Sprawling wind farms in Wyoming. A huge solar factory expansion in Georgia. Lithium mines in Nevada. Vacuums that suck carbon from the air in Louisiana.
Over the past three years, companies have made plans to invest more than $843 billion across the United States in projects aimed at reducing planet-warming emissions, driven by lucrative tax credits for clean energy provided by the 2022 Inflation Reduction Act.
But only about $321 billion of that money has actually been spent, with many projects still on the drawing board, according to data made public on Tuesday by the Clean Investment Monitor, a joint project of the Rhodium Group and the Massachusetts Institute of Technology.
Now, much of the rest, about $522 billion, will depend on action playing out on Capitol Hill. Starting on Tuesday, Republicans in Congress will begin a contentious debate over proposals to roll back tax credits for low-carbon energy as they search for ways to pay for a roughly $4 trillion tax cut package favored by President Trump.
A draft bill issued on Monday by Republicans on the House Ways and Means Committee would effectively end most of the Inflation Reduction Act’s tax incentives.
A tax credit for low-carbon electricity sources like wind, solar, nuclear or geothermal power would be phased out over the next few years. Rebates for consumers to buy electric vehicles would mostly disappear by the end of 2025. Tax breaks for domestic factories that make batteries or solar panels would end by 2031 and would contain new restrictions that could make them extremely difficult to access. Incentives for producing hydrogen fuels would end this year.
While shrinking those tax credits could help Republicans save hundreds of billions of dollars, it could also cause companies to abandon plans for new nuclear reactors or battery factories. More than three-quarters of pending investments were planned in Republican-held congressional districts.
“It’s jobs, it’s tax revenue into local communities,” said Ben King, an associate director at the Rhodium Group, a research firm that tracks investment data with M.I.T.’s Center for Energy and Environmental Policy Research. “It does represent a meaningful economic change in some of these places.”
The prospect of repeal has set off a furious lobbying battle in Washington, with energy companies pleading with lawmakers to preserve the tax breaks.
At least three dozen Republicans have asked their colleagues to keep at least some tax credits to protect jobs in their districts and reduce electricity prices. But a nearly equal number of conservative House members are pushing publicly to kill the climate law altogether.
One Republican supporter is Representative Juan Ciscomani of Arizona, whose district includes an electric vehicle factory and several solar projects under construction. “When I looked initially at the energy tax credits and how they were benefiting Arizona, a lot of those projects were underway, the jobs had been created, the ball was more than rolling at that point,” Mr. Ciscomani, who was elected in 2022, said. “So it made sense for me to stand up for that.”
If the tax credits are completely rescinded, it would sharply reduce future demand for electric vehicles, batteries, solar panels and wind turbines, according to projections by the Rhodium Group. The effect would be compounded if the Trump administration moved forward as planned with undoing Biden-era tailpipe pollution limits for cars and trucks, which would have pushed automakers to sell more electric vehicles.
The uncertainty around the tax credits, as well as confusion over Mr. Trump’s tariffs, has led many low-carbon energy companies to put their investment plans on hold.
In the Midwest, Heliene, a solar manufacturer, has paused plans to build a $350 million factory that would produce cells for solar panels, which today mostly come from China. Martin Pochtaruk, Heliene’s chief executive, said it was too risky to finance the plant without clarity on whether Congress would maintain tax credits for domestic energy manufacturing.
“Right now, we see a lot of folks just waiting,” said Jason Grumet, chief executive of the American Clean Power Association, a renewable industry trade group. “People are not canceling things, but they’re also not breaking ground.”
“There is a remarkable tension right now, between probably the best fundamentals for investment in the energy sector that we’ve seen in a generation and the greatest amount of uncertainty that we’ve seen in the generation,” Mr. Grumet said. “That is a collision that all manufacturing now is trying to navigate.”
The Fate of Low-Carbon Electricity
The biggest tax breaks in the Inflation Reduction Act were for companies that build power plants that generate electricity without emitting any planet-warming greenhouse gases. Those credits were set to remain in place for many years to come, until emissions from the U.S. electricity sector fell 75 percent from 2022 levels.
So far, power companies have mainly taken advantage of these credits to propose new solar, wind and battery plants in places like Texas, California, Wyoming and Arizona, since those technologies are ready today. But the credit was designed to also spur a wave of innovative nuclear reactors, advanced geothermal plants, fusion plants, hydroelectric dams and novel types of batteries over the next decade.
The credits have already allowed developers to install solar panels on sites as varied as a carport in New Mexico and a shuttered coal plant in Illinois, said Russ Bates, chief executive of NXTGEN Clean Energy Solutions, a low-carbon energy developer.
Yet those credits may wind down much faster than many companies expected. Under the House bill issued on Monday, the full clean-electricity credits would only apply to new power plants that are “in service” by 2028, which would exclude a large array of wind, solar, nuclear and geothermal plants that are under development but won’t be completed by then. The credits would then phase down and disappear after 2031.
In South Carolina, Gov. Henry McMaster, a Republican, recently warned that, without the tax credits, efforts to expand nuclear power in his state “are dead.”
What Congress decides could reshape the nation’s power grids. If the credits are repealed entirely or severely restricted, one study found, wind and solar installations would likely fall by half over the next decade, while electric utilities would burn more fossil fuels like coal and gas instead. That could lead to higher electricity prices, since renewables are often the quickest and easiest source of power for utilities to build. Emissions would also rise.
Risks for Domestic Supply Chains
Perhaps the most visible effect of the Inflation Reduction Act so far has been a surge of domestic manufacturing. Four years ago, the United States had hardly any capacity to build solar panels, wind turbines or lithium-ion batteries. Most of that happened in China and elsewhere.
That’s quickly changing.
The law gave hefty tax breaks to wind and solar developers if they used components made in the United States. It also doled out additional tax credits for domestic clean-energy factories. In addition, billions of dollars in funding from a 2021 bipartisan infrastructure law allowed the Biden administration to support domestic supply chains, including mining for key elements like lithium.
That has had a major effect in places like Dalton, Ga., once known as the nation’s carpet manufacturing capital. In 2023, Hanwha Qcells, a Korean solar company, announced it would invest $2.5 billion to expand its factory in Dalton, creating the largest solar panel manufacturing facility in the Western Hemisphere.
“It’s a newer technology for us, but it’s one we’re excited to be making right here,” said Jason Mock, president of the Greater Dalton Chamber of Commerce.
If all the solar factories currently planned in the United States get built, the country would have the capacity to produce three times as many solar panel modules as were installed in 2024, according to an analysis by the Rhodium Group and M.I.T. Yet the solar industry is still reliant on countries like China for many underlying components, such as the polysilicon wafers.
It’s a similar story for batteries: The number of U.S. factories that are currently planned would build enough lithium-ion modules and cells to satisfy future demand for electric vehicles, although progress has been much slower in building up domestic supplies of raw ingredients like graphite and lithium.
It’s not clear if those supply chains will survive. In the House draft bill, Republicans proposed sharp new restrictions on the use of materials from China, which could make it difficult for many U.S. factories to qualify.
The bill would also end by next year a $7,500 consumer tax credit for electric cars that is available for buyers of cars largely produced in the United States. That would reduce demand for electric vehicles, which would in turn affect a broad swath of battery manufacturing and demand for critical minerals like lithium.
At least 24 factories have been set up in the United States to produce electric cars that qualify for the credit, including a Ford plant making plug-in hybrids in Louisville, Ky., and a General Motors battery plant in Ohio, according to a study from Atlas Public Policy, a research firm.
Near Savannah, Ga., Hyundai invested in a $7.5 billion factory to build some of its most popular electric vehicle models, which qualify for the consumer credit. Local politicians, who spent years persuading Hyundai to come to the site, are concerned about possible changes to law.
“It’s difficult for a company to invest somewhere and then conditions change,” said Bert Brantley, chief executive of the Savannah Area Chamber of Commerce. “So our take is that some consistency is helpful for companies as they make large investments.”
Still, Mr. Brantley said he hoped that Georgia could continue to be a leader in electric vehicle production regardless of what happens to the tax credits. “This is a long-term play, we hope to be at it for a long time,” he said.
Other Energy Technologies in Limbo
Over the past three years, the federal government has also been supporting a broad array of emerging energy technologies that are less mature, including low-carbon hydrogen fuels that could power trucks, new processes to make cement and steel without emissions, as well as technologies to pull carbon dioxide out of the air.
Many of these projects could potentially qualify for tax breaks in the Inflation Reduction Act. Others have been supported by billions of dollars in grants and loans from the Department of Energy.
In Western Minnesota, DG Fuels plans a $5 billion plant to produce aviation fuel from agricultural waste. In Indiana, Heidelberg Materials, a cement maker, wants to capture the carbon dioxide it emits and bury it underground. In Louisiana, a company is planning to make a low-carbon ammonia that could be used for fertilizer.
New Orleans, which has become a major hub for exporting natural gas, has seen a boom in new industries like carbon capture and hydrogen that could help cut emissions in the future. “We’re becoming very diversified,” said Michael Hecht, president of Greater New Orleans, Inc., the economic development agency for southeast Louisiana.
But as part of the tax bill, House Republicans on the Energy and Commerce committee have proposed ending a tax credit for hydrogen fuels by the end of this year. At the same time, the Trump administration has proposed deep cuts and encouraged widespread layoffs at the Energy Department, which historically has played a leading role in nurturing new technologies.
The debate in Congress over the future of federal energy spending could affect the direction of entire industries.
“Other countries are rapidly scaling up investments in green steel, green cement, low-carbon manufacturing,” said Lindsey Baxter Griffith, chief executive of Clean Tomorrow, a nonprofit organization focused on technological innovation in energy. “Without a clear strategy here, we risk falling behind.”
Brad Plumer is a Times reporter who covers technology and policy efforts to address global warming.
Harry Stevens is a Times reporter and graphics editor covering climate change, energy and the natural world.
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