The Senate-passed version of President Donald Trump's "Big Beautiful Bill" significantly scales back federal clean energy incentives. Renewable energy advocates warn these changes will slow down project development, raise electricity prices, and reduce U.S. competitiveness.
While the final version of the bill stripped out a controversial excise tax on wind and solar projects, a last-minute addition that could have increased development costs by up to 20%, it still phases out tax credits for wind and solar development, and imposes new foreign sourcing rules that could delay or disqualify projects.
"This bill is bad news for America's clean energy future," said Nat Keohane, president of the Center for Climate and Energy Solutions (C2ES). "It represents a significant setback, particularly in wind and solar. They're critical to reliability, to affordability, and this bill would roll back tax incentives that support putting wind and solar generation onto the grid, and it does that just at the time when we need all the electricity we can to meet demand for new data centers, for new factories and so on."
The legislation modifies several key provisions of the 2022 Inflation Reduction Act, which was the most ambitious federal climate law in U.S. history. Under the new policy:
- Tax credits for wind and solar farms end abruptly in mid-2026, with no phase-out, unless projects are already under construction or close to breaking ground. Other sources of zero-emissions electricity, though, like batteries, geothermal and hydropower, would still be able to claim tax credits for a decade.
- Tax credits for home energy upgrades, such as installing a heat pump or adding insulated windows and doors, will expire at the end of 2025.
- Credits for residential rooftop solar, EV purchases, and energy-efficient new homes will expire between late 2025 and mid-2026.
- To qualify for any energy tax credits, companies must comply with strict sourcing rules, meaning they cannot have financial or material ties to designated "foreign entities of concern," including China, Russia, Iran, and North Korea.
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The bill does not include the massive proposed sell-off of public lands led by Senator Mike Lee (R-Utah), who withdrew that amendment after facing backlash across the country.
These rollbacks reflect Trump's long-standing opposition to renewable energy. Simply put, the president is no fan of alternatives like wind and solar to achieve his "energy first" agenda.
Keohane said the timing of the pullback is especially problematic, given the rising demand for electricity.
"Electricity demand has been flat for so long in this country, but now it's really starting to rise," Keohane said, "It's really short-sighted now to say, well, we're not going to put investments and incentives in place for the electricity we know we can get on the grid right away."
According to modeling from C2ES, the Senate-passed bill could lead to 1.7 million jobs lost and $197 billion in lost wages by 2035.
Sen. John Curtis (R-Utah), who helped shape the energy portions of the bill, praised the compromise from the bill's previous versions, saying it offers developers "certainty today to invest in tomorrow," while winding down the tax credits.
Sen. Chuck Grassley (R-Iowa) applauded the bill's support for Iowa's biodiesel industry and the removal of the briefly proposed wind and solar tax, which he called "punitive."
But Democrats in the House Sustainable Energy and Environment Coalition (SEEC) condemned the bill as a "Blackout Bill," warning of higher energy bills and long-term economic consequences.
"This disastrous legislation will cause more frequent and severe blackouts across the country, drive up household electricity bills by more than $400 a year, and kill hundreds of thousands of good-paying jobs," SEEC co-chairs Reps. Doris Matsui, Mike Quigley and Paul Tonko wrote in a statement. "It's not too late to stop the madness."
