Quick Reaction: House Ways & Means Bill Needs Tweaking

By Neil Auerbach, Hudson Sustainable Group CEO

As a conservative investor in sustainable energy, I believe stable bipartisan support is vital for America to lead in all energy technologies – not just those in political favor. House leaders tasked with deficit reduction understandably scrutinize even popular programs. The Ways & Means Committee’s draft bill takes a largely constructive, fiscally responsible approach to trimming the Inflation Reduction Act’s (IRA) clean energy tax incentives without dismantling them. However, a few proposed changes could unintentionally undermine market efficiency, consumer choice, and American energy security. Three modifications deserve a second look as the House finalizes its bill and the Senate deliberates.

Preserve Tax Credit Transferability to Maintain Market Efficiency

The House bill would sunset the ability of taxpayers to transfer clean energy tax credits after 2025. Tax credit transferability created a far more efficient marketplace by allowing projects to monetize tax credits directly and attract more capital at lower cost – bypassing the expensive “tax equity” deals that once dominated clean energy financing. As an early pioneer of the tax equity market, I can attest that credit transfers are a pro-market innovation Republicans would ordinarily applaud.

Eliminating this tool after only two years would reintroduce needless complexity – every clean energy project would require more lawyers, bankers, and accountants – and drive up costs with no fiscal benefit. In short, ending transferability would just push projects back into old, inefficient financing structures. To uphold free-market principles and keep capital flowing, Congress should preserve full tax credit transferability through the credits’ intended lifespan.

Protect Homeowners’ Energy Choice by Retaining the 25D Credit

The House draft also repeals the Section 25D residential clean energy credit (for home solar and batteries) after 2025, on the premise of “favoring working families over elites.” This talking point is misplaced. Rooftop solar is not a luxury for the elite – most single-family homeowners who invest in panels and batteries are middle-class Americans looking to save on energy bills and enhance their energy independence.

Conservatives have long championed consumer freedom, and energy choice should be no exception. Eliminating the 25D credit so abruptly would curtail Americans’ freedom to choose how to power their homes, just as residential clean energy adoption is accelerating. A smarter approach would be to phase this credit out gradually rather than end it overnight. For example, aligning the 25D credit’s sunset with that of its corporate counterpart (Section 48E) or otherwise providing a reasonable transition period would address fiscal concerns without pulling the rug out from under homeowners. Such a measured phase-out respects families’ ability to make their own energy decisions and ensures that everyday Americans – not just big corporations – can participate in our clean energy future.

Prioritize Building Domestic Clean Energy Supply Chains Over Ownership of Them

The bill also restricts clean energy projects involving “foreign entities of concern,” aimed largely at China. Protecting U.S. interests so taxpayer dollars don’t aid geopolitical rivals is sensible in principle – but this provision is overbroad and is insensitive to the context. After years without strong domestic manufacturing, the United States is finally attracting major investments to manufacture solar panels, batteries, and other components at home; that investment is coming from everywhere, including China. Chinese companies have the most manufacturing know-how and IP to build state of the art facilities here in the US.  The vast majority of the jobs in those factories go to Americans.

Singling out Chinese capital, which brings with it the greatest willingness to export critical technology to the US, is wholly counterproductive.  The Bill would strip tax credits to American project owners for merely doing business with a Chinese-owned U.S. factory, and would remove tax incentives from the Chinese owned, American companies, that were attracted to the US by existing law – one blind to nationality. 

This provision has to go.  No matter where investors in a manufacturing plant come from, if they create U.S. jobs and reduce imports, it’s a win for America.  Rather than retreat into isolation, Congress should pair reasonable national security safeguards with a welcoming climate for investment. Targeted measures – like vetting technologies for security risks – make sense; sweeping bans do not. The better strategy is to keep encouraging firms to build factories here so more of the clean energy supply chain is on American soil. Every new facility on U.S. shores – even if foreign-owned – means more jobs, know-how, and energy resilience. We shouldn’t undermine that success with overbroad restrictions.

Take the High Road

The IRA’s clean energy incentives passed without a single Republican vote, yet they are now delivering jobs and investment in red and blue districts alike. The House draft shows that fiscal responsibility need not derail that progress. By fixing these three issues, lawmakers can meet budget goals while sustaining our clean energy momentum – a bipartisan win for affordable, reliable, homegrown energy.