At the end of May, the U.S. House narrowly pushed through a budget and tax bill that took a sledgehammer to clean energy tax credits. These include the Section 45X Advanced Manufacturing Production Tax Credit, which encourages the domestic manufacturing of components for the clean energy supply chain, and the Section 45Y Clean Electricity Production Credit and Section 48E Clean Electricity Investment Credit, which benefit solar and wind projects. The Clean Economy Tracker has collected data about what the House reconciliation bill would mean for Kansas if passed in its current form.
Section 45X
Since 2022, Kansas has welcomed more than $4.6 billion in clean manufacturing investments and created 5,537 associated jobs. Battery manufacturing has accounted for over $4.1 billion and 4,180 jobs. For example, Panasonic is building a $4 billion electric vehicle battery plant in De Soto, marking the biggest economic development project in the state’s history. It will create 4,000 direct manufacturing jobs, pay 31% higher than the median income in the state, and double the area’s manufacturing workforce, creating 7,800 total jobs in the area. It will also pay $49 million in property taxes, contribute more than $166 million to improve local infrastructure, and ultimately have a $2.5 billion annual economic impact. H&T Recharge last year announced a $110 million battery component manufacturing plant in De Soto that will create 180 jobs.
Electric vehicle manufacturing has brought more than $427 million in investment and 185 new jobs to the state. For example, Orange EV employs more than 200 employees in Kansas City and built a $37 million headquarters there that can produce 1,800 terminal trucks per year. Last year, General Motors also announced that it would invest $390 million to retool its factory in Kansas City to make the Chevrolet Bolt EV.
Other investors in Kansas include Johnson Controls, which spent $35 million on a heat pump production facility, creating 782 jobs, and Siemens Gamesa, which spent $50 million to expand its wind turbine plant in Hutchinson, creating 130 jobs.
The House reconciliation bill would phase out the Advanced Manufacturing Production Tax Credit for wind components after 2027 and all other components after 2031. Many of the above facilities would qualify for the manufacturing credit, but may not proceed if it is scaled back, jeopardizing local job creation and community investments.
Photo Courtesy Kansas Department of Commerce
Section 45Y and Section 48E
Kansas currently has 10.82 GW of operating clean power capacity and 0.63 GW under construction. The state also has plans for an additional 0.8 GW of onshore wind, solar, and battery projects. For example, EDP Renewables’ 200 MW Plum Nellie Wind Farm in Cloud County will create 300 construction jobs, add $17 million to the local economy, and pay landowners $33.6 million in property taxes. Invenergy’s 189 MW Pixley Solar Energy Center in Barber County also creates 300 construction jobs, while Sunflower Electric Corporation’s 150 MW Boothill Solar Project in Ford County will add $50 million to the local economy.
The House reconciliation bill would phase out both the Clean Electricity Production Tax Credit and the Clean Electricity Investment Tax Credit after 2028, to be finished before 2032. However, eliminating the Section 45Y and Section 48E tax credits would diminish companies’ ability to build and produce clean energy, jeopardizing these projects and the associated construction and operations jobs. It would also reduce the state’s ability to meet electricity demand, which proves especially problematic as the Kansas Corporation Commission expects the state to face 7.2 GW more energy demand than it can supply by 2043.
Photo Courtesy Invenergy
Kansas and the rest of the country will suffer without these tax credits. If the bill passes, Energy Innovation estimates 830,000 lost jobs nationwide, particularly impacting Republican districts, where 80% of domestic clean energy projects have been built. The national GDP would drop by $1.1 trillion by the decade’s end. Consumers around the country would see energy bills that are 50% higher and would pay $33 billion more per year. NERA Economic Consulting estimates the impact on Kansas by 2032 would be drastic, including 5,250 lost jobs, a $600 million lower GDP, and $420 in lost annual household income, on average, should the clean energy tax credits be revoked.
