Climate advocates, Democrats, and even some House Republicans who last month had supported a tax package that gutted federal support for clean energy were hoping the Senate would make fixes to protect energy manufacturing and jobs.
But on Monday, Senate Republicans disappointed them, proposing to quickly end most tax breaks for wind and solar power, electric vehicles and other clean energy.
Draft legislation released by the Senate Finance Committee would terminate or scale back most of the major tax incentives for clean energy contained in the Inflation Reduction Act of 2022, the Biden administration’s signature climate law.
The plan would eliminate within six months a $7,500 consumer tax credit for purchases of electric vehicles as well as home energy rebates for things like electric heat pumps and induction stoves. A tax credit for homeowners who install solar panels on rooftops would end within 180 days. A subsidy for making hydrogen fuels would expire this year.
Federal tax credits for wind and solar power, which have been in place for decades but were made more lucrative under the Inflation Reduction Act, would be rapidly phased out. Wind and solar companies could qualify for the full tax break only if they began construction in the next six months. They would receive 60 percent of the tax break if they began construction in 2026, and 20 percent of the tax credit if they began construction in 2027. Projects built after that would get nothing.
That’s a slightly longer runway for renewable energy than is in the House version of the bill, which would have ended those tax breaks almost immediately.
But the phaseout is quicker than many clean-energy supporters had hoped for, and some analysts had warned that pulling support for wind and solar power could cause electricity prices to rise in the coming years.
Senator Mike Crapo, Republican of Idaho and the chairman of the Senate Finance Committee, said in a statement that the tax package “powers the economy” by permanently extending tax cuts for individuals and businesses.
“The legislation also achieves significant savings by slashing Green New Deal spending and targeting waste, fraud and abuse in spending programs while preserving and protecting them for the most vulnerable,” he said.
In the most notable change from the House version, the Senate bill would preserve tax credits for companies that build nuclear reactors, geothermal plants, hydropower dams or battery storage through 2033.
Energy Secretary Chris Wright and other business groups had urged Congress to keep credits for so-called baseload clean electricity sources that are still earlier in development but can operate at all hours, unlike wind and solar power.
Like the House bill, the Senate draft would also make solar leasing companies ineligible for federal tax credits, a change that analysts say could cause the rooftop solar market to sharply decline.
“This is worse than I thought it would be,” said Sam Ricketts, co-founder of S2 Strategies, a clean-energy consulting group. “I was expecting senators who had purportedly supported the clean energy industry to step forward and make a mark here and improve the bill in a material sense. They have not done that.”
Jason Grumet, the chief executive of America’s Clean Power, which represents renewable energy producers, said the Senate bill “would increase household electricity bills and threaten hundreds of thousands of jobs across the country.”
“The most immediate impact will be felt by consumers and companies facing increased energy bills,” Mr. Grumet said. He predicted that “good paying jobs, technology innovation, and AI data centers will be driven overseas.”
When Democrats passed the I.R.A. in 2022, no Republicans voted for it. But nearly 80 percent of the more than $841 billion in announced clean energy investments that followed the law have flowed to Republican districts, from wind farms in Wyoming to battery factories in Georgia.
Such benefits created some tension among Republicans, between fiscal conservatives who want to erase the tax credits and moderates who want to protect the factories and jobs spurred by the credits.
Soon after the House approved its version of the tax package, which gutted clean energy provisions, 13 House Republicans lobbied the Senate to preserve some of the clean energy incentives they had voted to erase.
Senator Chuck Schumer, Democrat of New York and the minority leader, was also making behind-the-scenes pitches to his Republican counterparts to protect the tax credits.
The efforts appear to have led to only minor changes.
Democrats and clean energy groups called the Senate draft a disaster, arguing that the plan would destroy jobs and manufacturing across the United States and drive up energy bills.
The package also would make it virtually impossible for the United States to meet the goal it once had of slashing emissions by at least 50 percent below 2005 levels by 2030, to try to slow global warming.
The Biden administration had hoped to achieve that goal by encouraging clean energy with tax credits and by aggressively cutting pollution from power plants and automobiles. Even then, the country was struggling to meet its climate goals.
But the Trump administration, which favors fossil fuels, is dismantling all those efforts.
“This bill would endanger hundreds of thousands of clean energy jobs and take food out of the mouths of millions of children,” Senator Ron Wyden of Oregon, the leading Democrat on the finance committee, said.
Ari Matusiak, the chief executive of Rewiring America, a nonprofit group founded in 2020 that is dedicated to electrifying homes and businesses, called the package a “profound mistake.” He said in 2023 that more than 3.4 million homes in the U.S. used the energy efficiency home improvement credit along with the residential clean energy credit to make upgrades.
Jackie Wong, senior vice president for climate and energy at the Natural Resources Defense Council, an environmental group, called the package “a 20-pound sledgehammer swung at clean energy.”
She said the version as written “would mean higher energy prices, lost manufacturing jobs, shuttered factories, and a worsening climate crisis.”
Others praised the package.
Pat Vincent-Collawn, the president of the Edison Electric Institute, a utility trade association, said in a statement that the Senate created “more reasonable timelines” for phasing out energy tax credits than the House did.
Like the House bill, the Senate text also adds new restrictions on tax breaks for both power plants and factories that build solar panels, batteries or other low-carbon technologies by disqualifying companies that use components from China.
Many companies had complained that the House language was far too restrictive, since China dominates global supply chains, and urged modifications. While the Senate version makes numerous adjustments, some industry groups said they were still reviewing the new language to see if it was workable.
Ms. Vincent-Collawn praised the Senate modification, calling it “a step in the right direction,” but suggested there was more work to be done.
“We look forward to continuing to work with lawmakers to ensure the final package incorporates practical, pro-growth policies that support our shared goals of strengthening America’s energy security and keeping customer bills as low as possible,” she said.
But some fiscal conservatives in the House have strongly opposed even the most modest extension of tax credits for wind and solar, and it remains unclear where Congress will ultimately land.
Lisa Friedman is a Times reporter who writes about how governments are addressing climate change and the effects of those policies on communities.
Brad Plumer is a Times reporter who covers technology and policy efforts to address global warming.
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