The Big Beautiful Bill finally made it over the finish line in the House last week, barely surviving months of deliberations and controversy. A contentious aspect surrounded the Inflation Reduction Act (IRA) energy tax credits, which at the last minute received big cuts. Not completely axed as budget hawks hoped, but not left mostly untouched like moderates wanted, these credits were at least substantially scaled back.
Now the Senate needs to do its part with an even bigger scalpel. The green energy tax credits embedded in the IRA do us no favors; they cost taxpayers trillions and simultaneously weaken our power grid. They need to go.
Initial costs of the subsidies back in 2022 were supposed to be $271 billion over 10 years. Within a few months of its passage, estimates came closer to $1.2 trillion. A recent analysis claims the subsidies could reach $4.67 trillion by 2050, in part because they don’t expire; credits can be reissued again and again.
The steep price tag is only part of the problem. The other issue lies with the government funding inferior energy sources that threaten the safety and reliability of our energy grid. Trading out dispatchable coal, natural gas, and nuclear for intermittent wind and solar puts lives and livelihoods at risk. Just ask Spain Portugal.
Last month the Iberian Peninsula suffered its worst blackout ever. A lack of inertia is the main culprit, “which is a direct result of a reliance on renewable generation.” Wind and solar do not supply power at steady frequencies; the sources they replace do. Just one week prior Spain had boasted 100 percent of its power came from renewables.
The 12-hour blackout cost $1.8 billion as the economy came to a screeching halt; everything went down. People were left in the dark and businesses suffered. An expensive glitch that could have been avoided.
The UK and Germany aren’t faring so well either since pursuing aggressive climate policies which have replaced natural gas and nuclear with wind and solar.
Britain’s residents experience some of the highest electric bills in all of Europe and endure a stagnant economy. Germany’s skyrocketing electricity prices have forced businesses to flee, leading to deindustrialization and economic decline. Each have also had major blackouts because of unstable and inadequate renewable power systems.
States here at home have failed to learn from Europe’s mistakes. California’s large renewable portfolio has strained the grid, causing rolling blackouts and petitions for residents to conserve. They also have the highest electric bills in the continental U.S. Texas’ massive expansion of wind and solar is largely responsible to power failures during winter Strom Uri and the grid’s near collapse. And New England states are seeing skyrocketing electricity prices attributable to increasing renewable development.
North American Electric Reliability Corporation’s annual report continually warns two-thirds of the U.S. is at risk of electricity shortages because the grid cannot handle an abundance of renewable sources. Dispatchable energy must be employed to keep power flowing. So why are we so determined to add more of the equipment that fails us?
Energy demand is continually exploding, and we can’t afford to get this wrong. We must course correct before it’s too late.
Green energy advocates worry about a renewables future without the tax credits. But an industry should not be highly dependent on subsidies provided by taxpayers, especially since it has received them for more than four decades. Wind and solar tax credits began in 1978. The training wheels need to come off. If these sources are worth their salt, they’ll stand on their own.
Proponents are also eager to point to red states receiving the majority of the IRA’s subsidies. But most industries are drawn to these states because they have a competitive edge: faster permitting, better tax packages, right to work laws, plenty of resources, and existing infrastructure. Of course wind and solar were eager to set up shop in business-friendly locations.
A stable reliable grid shouldn’t be optional. It’s essential. And that means supplying it with more dispatchable energy and less weather-dependent sources. It certainly means not charging taxpayers to imperil our grid.
Spending trillions on inferior energy that has no measurable impact on climate change is not sound policy. It puts lives and livelihoods at risk and jeopardizes national security while ballooning the deficit.
The Senate needs to finish what the House started and remove these IRA tax credits for good.
Kristen Walker is a policy analyst for the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit www.theamericanconsumer.org or follow us on X @ConsumerPal.