Trump pushes for stricter controls over wind and solar energy through executive action
In a recent development, President Donald Trump has issued an executive order directing the U.S. Treasury Secretary to enforce stricter rules for clean electricity production tax credits (PTCs) and investment tax credits (ITCs) for wind and solar projects. The order aims to prevent any potential circumvention of eligibility for these tax credits.
The order, issued on July 7, 2025, follows the signing into law of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025. The OBBBA accelerates the "beginning of construction" (BOC) deadline for wind and solar projects to July 4, 2026. Projects must start construction by this date to be eligible for the 45Y and 48E tax credits.
The stricter enforcement and tightened deadlines are expected to reduce the window for wind and solar projects to qualify for these lucrative tax credits, potentially discouraging developers and investors from committing capital to new projects that might miss the accelerated deadlines or fail the Foreign Entity of Concern (FEOC) requirements.
The greater scrutiny on foreign involvement and the prohibition of projects with substantial foreign content could limit supply chains and investment options, adding complexity and potentially increasing costs for U.S. clean energy development. As eligibility criteria tighten and uncertainty around Treasury guidance remains, capital investment in electricity and clean fuels production could decline or be delayed while developers reassess project feasibility and compliance strategies.
However, it's important to note that the transferable tax credit market, including manufacturing, nuclear, battery storage, geothermal, carbon sequestration, clean fuels, and hydropower, remains robust. Despite the challenges faced by wind and solar projects, other clean energy sectors continue to attract investment and support.
Hasan Nazar, head of policy at Crux, stated that tax credit policy changes make debt capital and other types of financing even more critical for project success. Developers of wind and solar projects currently in early to mid-stage development may face difficulties convincing financiers that they can complete construction within the new deadlines.
The interconnected nature of clean energy financing is highlighted by Nazar. The budget legislation signed into law on July 4 slashed the eligibility for the 45Y and 48E clean energy tax credits for wind and solar projects, but the advanced manufacturing 45X credit will continue, albeit potentially impacted by the complex FEOC rules introduced in the bill.
In conclusion, the executive order heightens enforcement of new legal limits on wind and solar tax credits, narrowing eligibility and imposing new restrictions on foreign involvement. This is likely to reduce capital investment in U.S. clean energy projects, especially beyond the mid-2026 BOC deadline, by increasing regulatory uncertainty and limiting financial incentives for new developments.
[1] The Hill: Trump tightens tax credit rules for wind, solar projects [2] Bloomberg: Trump's Executive Order Aims to Limit Clean Energy Tax Credits [3] Axios: Trump's new executive order targets wind and solar tax credits [4] Reuters: Trump orders Treasury to tighten rules for clean energy tax credits
- The tightening of rules for renewable energy tax credits, as a result of the executive order, could discourage developers and investors in the renewable energy industry from financing new wind and solar projects.
- The complex policy-and-legislation surrounding clean energy finance, including the stricter requirements for eligibility for renewable energy tax credits, could lead to a decline or delay in capital investment in the sector.
- The interconnected nature of clean energy finance, with various types of tax credits available for different technologies, means that changes in policy towards renewable energy tax credits could have a broader impact on finance for clean fuels production, geothermal, carbon sequestration, and other clean energy sectors.
