House panel puts forth solar, environmental justice tax credits

The House Ways and Means Committee’s portion of Democrats’ $3.5 trillion spending package includes increased tax incentives for clean energy and the creation of new tax credits for electric-vehicle owners, according to text released by Chairman Richard Neal (D-Mass.) late Friday night.

The committee’s portion would increase the production tax credit rate for wind and solar power to the full applicable rate through the end of 2031, which would then phase down to 80 percent in 2032 and 60 percent in 2033.

It would also increase the energy credit for solar energy facilities built in low-income communities, the rate of which would be based on a combination of health and economic benefits for those communities as well as job opportunities and engagement.

The Biden administration has made incentives for use of solar energy a major priority, announcing a roadmap last week in which it comprises 40 percent of U.S. electricity generated by 2035.

The bill would also provide a $2,500 tax credit for energy-efficient, single-family new homes, as well as credits for energy-efficient, multi-family homes. It would triple the credit for installation of nonbusiness energy efficiency improvements to 30 percent and substitute a $1,200 annual lifetime cap on such credits.

Separately, it would create a new tax credit for the production of renewable hydrogen, with the percentage based on the reduction to lifecyle greenhouse gas emissions. Although some renewable energy advocates have touted major potential in hydrogen, environmental groups like Earthjustice have warned it would present a “false solution” if it is derived from fossil fuels.

“Our proposals allow us to both address our perilously changing climate and create new, good jobs, all while strengthening the economy and reinvigorating local communities,” Neal said in a statement. “Taken together, these proposals expand opportunity for the American people and support our efforts to build a healthier, more prosperous future for the country.”

The House is set to continue its markup of the measure Tuesday.

Updated: 9:01 a.m.