The Cost of Biden’s Climate Tax Credits Is Soaring

Fast growth in clean energy and EVs boosts estimates by $428 billion while cutting emissions

By Richard Rubin and Amrith Ramkumar of The WSJ. Excerpts:

"President Biden’s 2022 climate law is driving faster-than-expected growth in electric-vehicle purchases and clean-energy projects, doubling the projected cost to taxpayers while potentially accelerating emissions reductions.  

The Congressional Budget Office this week bumped up its projection of the law’s climate tax credits through fiscal year 2033 by $428 billion. 

The CBO’s increase is driven by a flood of clean-energy factory announcements, proposed environmental regulations that would push more buyers to electric vehicles and rules allowing leased electric cars to qualify for generous tax breaks with fewer restrictions."

"One potential risk is that some companies will try to abuse the system or reap benefits without changing their behavior. Critics say that much of the money for wind and solar-power projects is subsidizing investment that would have happened anyway.

“It’s not like there was no interest in wind, solar, offshore wind. There was, and we had some existing credits. They just put them on steroids,”  said Douglas Holtz-Eakin, a former CBO director who now runs the conservative American Action Forum."

"the CBO said the biggest change came from the Environmental Protection Agency’s proposed rule to tighten vehicle-emissions standards. That would force automakers to increase EV production, driving more sales that will qualify for tax credits worth up to $7,500. 

The impact is even larger than it looks because the CBO only includes half of the effects of any proposed rule. If the EPA completes the rule as expected, the CBO would include the other half in its next update."

"That commercial-vehicle section was projected to cost just $3.6 billion, but the Treasury Department said leased vehicles can qualify for the open-ended commercial-vehicle credits rather than the restrictive regular credits. EV leasing has since expanded."