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Why Republicans Need To Kill The IRA’s Green Energy Subsidies

Repealing them could save Congress—and taxpayers—hundreds of billions of dollars.

by Philip Rossetti and David Kemp
May 20, 2025, 10:22 AM
in Energy, Money & Finance, News and Opinion, Politics, Waste and Fraud
Reading Time: 6 mins read
A A
1


House Republicans have recently unveiled their proposed modifications to energy subsidies, which would substantially pare them back and raise $515 billion of revenue. [emphasis, links added]

This is causing considerable heartburn among subsidy defenders, but the truth is that the subsidies are largely high-cost, inefficient, and transfer wealth from taxpayers to the richest Americans.

When Democrats passed the Inflation Reduction Act (IRA) along party lines in 2022, they pledged that the law would cut energy costs and achieve steep reductions in greenhouse gas emissions. These promises have fallen flat.

Soaring cost estimates and diminishing projections of emissions reductions have revealed the IRA’s clean energy subsidies as an ineffective burden on taxpayers.

Their repeal is a straightforward way for Congress to save hundreds of billions of dollars.

The cost of the IRA’s green subsidies, which include tax credits for wind and solar power, carbon capture, electric vehicles, and residential energy efficiency, has ballooned.

Initially projected to cost $270 billion over 10 years, estimates roughly doubled to $536 billion within a year and now stand at $1.2 trillion over 10 years. A Cato Institute analysis of the long-term implications of the law found that subsidies could reach $4.7 trillion by 2050.

In 2030 alone, these subsidies will cost an average of $900 per taxpayer.

These costs might be defensible if the subsidies substantially reduced greenhouse gas emissions, but they haven’t. Early analyses suggested the subsidies’ potential for emissions abatement justified their original, underestimated costs.

In plain English, we are doing worse on emissions with the IRA subsidies than what was expected without the subsidies…

The Rhodium Group, for example, estimated that the IRA would cut U.S. greenhouse gas emissions to 42 percent below 2005 levels (compared to 35 percent without it).

Yet, the latest official data from the U.S. Energy Information Administration finds that energy emissions are higher today than what was projected had the IRA not been enacted.

In plain English, we are doing worse on emissions with the IRA subsidies than what was expected without the subsidies, undermining claims that they contribute to significant decarbonization.

Simply put, the IRA’s subsidies are increasingly proving to be costly and ineffective. For climate hawks who favor sensible government policies to limit carbon emissions, the clean energy subsidies are bad policy.

For skeptics who worry that the costs of government overreach may outweigh the damages of emissions, the subsidies are exceptionally bad policy. With Republicans controlling Congress, repealing these subsidies seems like an easy decision.

However, some members of Congress, whose districts benefit from the subsidies, are hesitant to fully repeal them, fearing economic and job losses. This concern, though, overlooks just how unnecessary and problematic the subsidies are.

Many of the subsidies, for example, don’t fund new energy projects but instead pay for already-planned developments or upgrades to existing renewable facilities. Under this dynamic, the subsidies simply enrich investors while creating minimal additional climate benefits.

Worse, most of the subsidies’ value flows to America’s top one percent of earners, transferring wealth from poorer to richer Americans.

When asked, clean energy developers have been quite candid about the relative importance of these subsidies. A recent survey of renewable energy developers found that a lack of funding was the least likely reason for a wind or solar project to be cancelled, with permitting and grid interconnection difficulties far outweighing financial concerns.

Policymakers worried about clean energy jobs or emissions reductions should prioritize streamlining permitting and grid access over defending ineffective, regressive subsidies.

Congress should stop indefinitely subsidizing clean energy with little concern for the tradeoffs to Americans. Full repeal is the most economically sound choice.

For politicians wary of abrupt policy shifts, though, targeted reforms may still offer a second-best alternative to improve the efficiency of the subsidies, and this seems to be the preference of House Republicans’ budget reconciliation bill.

The R Street Institute estimated that a partial repeal of the IRA subsidies would reduce their cost by $771 billion over the next decade, while still retaining 66 percent of the potential emission benefits.

The Tax Foundation, similarly, estimated the effect of several policy options that could save taxpayers between $200 billion for small changes or up to $850 billion for fully repealing the IRA.

With recent legislative efforts, Congress has an opportunity to turn back the IRA’s ineffective green subsidies and curb wasteful spending.

Read more at RealClearEnergy

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  1. Spurwing Plover says:
    5 months ago

    Quit wasting our taxes on unreliable Wind and Solar Devest in Wind and Solar

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