Will California’s Clean Energy Tax Credits Be Eliminated Or Reduced?

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There are people in the US who wrongly claim that clean, renewable energy should not receive any government support in any form such as tax credits, rebates, etc. They also say the ‘free market’ should determine whether or not clean energy such as solar power, wind power, hydropower, geothermal, and wave power can have a place in the nation’s energy mix. The premise is that if clean energy can not stand on its own, it is artificially supported by the government and therefore is not valid somehow.

The same people who make these false claims will not mention that oil, gas, and coal in the US have received, and in some cases still receive, government subsidies. Using the ‘free market’ premise to determine whether or not fossil fuels are valid, then they too should not receive any government support. However, they do and have, in some cases, received government support for decades.

So, how much? It’s at least $20 billion a year. The climate change costs from fossil fuels are not included in that figure, which could cost another $646 billion per year from its impacts in the US. The cost of fossil fuels to human health in the US could be $800 billion per year. The subsidizing of fossil fuels also happens worldwide, to the tune of $7 trillion, according to the International Monetary Fund.

Subsidizing the greatly damaging fossil fuels while calling for the removal of clean energy government support, the energy that does not cause all the harm, makes no sense.

Still, the majority of Republicans, not every single Republican, persist in trying to reduce or eliminate government clean energy support. 

Reducing or eliminating the support could do much damage in California, which is the number one US state for clean energy and electric vehicles. About 544,000 clean energy workers are in the Golden State, as one example of how important clean energy is to the Golden State’s economy.

Andrew Reagan, President of Clean Energy for America, answered some questions for CleanTechnica about California’s clean energy situation.

Who is behind the new federal spending bill? 

The spending bill was passed by the Republican-controlled Congress and signed by President Trump. The House of Representatives budget called for the elimination of clean energy tax credits.  

How would the new federal spending bill threaten California clean energy tax credits?

The recently passed spending bill gives the administration broad latitude to cancel federal funding for clean energy projects with a stroke of a pen. The Trump administration has already delayed and pulled back funding, which creates more uncertainty and can derail projects and investment. 

Congressional Republicans have a history of trying to repeal clean energy tax credits and funding. They recently put forward a plan to slash clean energy investments and eliminate tax credits in their latest budget proposal. 

If clean energy jobs are lost in California, in what parts of the clean energy economy will they be lost? Solar power, wind power, EVs, etc.?

The energy tax credits have been a huge boon for California, which has seen more than $11 billion in clean energy investments and 10,000 new jobs created as a result. 

The greatest impacts we have seen have thus far been in wind power and EVs but no clean energy sector appears to be safe.

Could clean energy job losses in California have a negative effect on the state’s whole economy?

Federal clean energy tax credits are projected to increase the state’s GDP by $6.1 billion over the next five years. 

The $18 billion in future energy cost savings for Californians over the next two decades would evaporate.

Could the new federal spending bill reduce clean energy investing in California?

398,000 California households received over $1.6 billion in tax credits on their 2023 tax returns for installing solar panels or making other energy-efficient upgrades to their homes. 

Over $11 billion in clean energy investments have occurred since the law was passed.

How many future CA clean energy jobs could be lost if the new federal spending bill is passed?

Over 93,000 new jobs in clean energy sectors ranging from manufacturing to construction could be lost in the next five years.

What is the clean energy partnership announcement by Gov. Newsom and Sonora Gov. Montano and why does it matter?

The economic uncertainty means states are going to have to do more to step up where they can in the absence of the federal government. This is a great opportunity to develop more robust and consistent manufacturing opportunities that will create jobs, meet future energy needs, and lower energy bills for consumers.