeking concessions for further deficit reductions. The clean energy sector will need to navigate this final amendment process carefully to ensure the best possible outcome for their industry.

Senate's concluding budget negotiations face a fresh danger from deficit concerns, potentially endangering clean energy proposals