The sweeping congressional bill signed into law last week has sent shockwaves through the clean energy sector, delivering both tax relief and permanent opportunity zones, but also rolling back critical incentives that had fueled a surge in green investment.
The most immediate and controversial change is the reversal of clean energy tax credits that were put in place under the Bipartisan Infrastructure Law of 2021 and the Inflation Reduction Act of 2022 during the Joe Biden administration. According to Solar.com, the business energy tax credit, known as 48E, is now set to expire at the end of 2027. Companies have just one year from the bill’s enactment to begin construction, after which they will have up to four years to complete their projects and claim the full credit.
The consequences of these changes are already rippling through the industry. Bloomberg reports that dozens of planned green factories have been canceled, with many more facing delays or being scaled back. The causes are not solely political; rising construction costs, high interest rates and waning demand for electric vehicles have all contributed to the turmoil. Still, Bloomberg notes that about 9% of the $261 billion invested in green factories since 2021 has now been halted, with most of the disruptions occurring since President Donald Trump returned to office.
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The rollback of subsidies established during the Biden era is compounding these challenges. The new law, signed by President Trump on July 4, accelerates the phaseout of solar and wind energy credits, ending them years earlier than originally planned. Federal tax credits for electric vehicles, which were supposed to last until 2032, will now expire in September.
Bloomberg highlights several high-profile casualties of these shifts, including a major battery factory in Buckeye, Arizona; a wind turbine cable plant in Massachusetts; an EV battery facility in Georgia; and a lithium-ion battery factory in Colorado. All of these projects were canceled early in their development, and many had already encountered difficulties before the latest legislative changes.
Many of the projects affected by the recent tax credits were located in conservative states, leading the original framers of the incentives to believe they would be politically secure. Yet, the sweeping policy changes have upended those assumptions.
Beyond factories, the commercial real estate sector is also feeling the sting. Multifamily housing developments stood to gain significant tax savings per unit by meeting Energy Star or Zero Energy Ready Home program requirements. There were also separate credits for energy-efficient commercial property deductions, as well as incentives for clean energy generation and storage installations and for providing alternative fuel vehicle refueling infrastructure such as EV charging stations.
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