While some GOP lawmakers in the House and Senate wanted to kill federal subsidies for electric vehicles, wind, and solar power, the final version of the tax bill keeps the wind Production Tax Credit (PTC), the solar Investment Tax Credit (ITC), and the electric vehicle tax credit. The bill does kill the nuclear and “other” technology credits (geothermal, for example), and may reduce the tax equity value of the wind and solar credits.

Tax equity is the main financing tool for wind and solar projects, making up to forty to fifty percent of the funds for the average solar project and fifty to sixty percent of the funds for the average wind farm. The reduction of the corporate tax rate also means that there is less tax equity to use for renewable energy projects.

The Base Erosion Anti-Abuse Tax (BEAT) initially made the renewable energy sector very, very nervous, but a fix to that in the final version of the bill has many breathing a cautious sigh of relief. Essentially, the BEAT provision would require multinational companies to have two calculations of their taxes owed, one based on ten percent of a companies taxable income, and the other determining tax liability minus any tax credits, such as those from renewable energy. Multinational corporations would have been required to pay the difference if one figure ends up lower than the other, and this provision would have essentially eliminated tax incentives for investing in renewable energy. However, in the final version of the bill, energy companies will be able to offset eighty percent of that tax. This amendment, however, only lasts until 2025.

Beyond the loss of the “other” renewable energy credits for geothermal, nuclear, and other sources of energy, the main concern with the final version of the tax bill is that it will make the math for renewable energy tax credits more complicated and less attractive to energy companies. Moreover, the bill is also a huge boon to the oil, coal, and gas industries, who hailed the lower corporate tax rate as a victory. The bill also includes a controversial provision to allow oil drilling in the Alaskan Arctic National Wildlife Refuge (AANWR), a move hailed by Alaskan Senator Lisa Murkowski as an important step for US energy independence, while environmentalists counter that drilling in AANWR will do irreparable damage to wildlife and millions of acres of wilderness.

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