In a new insight, Director of Energy and Environmental Policy Shuting Pomerleau weighs Congress’ consideration of policies to slim the 2022 Inflation Reduction Act’s (IRA) energy credits for 2025 reconciliation savings.

Key Points:

• To reduce the cost of the pending reconciliation legislation, lawmakers are considering options to pare down the IRA’s clean energy tax credits –one of which is removing the transferability feature of the credits.

• Transferability allows clean energy developers with limited or no tax liability to monetize the credits by selling directly to an investor for cash at a low transaction cost, which makes the credits accessible for more taxpayers compared to prior to the IRA.

• If lawmakers decide to trim the IRA clean energy credits, they should repeal some of the poorly designed credits entirely rather than eliminate the transferability feature, which would make the credits less efficient.

Read the analysis.