Repeal of clean energy credits could hurt Wisconsin small businesses

President Donald Trump and congressional Republicans have called for the repeal of a series of clean energy tax credits that were designed to help American households and companies switch to clean energy. Wisconsin small business leaders said those cuts could cost jobs and raise costs for consumers and employers.

A provision of the Inflation Reduction Act enacted by President Joe Biden in 2022 authorized or increased tax credits and deductions for anyone who paid to install solar panels, home or building insulation, heat pumps, or other climate-friendly devices. The law spurred hundreds of billions of dollars in private and public investments in projects in Wisconsin and was forecast to create hundreds of jobs.

Republicans in Congress unanimously opposed the 2022 law and have repeatedly attempted to repeal all or most of it. During the 2024 presidential campaign, Trump vowed to repeal the law.

The White House did not immediately respond to a request for comment for this story.

“For a lot of these business owners, having the support to be able to make these kinds of investments, to make their energy bills go down but also be more energy-efficient, is the net positive, and to see those go away, I think, for many of them will be very distressing,” said Shawn Phetteplace, the national campaigns director for Main Street Alliance, a nonprofit that supports small businesses and local economies.

A lot of small businesses have already planned to use these tax credits and may have already made investments in sustainable infrastructure, he said.

“And if that’s no longer going to be predictable and guaranteed that they’re still going to be around, then I think you’re going to see a real chilling effect of folks making those kinds of capital investments,” he said.

The River Food Pantry, which serves tens of thousands of residents across Dane County, plans to install a 112-kilowatt solar array on the roof of a new facility it’s constructing on Madison’s north side. The solar panels will connect to the pantry’s new all-electric kitchen, and the pantry will also install a geothermal HVAC system. Both of these projects qualify for a 30% tax credit through the IRA.

But because they haven’t yet finished constructing the new facility, they haven’t received the rebate yet, causing concern about whether the funds will be cut.

“The way cuts have been coming from a variety of other government programs that have impacted the pantry, this certainly feels like it could be coming up on the chopping block,” said Ryan Holley, the grants manager for the pantry.

He said a big reason they decided to include the renewable energy initiatives in the new facility was that the tax credits felt certain, unlike a lot of grant funding the food pantry receives. But they’re hopeful if they finish construction by the end of this year, the tax credits may still apply, even if the IRA is cut.

Kevin Kane, the chief economist and co-founder of Green Homeowners United, a West Allis-based business that upgrades homes with eco-friendly improvements, told the Wisconsin Independent that losing the credits for insulation would hurt his business.

“When people have this incentive to be rewarded, if you will, for doing the right thing for both the planet and their house, then this is going to be kind of a disincentive to doing so,” Kane said. He said over the last two years they have had a flurry of requests for insulation and other improvements because of the tax credits.

Angie Kochanski, the director of business development for Arch Solar, which installs solar energy equipment across the state, said the uncertainty over the tax credits is hurting business.

“There’s a big chunk of people that make an investment that depend on that 30% federal tax credit in order to have it pencil out,” she said. “So that would just lower our market of viable purchasers and make the adoption to renewable energy move even slower than it already has, and just in general, it’s putting a hindrance on people’s decision making.”

Kochanski said losing the tax credits would hurt businesses like Arch and cost jobs.

“I’ve been with Arch since 2016, and at that point we were 12 employees, and now we have four business units and are pushing almost 200 employees. So it’s just been wild to see how much growth potential and the opportunity for a green economy and growing jobs is really out there,” she said, noting the industry would definitely lose jobs if the IRA is repealed.

It’s still unclear whether the IRA will be repealed, and if so, whether any of the clean energy provisions will be spared. Kane hopes they will be.

“These tax credits were a nod to those who wanted to do the right thing, you get rewarded for it,” he said. “Those who hoped to do the right thing, you’re sort of encouraged in that direction. It’s the sense of like, we all know that these improvements make sense, but to be validated by saying the public policy world not only agrees with you, but wants to help you do it — it’s powerful. It makes you feel like you’re doing the right thing, and society thanks you for it. But if they’re taken away, that is not just a blow financially, it’s a blow morally to feeling like we as a society are taking on this collective challenge, and it just makes it that much harder, both in spirit and in finances.”