US Plans Major Rollback of Clean Energy Incentives

In a significant policy shift, the US House Ways and Means Committee has unveiled a draft legislation titled 'The One, Big, Beautiful Bill,' which proposes sweeping changes to clean energy tax incentives and could have an impact on  global renewable energy markets.

The bill outlines a phased rollback of several major tax credits introduced under President Biden’s Inflation Reduction Act (IRA). Among the most affected are the Tech-Neutral Production Tax Credit (45Y) and the Investment Tax Credit (48E), both of which have been central to the growth of solar, wind, and other renewable technologies. These credits would begin to decline in value from 2029 and be eliminated entirely by 2032. The nuclear production credit (45U) faces a similar phase-out, while the carbon capture credit (45Q) will continue through 2032.

Geothermal incentives would see early reductions and full termination by 2032. Several other credits which includes supporting electric vehicles, clean hydrogen, residential solar (25D), and energy-efficient housing, are proposed to end for new projects starting after December 31, 2025, unless qualify for existing project exemptions under specific criteria.

The bill would also severely limit the transferability of tax credits, a mechanism widely used by developers to raise capital. Under the proposal, credits for electricity generation and clean fuels would no longer be transferable two years after the bill’s enactment, and projects starting after 2027 would not qualify for such benefits.

In a move echoing national security concerns, the bill introduces strict rules disqualifying projects from receiving credits if they involve components sourced from 'Foreign Entities of Concern'(FEOCs), particularly those linked to China or Russia. These restrictions would begin in 2026 and expand further in 2028 to include even minor foreign influence or ownership.

Additionally, the Advanced Manufacturing Credit (45X) for wind components would be cut short by 2028, five years ahead of schedule. Meanwhile, although the Clean Fuels Credit (45Z) would be extended through 2031, it comes with tighter sourcing and emissions conditions.

Another major provision seeks to repeal EPA emissions regulations, fast-track LNG export permits, and claw back over USD 1.5 billion from clean energy programs, including initiatives for port electrification and methane reduction.

As per recent reports, these proposals have sparked significant backlash. More than two dozen House Republicans and several GOP senators from clean energy-supportive states have urged the committee to reconsider the cuts. Industry stakeholders warn the rollback could severely impact residential solar adoption, financing for small developers, and US climate commitments.

The bill signals a dramatic shift in the country’s renewable energy policy. If passed, it could not only reshape the US clean energy trajectory but also disrupt global supply chains and investment flows tied to the American market.