This month, 18 House Republicans submitted a letter to House Speaker Mike Johnson (R-La.) urging him not to repeal the Inflation Reduction Act’s clean energy tax credits if Republicans maintain or expand their House majority in this year's election. They emphasized that these “energy tax credits have spurred innovation, incentivized investment, and created good jobs in...many districts represented by members of our conference.”
These Republicans are likely reacting to a repeated talking point by former President Donald Trump and many Republican candidates on this year’s campaign trail: grand declarations that if elected into office, the Inflation Reduction Act and its associated tax credits will be on the chopping block.
In reality, repeal is extremely unlikely.
For starters, the IRA has deeply and disproportionately benefited red states in capital investments, expansion of manufacturing, job creation and economic growth. A Financial Times analysis revealed that, in the legislation’s first year alone, $180 billion of investment were committed to districts represented by Republicans in Congress, compared to approximately $10 billion in districts represented by a Democrat.
Overall, the IRA has benefitted all states. In its first year, over 280 clean energy projects were announced across 44 U.S. states, representing $282 billion in investment and forecasts to create nearly 175,000 jobs, according to public announcements tracked by the American Clean Power Association. In corporate earnings calls, solar energy was the clean energy topic most often mentioned in combination with the IRA on earnings calls, according to Goldman Sachs analysis.
For American households, the biggest solar energy tax incentive is the Solar Investment Tax Credit, a tax credit of 30 percent of the solar photovoltaic system cost. The solar credit actually predates the IRA. It was first created in the Energy Policy Act of 2005 under President George W. Bush. It has been revised and extended several times with bipartisan support. Since its inception, the solar credit has been instrumental in driving investment into residential and commercial solar energy projects across the country, and growing American technologies, jobs and our energy sector.
This brings us to reality check number two: Even if Republicans were willing to vote against the undeniable economic benefits that the IRA delivers to their constituents, dismantling legislation of its size and scope — like repealing just the solar credit or electric vehicle tax credits — is not easy. For the IRA to be at risk, there would have to be a Republican sweep in 2024, with the presidency, Senate and House all under their control. Dismantling the IRA piece-by-piece is not easy to do. As we saw with the Affordable Care Act, it’s hard to remove a benefit once it's been bestowed upon the American people.
The IRA has provided valuable tax benefits to individual American households and generated billions of dollars of growth for the American economy. As these 18 House Republicans point out in their letter: “American energy dominance increases national security, creates American jobs and ensures energy independence.”
Republicans have always pushed for tax incentives to incentivize business growth, domestic manufacturing and job creation — and the data shows these IRA tax incentives are working.
Neil Chatterjee is former chairman of the Federal Energy Regulatory Commission and current advisor to many companies, including American climate tech leader Palmetto.
