Save the energy tax credit. Don’t strengthen Putin’s hands

It’s negotiations 101. When you are about to take someone to the negotiation table, the last thing you want to do is strengthen his hand. You want him to think that he has no choice but to negotiate. You don’t want him to think, “Why am I solving it now, as I’m in a better position?”

As we are trying to resolve and end his vicious invasion of Ukraine, the worst move we can do is raise global energy prices while limiting the exportable energy supply. On the other hand, we will meet the Russian government’s financial resources (the country draws 45% of its revenues from oil and gas), restructure abused troops, weaken their hands, and give European countries the resources they need to end the war.

But that’s exactly what Congress is considering. Some in Washington have argued that historically bipartisan energy investment tax credits, particularly 25D and 48E credits, should be eliminated for solar, nuclear, storage and other technologies. Such a move quickly jacks energy costs and covers the power source, which provides more than 14% of America’s energy.

As a former commander of the US Army in Europe, I faced off against Putin’s general. I read the daily intelligence briefings and gave me some insight into his thinking. He’s vicious, but he does calculate. He knows when he got the gift. If we give him this kind of leverage, we won’t let him settle. We may not take him to the negotiation table at all.

Three years ago I wrote that the Florida bill to eliminate the incentives of rooftop solar would benefit Putin. I’ll stand up to it. However, eliminating the energy investment tax credit would seem negligible by comparing gifts to Putin. This credit led to an explosion of solar investment and energy generation. Since its passing, the US has at least $493 billion in renewable energy investments, with over 85% of which remain private. Thanks to this infusion of private capital, renewables are at a pace that will provide 2,200 terawatts of energy to American consumers by 2035, or about 58% of national energy production.

This growth in energy production covers Putin at two levels. First, it puts downward pressure on the energy price by creating more supplies. Certainly, since Putin’s war spiked in the destruction price of energy that had been deposited in mid-2022, energy prices have collapsed to 2018 levels and have remained almost at levels ever since. What this happened in an era of strong global economic growth is almost unprecedented.

Low energy prices have devastated Putin’s regime. Coupled with the global sanctions regime, flat energy prices have reduced the Kremlin tax revenue by about 20%. This led him to gging countries like Iran and North Korea for military equipment that he couldn’t afford.

Secondly, the shock of solar production gave us the extra oil and natural gas we used to bail out our European allies. Until the Ukrainian invasion, Europe imported 40% of the gas it consumed from Russia. This left Europe on Russian mercy. Russia can literally turn off the lights. However, as the increase in solar power is meeting the domestic needs of the United States, we were able to ship oil and liquefied natural gas, which were not needed in Europe. Since the invasion, the US has seen a surge in exports to Europe. Putin lost leverage.

Eliminating the investment tax credits will bring everything back to him.

The great military theorist Carl von Kroiswitz said, “War is politics by other means.” His point was that the purpose of war was to put himself in the most powerful position for the resolution of the war. The victorious combatant negotiates the expansion of his country’s territory, economic interests, or ideally the surrender of the enemy.

That would be awful irony, if we believed that our politics strengthened Putin’s hands and that he had won the war. If he could demand the greatest territorial expansion or countless other concessions in any negotiation. If his economy (and his bank account) comes out, it won’t get worse due to wear.

That’s what happens when Congress chooses to eliminate solar, storage and nuclear investment tax credits. And we have no one to take responsibility for anything other than ourselves.

Mark Heltling retired as lieutenant general in 2012 after 38 years in the Army. His final command was commanding US Army generals in Europe. He currently lives in central Florida.