President Trump’s proposed tax bill, passed by the House of Representatives on May 22, poses a significant threat to the clean energy sector. The bill accelerates the expiration of key tax credits introduced under the 2022 Inflation Reduction Act (IRA), making them harder to access.
Specifically, it shortens the timeframe for developers to begin and complete clean energy projects in order to qualify for Production Tax Credits (PTC) or Investment Tax Credits (ITC). Projects must now begin construction within 60 days of the bill’s enactment and be operational by the end of 2028, compared to the IRA’s 2032 window.
Industry groups and experts have raised alarms over the new constraints, warning of a detrimental impact on ongoing and planned projects. Advanced Energy United emphasized that the tight 60-day construction window and 2028 operational deadline would undermine many initiatives currently in development.
The rollback of clean energy support, combined with a renewed focus on fossil fuels, is expected to slow solar and battery storage deployment, despite recent growth driven by falling costs and supportive tax policies.
Short-Term Rush, Long-Term Uncertainty Threaten Clean Energy Investment and Manufacturing Stability
While the bill may temporarily spur a rush of activity as developers attempt to meet the new deadlines, experts like Gautam Jain from Columbia University warn of a subsequent steep drop in project deployment. Executives, including John Powers of Schneider Electric, advise companies with sustainability goals to act swiftly. However, the broader outlook remains bleak, with Jain cautioning that clean energy deployment will ultimately suffer, potentially raising electricity costs as cheap renewable sources are sidelined.
Trump Tax Bill Jeopardizes Clean Energy Progress with Accelerated Deadlines and Stricter Trade RulesThe proposed legislation adds uncertainty through new restrictions on sourcing components from “foreign entities of concern” (FEOC), particularly China, a major supplier for clean technologies. Companies like RWE are already reevaluating their U.S. investment strategies due to these uncertainties, higher tariffs, and stricter requirements for tax credit eligibility.
Developers also worry that the environment is becoming less conducive to long-term clean energy manufacturing and construction, as key project elements remain unresolved.
Nuclear Energy Gains Favor as Senate Scrutinizes Clean Energy Cuts and Trade Rules
In contrast to clean energy sectors like solar and wind, nuclear power stands to benefit under the bill. Projects have a more lenient deadline of the end of 2028 to qualify for tax credits. Additionally, Trump has directed the U.S. Nuclear Regulatory Commission to streamline regulations and hasten licensing for new reactors.
A $900 million funding initiative for small modular reactor (SMR) technology was also reissued without community engagement requirements, showing a clear policy tilt toward expanding nuclear energy infrastructure.
The bill faces scrutiny in the Senate, where some Republican Senators are expected to oppose its more extreme provisions due to clean energy benefits in their home states. Legal experts like David Sausen suggest the Senate may moderate the bill’s harsher elements.
Industry groups are calling for clearer guidance on the foreign entity rules, which are seen as vague and unworkable. While the bill aims to reduce the federal deficit and boost U.S. manufacturing, experts stress the importance of ensuring it does not inadvertently stifle clean energy progress and investment.
