US House passes GOP budget resolution with major implications for energy policy

House Republicans passed a compromise budget reconciliation resolution meant to unlock US President Donald Trump's policy agenda on immigration, national defense and energy production, setting the stage for a legislative package that includes up to $5.3 trillion in tax cuts over 10 years.

A rule used to advance the House resolution — passed April 10 on a 216-214 vote — also prohibits the lower chamber from considering privileged resolutions to terminate the national emergency Trump declared in announcing market-roiling reciprocal tariffs last week on key US trading partners.

The party-line House vote comes after Senate Republicans on April 5 amended a House-passed budget resolution calling for up to $4.5 trillion in tax cuts over 10 years.

The original House measure, passed in February, directed individual committees to find a minimum of $1.5 trillion in offsetting spending reductions as part of the budget reconciliation process, which avoids the Senate's 60-vote filibuster threshold.

In contrast, the Senate's updated budget resolution only committed to cutting several billion dollars over the 10-year budget window, angering hardline fiscal conservatives in the House. The Senate measure — which gives the tax-writing Senate Finance Committee $1.5 trillion in additional borrowing authority — also assumes no cost to extending the Tax Cuts and Jobs Act of 2017 under a "current policy" approach.

Extending the 2017 tax cuts is otherwise estimated to cost $3.8 trillion over 10 years, meaning a final reconciliation bill could include up to $5.3 trillion in tax cuts without the baseline policy assumption, according to the Committee for a Responsible Federal Budget group.

The Senate's amended budget resolution also authorizes a $5 trillion hike for the US debt limit, compared to a $4 trillion debt limit increase included in the original House resolution. The Congressional Budget Office estimates the US government will reach its debt limit in August or September 2025, although that date could arrive as soon as May or June if this year's federal tax payments come in lower than expected.

Energy sector implications

The April 10 House vote kicks off a budget reconciliation process that holds major implications for the US energy sector. To help offset the tax cuts, Republican lawmakers are considering repealing or scaling back federal clean energy tax credits in President Joe Biden's signature energy and climate law: the Inflation Reduction Act (IRA) of 2022.

The House Ways and Means Committee, which has jurisdiction over the credits, estimates that full repeal of the law's "green energy" tax credits would save about $329 billion over 10 years. That figure could rise to about $800 billion when paired with the repeal of Biden-era vehicle standards that were expected to encourage car buyers to take advantage of a $7,500 federal tax credit on new electric vehicle purchases, according to the committee.

However, wholesale repeal of the IRA tax credits is already facing opposition from a growing faction of congressional Republicans.

In March, a group of 21 House Republicans sent a letter to House Ways and Means Committee Chairman Jason Smith (R-Mo.) calling for "targeted and pragmatic" changes to the tax code.

"Many credits were enacted over the course of a ten-year period, which allowed energy developers to plan with these tax incentives in mind," the group of House members said. "These timelines have been relied upon when it comes to capital allocation, planning, and project commitments, all of which would be jeopardized by premature credit phase outs or additional restrictive mechanisms such as limiting transferability."

Four GOP senators — John Curtis of Utah, Jerry Moran of Kansas, Lisa Murkowski of Alaska and Thom Tillis of North Carolina — echoed that sentiment in an April 9 letter addressed to Senate Majority Leader John Thune.

"Many American companies have made substantial investments in domestic energy production and infrastructure based on the current energy tax framework," the senator said. "A wholesale repeal, or the termination of certain individual credits, would create uncertainty, jeopardizing capital allocation, long-term project planning, and job creation in the energy sector and across our broader economy."

In a more measured approach, US Rep. Julie Fedorchak (R-ND), a former state utility regulator, introduced legislation on April 10 that would phase out federal production and investment tax credits for wind and solar by the end of the decade.

"Wind and solar are no longer emerging technologies — they're mature, market-proven, and widely deployed," said Fedorchak, who was previously president of the National Association of Regulatory Utility Commissioners. "By continuing to incentivize these intermittent energy sources through generous tax credits, we're distorting energy markets and sending the absolute wrong signal to investors."

As part of the reconciliation process, Republicans are also seeking to boost oil and gas production on federal lands, repeal the IRA's fee on waste methane emissions, and significantly curb federal agencies' authority to issue "major" new regulations.