RELEASE: Letter Advises Senate Republicans to Prioritize Energy Affordability and Reliability by Maintaining Support of Innovative Technologies in Budget Reconciliation

Washington, DC, June 25, 2025 — As Congress weighs sweeping changes to federal energy policy through the FY2025 budget reconciliation process, the Breakthrough Institute is calling on Senate Republicans to advance targeted reforms to the Inflation Reduction Act (IRA) that promote energy affordability, reliability, and innovation.

In a letter submitted to key Congressional leaders, the Breakthrough Institute expressed support for the Senate Finance Committee’s proposed amendments to the IRA, which offer a more balanced and forward-looking framework than the House’s “One Big Beautiful Bill”. While the House plan would broadly phase out clean energy tax credits, the Senate’s approach preserves incentives for emerging technologies—such as advanced nuclear, geothermal, and natural gas with carbon capture—while winding down subsidies for mature sectors like wind, solar, and electric vehicles.

“These reforms represent a crucial pivot away from indiscriminate subsidies and toward innovation-driven policy,” the letter explains. “The Senate proposal supports the baseload technologies that will power tomorrow’s grid while delivering significant cost savings for the American taxpayer.”

According to a Breakthrough analysis, the Senate’s draft bill would achieve an estimated $130 billion more in cost savings over the 2025-2035 period relative to the House version, in large part due to an earlier phaseout of clean electricity credits for solar, onshore wind, and offshore wind.

Importantly, the Senate proposal maintains investment tax credits for energy storage—an essential component of modern renewables deployment. The energy storage investment tax credit is technology-neutral, and plays a key role in accelerating the commercialization of novel battery, thermal, and other energy storage technologies.

The Institute also welcomed the Senate’s improvements to rules governing “foreign entities of concern” (FEOC), which previously posed onerous compliance burdens for U.S. companies. The proposed changes would raise ownership and debt thresholds, reducing red tape while preserving national security objectives.

The letter further outlines four key recommendations for Congress to consider in final negotiations:

• Allow regulated utilities to opt out of tax normalization rules, enabling them to immediately benefit from clean energy investment tax credits and accelerate capital-intensive projects.
  

• Incorporate simpler and clearer revisions to FEOC restrictions to avoid unnecessary barriers to domestic investment.
  

• Restore stringency on pollution and land consumption safeguards for clean fuel production tax credits and biomass-fired electricity.
  

• Restore a longer phaseout timeline for critical minerals under the Advanced Manufacturing Production Credit.

“As budget and political constraints narrow the window for action, these recommendations provide a fiscally responsible path forward that aligns U.S. energy policy with long-term innovation and security goals,” the letter concludes.

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David Hong

Washington Director

david@thebreakthrough.org