ICYMI: Wall Street Journal: Tech Industry Fights to Save Clean-Energy Tax Credits

Washington, D.C. — The Wall Street Journal reported that leading tech and AI companies are fighting for the Senate to preserve clean energy tax credits and loan funding. Tech companies are counting on clean energy to meet their growing power demand, and repealing the tax credits could lead to energy shortages that set the U.S. back in the AI race with China. 

Wall Street Journal: Tech Industry Fights to Save Clean-Energy Tax Credits

The tech industry is fighting to save clean-energy subsidies in the tax-and-spending bill working its way through Congress, a sign that access to power is a priority for the biggest artificial-intelligence companies.

The Data Center Coalition, a group that includes Microsoft, Alphabet’s Google, Amazon.com and Meta Platforms, recently made its pitch in a letter to Senate Majority Leader John Thune (R., S.D.), according to a copy viewed by The Wall Street Journal. The group asked him to preserve tax credits and loan funding that would be aggressively phased out in the version of the bill passed by the House of Representatives last month. 

The bill is fueling industry concerns about rising prices and power shortages if planned investments don’t materialize. But garnering enough Republican support to preserve the tax credits could prove difficult because of the party’s slim majorities in both chambers.

The Data Center Coalition discussed the topic with about 30 Republican senators, including Thom Tillis of North Carolina, Lisa Murkowski of Alaska and John Curtis of Utah, who have expressed support for the tax credits. Other groups that count big tech companies as members, including TechNet and the Clean Energy Buyers Association, have discussed saving the credits with the same lawmakers and have been encouraged by the talks, people familiar with the matter said.

Lawmakers risk disrupting business investment and local economies if they remove tax credits too quickly, Tillis said last week.

“We need to be smart about where capital has been deployed and to minimize the impact to the message we’d send businesses,” he said. 

The House bill would require solar, wind and other projects to begin construction within 60 days of the measure’s enactment to receive tax credits. It would also require the projects to come online by 2028, setting a hard cutoff for any projects placed in service after that year. Under current law, the tax credits phase out over four years, starting in either 2032 or when the U.S. power sector’s greenhouse-gas emissions fall to a quarter of their 2022 levels—whichever comes later.

The tight timelines in the House bill and restrictions on the origin of components of projects would be nearly impossible to meet, industry executives say.

Extending the tax credits will likely be a tough battle with little room for error given pushback from fiscal hawks urging deeper spending reductions in President Trump’s “big, beautiful bill.” The bill also extends expiring tax cuts, lowers Medicaid costs and provides money for border security and national defense. 

Republicans have a 53-47 majority in the Senate and a 220-212 edge in the House, and most members of the party with concerns about particular pieces of the bill have been careful not to draw red lines, considering those tight margins. 

The tech sector’s push adds to the jockeying around the bill. Tech companies are the largest purchasers of clean energy and have committed to slashing carbon emissions. They have come under pressure from some environmentalists for the emissions associated with the data centers they use to train their AI models. Those centers guzzle electricity around the clock and can consume as much power as a city.

“Energy is the pacing challenge of our industry,” Cy McNeill, director of federal energy policy for the Data Center Coalition, said in an interview. 

The cuts would hit many clean-energy ventures that tech companies have directly invested in and are counting on to meet their power demand. Companies such as Microsoft and Google have been leading backers of technologies such as battery storage and geothermal, so funding tweaks could throw a wrench in their future plans. 

Renewables account for most of the near-term electricity generation expected to be added across the U.S. There is a backlog of about four to five years for natural-gas power-plant equipment, making it difficult to build many more of those plants rapidly.

Industry groups have also been emphasizing that energy shortages could set the U.S. back in the AI race with China, a priority for many lawmakers.

Another factor that could affect the tax credits is the recent rift between Trump and Tesla Chief Executive Elon Musk. Trump has threatened to end all subsidies benefiting Musk’s companies. Tesla is a big beneficiary of battery-storage tax credits and received funding over a decade ago from an Energy Department loan office that would undergo sharp funding cuts under the House bill.

Many of Tesla’s customers also claim tax credits for electric vehicles, solar panels and home battery systems. The House bill would get rid of tax credits for most EVs at the end of this year.

The clean-energy subsidies being targeted were passed in Democrats’ 2022 Inflation Reduction Act and fueled tens of billions of dollars of private-sector investment. Many of those projects have been put on pause with their funding at risk. 

Some tech executives now think power could be their biggest challenge for keeping up in the AI race. 

“Folks are quite concerned about basic access to electricity,” said Rich Powell, CEO of the Clean Energy Buyers Association.