The US House of Representatives has narrowly passed a piece of reconciliation legislation, which could significantly impact the clean energy sector in the US by ending Biden-era tax credits earlier than anticipated.
The bill, aligned with President Donald Trump’s reduced tax and increased spending plans, may curtail the clean energy production boom fuelled by subsidies enacted in 2022.
The legislation would advance the expiry date for clean electricity tax credits for wind, solar and battery storage projects to 2028, three years ahead of the previous plan, and impose a 60-day construction commencement deadline following passage of the bill.
The move has led to a sharp decline in clean energy company shares, with industry stakeholders warning of factory closures, job losses and increased electricity costs for US households.
President Trump is set to sign executive orders as early as Friday 23 May 2025 to revitalise the nuclear energy sector. These orders will simplify the regulatory approval process for new reactors and bolster fuel supply chains, as reported by Reuters.
The move comes as the US experiences its first increase in power demand in 20 years, driven by the surge in AI, prompting Trump to declare an energy emergency on his first day in office.
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By GlobalDataThe US Energy Information Administration forecasts that solar, wind and battery storage will comprise 93% of the new electric capacity in the US in 2025.
The bill has been praised by the American Petroleum Institute for maintaining competitive tax policies and promoting oil lease sales.
However, clean energy groups have expressed disappointment, especially given that more two dozen Republican representatives whose districts have benefited from clean energy investments supported the bill.
Solar Energy Manufacturers for America Coalition executive director Michael Carr criticised the decision: “Despite many reassurances that members support domestic manufacturing, a vote for this bill was a vote to close US factories and concede manufacturing jobs of the most important energy resource of the 21st century to China.”
The bill also targets the clean energy supply chain by strengthening restrictions on tax credits for projects involving Chinese companies or materials. Due to China’s dominance in the industry, this move could disqualify most projects from claiming the credits.
Advanced Energy United president Heather O’Neill lamented the bill’s approach: “This isn’t a scalpel, it’s a meat cleaver, and it will hurt us all.”
Solar Energy Industries Association president and CEO Abigail Ross Hopper stated: “If Congress does not change course, this legislation will upend an economic boom in this country that has delivered an historic American manufacturing renaissance, lower electric bills, hundreds of thousands of good-paying jobs, and tens of billions of dollars of investments primarily to states that voted for President Trump.
“This unworkable legislation is willfully ignorant of the fact that deploying solar and storage is the only way the US power grid can meet the demand of American consumers, businesses and innovation. If this bill becomes law, America will effectively surrender the AI race to China and communities nationwide will face blackouts.”
