GOP Lawmakers Urge Elimination of Tax Credits for Geothermal Programs

The joint hearing—labeled “Mandates, Meddling, and Mismanagement: The IRA’s Threat to Energy and Medicine”—focused on ending federal tax credits for clean energy programs that were created by the IRA, which became law on Aug. 16, 2022.

The IRA contains a provision called the “production tax credit” (PTC) that allows taxpayers to deduct a percentage of the cost of renewable energy systems from their federal taxes, according to the Environmental Protection Agency (EPA).

Those credits were available to taxable business entities and certain tax-exempt entities eligible for direct payment of tax credits, but on Jan. 1, 2025, the traditional PTC was replaced with the “clean energy production tax credit” and the traditional “investment tax credit” (ITC) was replaced with the “clean electricity investment tax credit,” EPA says.

The tax credits provided by the ITC have been available to geothermal energy systems that use a heat pump, or direct use. In addition to geothermal energy, other clean energy systems eligible for tax credits include energy storage technologies; microgrid controllers; fuel cells; combined heat and power; microturbines, and interconnection costs, according to the EPA.

Ending tax credits for clean energy programs that were created by the IRA is a position strongly supported by Subcommittee on Economic Growth, Energy Policy, and Regulatory Affairs Chairman Eric Burlison (R-Mo.) who told The Driller he is opposed to all tax credits for geothermal-energy programs despite confirming he has a home geothermal unit that has resulted in financial savings. Geothermal units are “a very wise use of money. I think that you can save a lot. In fact, I’ve saved a lot of money because of my geothermal unit,” he said.

Burlison also acknowledged there is an ongoing effort in the U.S. to use geothermal heat to produce electricity, such as at the Cape Station geothermal development project in Utah. The officials overseeing the Cape Station facility say it will begin delivering 500 megawatts of “around-the-clock clean power to the grid” in 2026.

However, while Burlison said geothermal energy “makes a lot of sense” and there is ongoing geothermal research that will likely produce positive results, he opposes the continuation of tax credits for those projects saying, “The IRA funnels money to so called clean energy organizations that would not be able to compete on their own without these subsidies”

“Let the market pick the winners and the losers in this field,” said Burlison, who added, “Let the industry decide to invest, and if geothermal is a wise decision long term, then the money will flow that way.”

“We need to get to a place where it (geothermal) funds itself” and is “not subsidized by the government,” Burlison said.

Democratic members of the two subcommittees are opposed to ending the tax credits, with Subcommittee on Economic Growth, Energy Policy, and Regulatory Affairs Ranking Member Maxwell Frost (D-Fla.) saying the tax credits provided by the IRA have “created economic growth in communities across the nation.”

The provisions within the IRA have created a “boom” within domestic manufacturing, with “more than $522 billion” in investments in 340 clean energy projects in 41 states and Puerto Rico, including in many Republican districts, said Frost.

Furthermore, the IRA had created more than 300,000 good-paying clean energy jobs, many of which do not require four-year degrees, and projections indicate that the IRA could create nearly 850,000 jobs annually across industries, according to Frost. “But despite the enormous economic benefit of the IRA and its various energy tax credits, many Republicans want to repeal those key provisions,” he said.

Lawmakers opposed to the tax credits in the IRA provide several reasons for opposing those credits, including that the energy subsidies in the IRA will increase the federal deficit because they might cost from $936 billion to $1.9 trillion by 2035; that innovation in clean energy technology occurred before the IRA, and will continue after the IRA is gone; that clean energy that has received federal help such as wind and solar energy are unreliable; and that the businesses and jobs created by clean energy program tax credits will disappear once the IRA ends. That is a position supported by Rep. Lauren Boebert (R-Colo.), who said, “The idea the IRA is creating jobs is a myth.” Rather, “The IRA is directing investments to uncompetitive businesses and jobs. It’s literally one side of the government choosing winners and losers,” she said.

Which is a position supported by hearing witness Ben Lieberman, a senior fellow at the Competitive Enterprise Institute, who said the alternative energy companies, especially those producing energy from wind and solar, probably would not survive without the tax credits.

When jobs are created “because of subsidies, that means money and jobs have to be siphoned away from the rest of the economy,” which reveals there are “always two sides of the jobs ledger when government subsidies are involved,” Lieberman said.