Recent analyses underscore the critical importance of maintaining federal clean energy tax incentives to ensure affordable electricity, stimulate economic growth, and meet the surging energy demands driven by technological advancements.
A study by The Brattle Group, commissioned by ConservAmerica, projects a 50% increase in U.S. electricity demand by 2035, largely due to the expansion of artificial intelligence, manufacturing reshoring, and industrial electrification. To meet this unprecedented demand, a diverse energy portfolio is essential. However, the study warns that eliminating the Clean Electricity Production Tax Credit (§45Y) and Investment Tax Credit (§48E) would halve the anticipated growth in solar and wind capacity, leading to a $520 billion reduction in clean energy investments. This shortfall would not only elevate electricity costs but also impede economic progress and result in the loss of approximately 3.8 million job-years, particularly affecting rural communities where many of these projects are located.
Complementing these findings, research by NERA Economic Consulting for the Clean Energy Buyers Association (CEBA) indicates that repealing these tax incentives would raise average U.S. residential electricity prices by nearly 7% by 2026, equating to an average yearly increase of more than $110 per household. Businesses would face even steeper hikes, with electricity bills increasing by about 10%, costs likely to be passed on to consumers through higher prices for goods and services. The absence of these incentives would also result in 167 gigawatts less new clean energy capacity by 2029, at a time when robust generation is critical to supporting 21st-century industries and maintaining U.S. competitiveness.
The urgency of preserving these tax incentives is further highlighted by the rapid expansion of data centers, driven by AI and other data-intensive technologies. Data centers currently account for about 4% of U.S. electricity consumption, a figure projected to rise significantly by 2030. Without the cost reductions facilitated by clean energy tax credits, the increased demand from these centers could lead to higher electricity prices for all consumers and strain the existing power infrastructure.
Maintaining federal clean energy tax incentives is not merely an environmental imperative but an economic necessity. These incentives play a pivotal role in controlling electricity costs, fostering job creation, and ensuring that the U.S. energy infrastructure can meet future demands. Policymakers must recognize that eliminating these incentives would have far-reaching negative consequences for consumers, businesses, and the nation’s economic vitality.