WASHINGTON (Reuters) -The latest version of the Senate's massive budget bill that the Senate is racing through for a vote as soon as Saturday deals a fatal blow to the use of tax credits in place since 2005 to spur more wind and solar energy and would set a new tax on those projects for the first time, renewable energy proponents said on Saturday.

Despite hopes earlier in the week that the Senate would rework the budget megabill's language about the future use of Inflation Reduction Act tax credits to extend their use and make them more usable, the new version of the bill introduced by Senate leadership overnight will effectively repeal the incentives for solar and wind immediately.

Instead, it imposes a new tax on wind and solar projects completed after Dec. 31, 2027 if they cannot prove they have not used any Chinese components, while offering a new tax break for coal production.

It also accelerates the phase-out of clean energy manufacturing tax credits that have attracted billions in investments throughout the US, especially in Republican states.

The clean energy industry and environmental groups decried the last-minute changes to the bill, saying that it will raise household energy costs and deprive the US of new, necessary and fast electricity capacity at a time of massive power demand amid a rush of construction of power-hungry data centers to power AI development.

Trump's former advisor and head of DOGE Elon Musk blasted the bill on his social media platform X on Saturday, warning that the bill will "destroy millions of jobs in America" and cause "strategic harm."

"It is utterly insane and destructive. It gives handouts to industries of the past while severely damaging industries of the future," he said.

Energy security organization SAFE said in a statement that the bill, as written, would give an advantage to China, which dominates the clean energy and electric vehicle industries and is racing to outpace the US in AI development by taking away financing for energy storage, mineral processing and power projects.

"Where the original Senate version was a recipe for energy stagnation, this is outright energy surrender-all but guaranteeing Chinese dominance of critical minerals, industrial supply chains, and AI development," said Avery Ash, head of government affairs for SAFE. 

Green energy opponents praised the bill for ending support for renewable energy. Trump on Friday evening called for the end of the credits and said they no longer need support.

"If, as supporters of the IRA are complaining, repealing these subsidies will 'kill' their industry, then maybe it shouldn't exist in the first place," said Tom Pyle, president of the American Energy Alliance.