A heated debate over federal clean-energy subsidies has intensified as Congress attempts to pass President Donald Trump’s “big, beautiful bill” through the budget reconciliation process. Elements of Utah Sen. Mike Lee proposal aimed at repealing what he calls “trillion-dollar Green New Deal giveaways” have been included in the bill.
Trump previously called the subsidies - part of the 2022 Inflation Reduction Act (IRA) - the “green new scam.” The effort to repeal them is driven by mounting concerns from fiscal conservatives and grid‐reliability advocates who assert subsidies have driven up costs, distorted markets, and hindered energy reliability.
On May 13, Senator Lee, Chairman of the Senate Energy and Natural Resources Committee, introduced the Energy Freedom Act, which targets more than 20 subsidies under the IRA.
“The Biden Administration's green energy subsidies have rigged the market, driven up costs, and left our grid more vulnerable,” Lee said. “America's energy policy should be about keeping the lights on and costs low—not lining the pockets of special interests.”
With budget reconciliation allowing legislation to pass the Senate by a simple majority, fiscal conservatives see it as their best shot to undo nearly $1 trillion in long-term energy tax credits embedded in the IRA. By packaging subsidy repeal into a larger budget framework aimed at reducing federal spending and deficits, GOP leaders hope to shift the conversation from climate goals to fiscal responsibility. As Lee put it, “This is how we make government smaller, freer, and work for Americans.”
Democrats, meanwhile, argue that Republicans are abusing reconciliation to gut long-term investments that were designed to modernize the energy grid, reduce emissions, and foster domestic manufacturing. Senate Budget Committee Chairman Sheldon Whitehouse (D-RI) called the repeal efforts “a direct attack on clean energy jobs and U.S. climate leadership,” and warned that a partisan budget bill could destabilize investment in the sector.
Rep. Chip Roy (R‑TX) has pushed back against Whitehouse’ argument.
“The Inflation Reduction Act, better known as the Green New Scam, is providing massive unlimited subsidies to billion dollar corporations and Chinese manufacturers to the detriment of American energy freedom and dominance,” Roy said. “It is responsible for building ineffective, unattractive, and unwanted energy projects enriching paper investors over the objections of the people living in Texas communities I represent.”
From policy think tanks, support has coalesced strongly around aspects of the bill aimed at restoring free market principles. Daren Bakst, senior fellow at the Competitive Enterprise Institute, argues that eliminating the credits is the key to restoring stability to Americans’ energy use.
“The Biden Administration's green energy subsidies have rigged the market, driven up costs, and left our grid more vulnerable. America's energy policy should be about keeping the lights on and costs low—not lining the pockets of special interests.” - Mike Lee R-UT
“The tax credits form a radical central plan to shift our nation to unreliable electricity and to change how Americans use energy, including what cars we drive. Such efforts will devastate Americans, especially the poor,” said Bakst. “Any legislator wanting to get rid of the Green New Deal can only fulfill this objective by getting rid of these tax credits.”
Mario Loyola, with the Heritage Foundation, noted that the IRA’s subsidies have been a problem for some time.
“We are already seeing problems,” Loyola recently said on the Heritage Foundation’s Heritage Explains podcast. “Electricity prices for most Americans have gone up 30% since the beginning of the Biden administration. And the problems with the power grid are not going away; they are getting worse. The biggest problem we’ve identified for that is the so-called Inflation Reduction Act that has tax credits for solar and wind that are truly exorbitant.”
Additionally, the Cato Institute argues that subsidies often funnel money to incumbents and mature technologies like wind and solar, thus misallocating capital and increasing costs.
Complicating the debate are mixed messages on renewable energy subsides coming from the utility sector.
CPS Energy (San Antonio) CEO Rudy Garza warned that eliminating solar and battery tax breaks could drive customer prices upward while jeopardizing grid stability.
“We want to lead the world in artificial intelligence growth and capabilities,” he said. “That means we need to embrace every source of energy that’s out there.”
However, Jacob Williams, CEO of Florida Municipal Power, wrote in a letter to Sen. Lee that eliminating the subsidies “is critical to keeping electricity reliable and affordable in the United States. Most importantly for consumers, it ends the Inflation Reduction Act’s ITC and PTC tax credits that incentivize new, unreliable, higher-cost solar and wind generation—putting existing reliable, lower-cost natural-gas, nuclear and coal generation at economic and operational peril.”
As Congress moves deeper into summer budget negotiations, Republican leaders are expected to soon formally introduce their reconciliation package, with Senate conservatives like Mike Lee and House Freedom Caucus members pushing hard to include full repeal of IRA energy subsidies.
However, the path forward remains uncertain. Senate passage will require near-total Republican unity and the support of moderates wary of political fallout from slashing popular energy incentives. With Democrats uniformly opposed and some Senate Republicans favoring a more incremental rollback, the final package is likely to include partial reductions or caps on select subsidies.
Rep. Roy sent a message to the Senate on potential repercussions if that occurs.
"You backslide one inch on those IRA subsidies and I'm voting against this bill,” he said. “So you do what you want to do in the Senate, House of Lords, have your fun. But if you mess up the Inflation Reduction Act, Green New Scam subsidies, I ain't voting for that bill."
