As lawmakers continue to debate the spending bill supported by many Republicans and President Donald Trump, some are concerned about the impact it could have – even in red states along the Gulf Coast.
“You could be someone who believes that a lot of the subsidies that were passed in the Inflation Reduction Act shouldn’t have been passed. That’s a legitimate, of course, point of view,” Greg Upton, director of the Center for Energy Studies at Louisiana State University, told Audacy this week. “But, now that they are moving forward with these investments and a lot of planning has happened when you have the current proposed changes of removing some of these subsidies,” things get complicated.
According to Reuters, the proposed tax bill passed by the House of Representatives late last month would “slow the country’s clean energy expansion by accelerating the expiration of key tax credits introduced under the 2022 Inflation Reduction Act (IRA) and making them harder to access,” if eventually passed. Though Trump has signaled that he’ll sign the bill into law, there is still some pushback in the Senate, even among some Republicans.
In particular, Reuters said that the legislation as it currently stands would shorten the window to start and complete new clean energy projects in order to qualify for a production tax credit (PTC) or an investment tax credit (ITC). Developers of those projects would be required to begin construction within 60 days of the bill’s enactment and the project would need to become operational by the end of 2028. In the Inflation Reduction Act, these credits were to be available until 2032.
For Louisiana, a Gulf Coast state that has become a powerhouse for clean energy production, the bill could mean that billions of dollars now flowing into the state are in jeopardy.
“We’ve seen a historic decade of investment this last decade in Louisiana,” said Upton. He said this was “made possible by the kind of shale revolution, which includes the Haynesville shale in northwest Louisiana.”
This investment has been focused on supporting work to create and refine “liquid fuels, chemicals, plastics, fertilizers,” as well as the exporting of natural gas in the form of LNG.
“We ship these products all over the world, so we’re a big exporter,” Upton added. “And we’ve seen over $100 billion of investment in these sectors over the last decade or so.”
There are a few factors at play that have made this work along the Gulf attractive to investors, he explained. These include consumer demand and the benefit of subsidies.
“One of the things that these companies who are investing here increasingly tell us is that that customers all over the world are asking them to document what their carbon intensity [is]… and then now we’re really seeing this next wave of investments that is due to this global demand,” Upton said, adding that “if you do it here, you’re gonna have access to the subsidy… it’s kind of two things number one the customer demand what the customers are saying but also where you have access to the subsidies.”
At this point, companies have already made plans based on the subsidy plan outlined in the Inflation Reduction Act. If those subsidies change, that could make things complicated for companies and investors.
“Of course, some of the companies are saying, ‘Look, I already started the investment in this. I’ve already gone down the path of looking at these projects based upon the information that was there and based upon that the tax regime that was there. And now are we looking at changing that?’”