Summary: The Senate bill looks like it has a 2027 “placed in service” cutoff for new solar/wind subsidies. But one last-minute paragraph makes the cutoff worthless—because projects making a recoverable 5% investment in the next 12 months are exempt!
As of the evening of June 30, the Senate was set to pass a bill that would cut off subsidies for new solar and wind projects not “placed in service” by the end of 2027. This would have been a huge victory for electricity in America, nevermind the hundreds of billions of future dollars saved by the government.
From my private conversations with Senators, many of them thought they were signing a bill with the 2027 “placed in service” cutoff. But in fact, a last-minute paragraph inserted by lobbyists and agreed to by leadership totally destroys the “placed in service” language.
What’s in the Bill?
The One Big Beautiful Bill Act is a comprehensive piece of legislation encompassing taxes, healthcare, immigration, defense, and energy policy. Key energy-related provisions include:
- Fossil Fuel Incentives and Coal Tax Credit: The bill introduces a new tax credit for metallurgical coal used in steelmaking, a move critics argue could funnel hundreds of millions in subsidies to a struggling industry. It also expands oil, gas, and coal leasing on federal lands, projected to generate $15 billion in new revenue, according to Senate Republicans. Sen. John Barrasso (R-WY) championed this as a step toward making America an “energy superpower” again.
- Repeal of Clean Energy Tax Credits: Most tax credits for wind, solar, and other renewable energy projects under the 2022 Inflation Reduction Act (IRA) are phased out for projects not in service by the end of 2027. Consumer incentives, such as the $7,500 electric vehicle (EV) tax credit and credits for energy-efficient home improvements (e.g., solar panels, heat pumps), are eliminated after December 31, 2025.
- Preservation of Select Clean Energy Provisions: Some tax credits for hydrogen, nuclear, geothermal, hydropower, and carbon capture technologies were retained, a concession praised by conservative clean energy groups like Citizens for Responsible Energy Solutions. However, these are narrow compared to the broad rollback of wind and solar incentives.
- Removal of Proposed Wind and Solar Excise Tax: A last-minute excise tax on wind and solar projects, which could have raised costs by 10–20%, was struck from the final bill after pushback from Sens. Joni Ernst (R-IA), Chuck Grassley (R-IA), and Lisa Murkowski (R-AK). This was a modest win for renewables, though the industry remains under pressure.
- Other Provisions: The bill includes pro-gun measures (e.g., eliminating the $200 excise tax on suppressors), increased border security funding, Medicaid work requirements, and a $40,000 SALT deduction cap through 2029. It also reinstates full expensing for capital investments and R&D, benefiting energy-intensive industries like manufacturing and resource extraction.
Fate of Renewable Energy Tax Incentives and Subsidies
The renewable energy sector took a significant hit with the bill’s passage. The IRA’s clean energy tax credits, which spurred countless wind, solar, and battery projects since 2022, are effectively gutted for projects not operational by 2027. This accelerated phaseout, pushed by President Trump and Senate Majority Leader John Thune (R-SD), replaces a slower sunset favored by moderate Republicans. Consumer-facing incentives, including tax credits for EV purchases and home solar installations, will end abruptly after 2025, threatening growth in these markets.The removal of the proposed excise tax on wind and solar was a small reprieve, but industry advocates argue it’s insufficient. The Solar Energy Industries Association (SEIA) noted that while the tax’s elimination helped, the overall legislation remains “harmful” to renewables. Research firm Energy Innovation projects a loss of 300 gigawatts of electricity capacity, exacerbating power shortages amid rising demand from data centers and AI. Climate advocacy group Evergreen Action warned of “the largest spike in utility bills in American history,” with C2ES estimating 2.3 million job losses tied to the renewable sector by 2030.Major Issues and Controversies
- Energy Price Hikes and Power Shortages: Critics, including business and labor groups, warn that slashing renewable incentives will stifle wind and solar growth, key to meeting soaring energy demand. The bill’s focus on fossil fuels, coupled with the coal tax credit, has drawn ire for prioritizing high-carbon energy over cleaner alternatives. Elon Musk, a Trump ally and Tesla CEO, criticized the renewable tax cuts, reflecting broader industry discontent.
- Economic and Job Impacts: The rollback of clean energy credits threatens states like Georgia, which saw massive investment in EV and solar manufacturing under the IRA. Companies like Solarcycle have paused expansion plans, citing uncertainty. Meanwhile, fossil fuel states like Wyoming stand to benefit from expanded leasing, creating a regional divide.
- Deficit Concerns: The bill’s $3.3 trillion deficit increase, despite $1.2 trillion in spending cuts (e.g., to Medicaid and food aid), has drawn criticism from fiscal conservatives like Sens. Susan Collins (R-ME), Thom Tillis (R-NC), and Rand Paul (R-KY), who voted against it. The Club for Growth, however, praised the bill for averting a $4.5 trillion tax hike and ending “green energy subsidies.”
- Environmental Backlash: Environmental groups argue the bill derails Biden-era climate goals, with the coal tax credit and relaxed environmental protections (allowing polluters to pay fees to bypass rules) seen as steps backward. Appalachian Voices called it a giveaway to “billionaires and polluters.”
- Political Tightrope: The bill’s passage required delicate negotiations, with Sens. Murkowski, Ernst, and Grassley securing concessions for their renewable-heavy states. However, its narrow approval—opposed by all Democrats and three Republicans—underscores its divisive nature. The House must now approve the Senate’s version, with a potential signing by President Trump targeted for July 4.
