GOP Tax-Reform Bill Could Sideline NJ’s Clean-Energy Efforts

Tom Johnson | November 9, 2017 | Energy & Environment
Republicans in D.C. are looking to slash or eliminate tax credits that encourage solar and wind power, help offset the price of electric vehicles

Just when clean-energy advocates find an ally in the governor’s office to back their agenda, the federal government is moving to phase out tax incentives that have helped promote solar and wind energy, as well as electric vehicles.

New Jersey Gov.-elect Phil Murphy won a string of endorsements from environmentalists for his clean-energy platform, which included a goal of having 100 percent of the state’s electricity generated by renewable energy by 2050.

But achieving that target could prove difficult if Republicans in Washington, D.C., succeed in passing a tax plan that would eliminate and slash tax credits that encourage the use of solar and wind power, and give consumers more of an incentive to switch to electric vehicles.

The tax-reform plan now being debated by Congress would eliminate a $7,500 tax credit for electric vehicles, reduce a tax credit for wind production by one-third, and eventually phase out an existing tax credit for solar after 2027.

Undermining NJ’s efforts

The actions could complicate the state’s plans to ramp up its reliance on renewable energy, as well undermine efforts to build the infrastructure for electric vehicles and convince motorists to switch to cleaner-running vehicles.

“This plan barely touches huge tax giveaways for fossil fuels,’’ said Ana Unruh Cohen, director of government affairs for the Natural Resources Defense Council. “But it would zero-out cost-effective electric-vehicle tax credits and weaken tax credits for wind and solar that are creating jobs, spurring innovation, meeting consumer demand, and cleaning up the air.’’

In New Jersey, as elsewhere in the Northeast, the biggest source of greenhouse-gas emissions contributing to global warming is the transportation sector. The state’s global-warming reduction law requires an 80 percent decrease in such emissions by 2050, a target that likely will be impossible to meet unless steep cuts from vehicles are achieved, according to clean-energy advocates.

Sen. Bob Smith, the chairman of the Senate Environment and Energy Committee, is planning to put a priority in the next legislative session in January on moving a package of bills that would promote the use of electric vehicles. Losing the $7,500 tax credit for electric vehicles is a blow to that goal.

Rebates for electric vehicles

At the same time, a coalition is urging the state to set aside $300 million in rebates to offer to consumers to get them to buy electric vehicles. Smith has suggested rejoining a regional initiative to reduce carbon pollution from power plants could provide most of the money to fund that effort, albeit over a period of several years.

The reduction in tax incentives for wind production also could hinder New Jersey’s efforts to revive its push to build offshore wind farms off the coast, an initiative that originally was promoted by the Christie administration, until it backed off because of concerns the cost would spike energy bills.

Murphy has set a goal of building 3,500 megawatts of offshore wind capacity, more than triple the 1,100-megawatt target set by the Christie administration. Besides cutting the tax credit, the tax-reform plan would require projects to be completed by 2020, virtually shutting the door on any offshore wind farms in the state from qualifying.

While two developers are seeking to build offshore wind facilities along the coast, the projects are not expected to be operating until about 2023, at the earliest.

“This bill targets offshore wind by cutting the tax credit by a third and speeding up the installation timelines,’’ said Jeff Tittel, director of the New Jersey Sierra Club. “Offshore wind could be a great way to jumpstart our coastal economy.’’