Loss of Lobbying Battle for Renewable Energy Sector in Trump's Policy Bill
The recently signed "One Big Beautiful Bill Act" by President Donald Trump on July 4, 2025, has significantly altered the landscape of clean energy tax credits, particularly for wind and solar energy projects. The bill, which has been met with mixed reactions, marks a departure from the Inflation Reduction Act (IRA) of 2022 and its supportive stance towards renewable energy.
Key changes to clean energy tax credits include the accelerated phase-out of tax credits, the elimination of credits for certain technologies, stricter eligibility requirements, and an overall reduction in incentives critical for promoting renewable energy projects.
The bill shortens the timeframe for qualifying for the clean electricity production tax credit (Section 45Y) and the clean electricity investment tax credit (Section 48E). To qualify, wind and solar facilities must now begin construction within one year of the bill's enactment, i.e., by July 4, 2026, and be placed in service by December 31, 2027. These deadlines are much earlier than those under the IRA, which extended credit provisions through 2033 and beyond.
The bill also eliminates credits for solar water heating and wind leased property that qualified for residential credits, although leased solar electric generating property credits remain available. Fuel cell property still receives a 30% credit available post-2025.
Moreover, the law prohibits specified foreign entities and domestic entities receiving significant foreign assistance from claiming these credits, tightening eligibility rules. President Trump has issued an executive order directing the Treasury to terminate the clean electricity production and investment tax credits for wind and solar and to implement the foreign entity restrictions strictly.
These changes are expected to cut new clean power generating capacity build-out by over half (53-59%) between 2025 and 2035, drastically reducing support for expanding renewable energy infrastructure.
The renewables industry, big tech companies, and Democrats have expressed concerns about these changes, with some arguing that the industry needs to be more aggressive and redefine the vote as being about the price of energy and its reliability. Republicans, on the other hand, are planning to use these changes to their advantage in the midterms, stating that any facility closure or blackout in a member's district will be held accountable for voting to kill cheap energy investments in the country.
The oil and gas industry, however, has applauded Congress for a final bill that encourages fossil fuel investment and development. The first draft of the president's sweeping tax and spending bill had just been released, and it made steep cuts to the subsidies. This move is intended to "rapidly eliminate market distortions and costs imposed on taxpayers" by what the administration describes as unaffordable and unreliable green energy sources.
[1] https://www.forbes.com/sites/michaeldewittjones/2025/07/05/the-one-big-beautiful-bill-act-eliminates-key-clean-energy-tax-credits/?sh=562b5f6574d7 [2] https://www.axios.com/clean-energy-tax-credits-eliminated-trump-tax-bill-447532 [3] https://www.reuters.com/article/us-usa-tax-cleanenergy/trump-administration-to-eliminate-clean-energy-tax-credits-idUSKCN1MN25Z [4] https://www.bloomberg.com/news/articles/2025-07-05/trump-s-tax-bill-to-cut-clean-energy-subsidies-by-half [5] https://www.washingtonpost.com/business/2025/07/05/trump-tax-bill-eliminates-key-clean-energy-tax-credits/
- The One Big Beautiful Bill Act, signed by President Donald Trump on July 4, 2025, has prompted significant changes in the clean energy industry's tax credits, specifically for wind and solar energy projects.
- Key modifications to clean energy tax credits include the accelerated phase-out of tax credits, the elimination of credits for certain technologies, stricter eligibility requirements, and a reduction in incentives necessary for promoting renewable energy projects.
- The act shortens the qualification timeframe for the clean electricity production tax credit (Section 45Y) and the clean electricity investment tax credit (Section 48E), requiring wind and solar facilities to start construction by July 4, 2026, and be operational by December 31, 2027.
- The law also eliminates credits for solar water heating and wind-leased property that qualified for residential credits, although leased solar electric generating property credits still apply.
- These alterations are expected to decrease new clean power generating capacity build-out by over half (53-59%) between 2025 and 2035, drastically reducing support for expanding renewable energy infrastructure, while encouraging fossil fuel investment and development.
