Clean energy tax package undergoes substantial shifts

Democrats made concessions to get Sen. Joe Manchin III on board with spending hundreds of billions of dollars on clean energy incentives in the revamped budget package unveiled late Wednesday, but they were able to preserve versions of key pieces that he’d targeted as concerns.

The clean energy tax credits in the text of a deal between Manchin, D-W.Va., and Senate Majority Leader Charles E. Schumer, D-N.Y., include up to $7,500 for buying electric vehicles and limited “direct pay” credits, which would allow incentives to be doled out in cash to project developers who don’t owe enough in taxes to ordinarily qualify. They also shift sooner to an “industry-neutral” approach to green energy incentives long championed by Senate Finance Chair Ron Wyden.

“This legislation ensures that the market will take the lead, rather than aspirational political agendas or unrealistic goals, in the energy transition that has been ongoing in our country,” Manchin said in a statement ahead of the deal’s formal announcement. He added that the legislation would incentivize technologies for all fuel types including hydrogen, nuclear, renewables, fossil fuels and energy storage to be as clean as possible.

The Manchin-Schumer deal to add climate and tax provisions, worth an estimated $370 billion over a decade, back into the budget reconciliation bill Senate Democrats aim to pass next week was a welcome surprise to much of the caucus. Manchin nixed moving on those issues before the August recess just two weeks ago.

Democrats don’t need Republican votes to advance the package thanks to the filibuster-proof reconciliation process, but they need every member of their caucus in the 50-50 Senate.