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Excise tax is out, foreign sourcing rules are in.
After more than three days of stops and starts on the Senate floor, Congress’ upper chamber finally passed its version of Trump’s One Big Beautiful Bill Act Tuesday morning, sending the tax package back to the House in hopes of delivering it to Trump by the July 4 holiday, as promised.
An amendment brought by Senators Joni Ernst and Chuck Grassley of Iowa and Lisa Murkowski of Alaska that would have more gradually phased down the tax credits for wind and solar rather than abruptly cutting them off was never brought to the floor. Instead, Murkowski struck a deal with the Senate leadership designed to secure her vote that accomplished some of her other priorities, including funding for rural hospitals, while also killing an excise tax on renewables that had only just been stuffed into the bill over the weekend.
The new tax on wind and solar would have driven up development costs by as much as 20% — a prospect that industry groups said would “kill” investment altogether. But even without the tax, the Senate’s bill would gum up the works for clean energy projects across the spectrum due to new phase-out schedules for tax credits and fast-approaching deadlines to meet complex foreign sourcing rules. While more projects will likely be built under this version than the previous one, the basic outcomes haven’t changed: higher energy costs, project delays, lost jobs, and ceding leadership in artificial intelligence and manufacturing to China.
"This bill will hit Americans hard, terminating credits that have helped families lower their energy and transportation costs, shrinking demand for American-made advanced energy technologies, and squeezing new domestic energy production at a time of rising demand and prices,” Heather O’Neill, the CEO and president of the trade group Advanced Energy United, said in a statement Tuesday. “The advanced energy industry will endure, but the downstream effects of these rollbacks and punitive policies will be felt by American families and businesses for years to come.”
Here’s what’s in the final Senate bill.
The final Senate bill bifurcates the previously technology-neutral tax credits for clean electricity into two categories with entirely different rules and timelines — wind and solar versus everything else.
Tax credits for wind and solar farms would end abruptly with no phase-out period, but the bill includes a significant safe harbor for projects that are already under construction or close to breaking ground. As long as a project starts construction within 12 months of the bill’s passage, it will be able to claim the tax credits as originally laid out in the Inflation Reduction Act. All other projects must be “placed in service,” i.e. begin operating, by the start of 2028 to qualify.
That means if Trump signs the bill into law on July 4, wind and solar developers will have until July 4 of 2026 to “start construction.” Otherwise, they will have less than a year and a half to bring their projects online and still qualify for the credits.
Meanwhile, all other sources of zero-emissions electricity, including batteries, advanced nuclear, geothermal, and hydropower, will be able to continue claiming the tax credits for nearly a decade. The credits would start phasing down for projects that start construction in 2034 and terminate in 2036.
While there are some potential wins in the bill for clean energy development, many of the safe harbored projects will still be subject to complex foreign sourcing rules that may prove too much of a burden to meet.
The bill requires that any zero-emissions electricity or advanced manufacturing project that starts construction after December of this year abide by strict new “foreign entities of concern,” or FEOC rules in order to be eligible for tax credits. The rules penalize companies for having financial or material connections to people or businesses that are “owned by, controlled by, or subject to the jurisdiction or direction of” any of four countries — Russia, Iran, North Korea, and most importantly for clean energy technology, China.
As with the text that came out of the Senate Finance committee, the text in the final bill would phase in supply chain restrictions, requiring project developers and manufacturers to use fewer and fewer Chinese-sourced inputs over time. For clean electricity projects starting construction next year, 40% of the value of the materials used in the project must be free of ties to a FEOC. By 2030, the threshold would rise to 60%. Energy storage facilities are subject to a more aggressive timeline and would be required to prove that 55% of the project materials are non-FEOC in 2026, rising to 75% by 2030. Each covered advanced manufacturing technology gets its own specific FEOC benchmarks.
Unlike the text from the Finance Committee, however, the final text includes a clear exception for developers who already have procurement contracts in place prior to the bill’s enactment. If a solar developer has already signed a contract to get its cells from a Chinese company, for example, it could exempt that cost from the calculation. That would make it easier for companies further along in the development process to comply with the eligibility rules.
That said, these materials sourcing rules come on top of strict ownership and licensing rules likely to block more than 100 existing and planned solar and battery factories with partial Chinese ownership or licensing deals with Chinese firms from receiving the tax credits, per a BloombergNEF analysis I reported on previously.
Once again, the details of how any of this will work — and whether it will, in fact, be “workable” — will depend heavily on guidance written by the Treasury department. That not only gives the Trump administration significant discretion over the rules, it also assumes that the Treasury department, which is now severely understaffed after Trump’s efficiency department cleaned house earlier this year, will actually have the bandwidth to write them. Without Treasury guidance, developers may not have the cost certainty they need to continue moving forward on projects.
Up until today, the Senate and House looked poised to destroy the business model for companies like Sunrun that lease rooftop solar installations to homeowners and businesses by cutting them off from the investment tax credit, which can bring down the cost of a solar array by as much as 70%. The final Senate bill, however, got rid of this provision and replaced it with a much more narrow version.
Now, the only “leasing” schemes that are barred from claiming tax credits are those for solar water heaters and small wind installations. Companies that lease solar panels, batteries, fuel cells, and geothermal heating equipment are still eligible. SunRun’s stock jumped nearly 10% on Tuesday.
Other than the new FEOC rules, which will have truly existential consequences for a great many projects, there aren’t many changes to the advanced manufacturing tax credit, or 45X, than in previous versions of the bill. The OBBBA would create a new phase-out schedule for critical mineral producers claiming the tax credit that begins in 2031. Previously, critical minerals were set to be eligible indefinitely. It would also terminate the credit for wind energy components early, in 2028.
One significant change from the Senate Finance text is that the bill would allow vertically integrated companies to stack the tax credit for multiple components.
But perhaps the biggest change, which was introduced last weekend, is a twisted new definition of “critical mineral” that allows metallurgical coal — the type of coal used in steelmaking — to qualify for the tax credit. As my colleague Matthew Zeitlin wrote, most of the metallurgical coal the U.S. produces is exported, meaning this subsidy will mostly help other countries produce cheaper steel.
It looks like the hydrogen industry’s intense lobbying efforts finally paid off: The final Senate bill is the first text we’ve seen since this process began in May that would extend the lifespan of the tax credit for clean hydrogen production. Now, projects that begin construction before January 1, 2028 will still qualify for the credit. This is shorter than the Inflation Reduction Act’s 2033 cut-off, but much longer than the end-of-year cliff earlier versions of the bill would have imposed.
The tax credits for electric vehicles and energy efficiency building improvements would end almost immediately. Consumers will have to purchase or lease a new or used EV before September 30, 2025, in order to benefit. There would be a slightly longer lead time to get an EV charger installed, but that credit (30C) would expire on June 30, 2026.
Meanwhile, energy efficiency upgrades such as installing a heat pump or better-insulated windows and doors would have to be completed by the end of this year in order to qualify. Same goes for self-financed rooftop solar. The tax credit for newly built energy efficiency homes would expire on June 30, 2026.
The bill would make similar changes to the carbon sequestration (45Q) and clean fuels (45Z) tax credits as previous versions, boosting the credit amount for carbon capture projects that do enhanced oil recovery, and extending the clean fuels credit to corn ethanol producers.
The House Rules Committee met on Tuesday afternoon shortly after the Senate vote to deliberate on whether to send it to the House floor, and is still debating as of press time. As of this writing, Rules members Ralph Norman and Chip Roy have said they’ll vote against it.
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On betrayed regulatory promises, copper ‘anxiety,’ and Mercedes’ stalled EV plans
Current conditions: Typhoon Wipha is barrelling through southern China, making its way across the mainland after pummeling Hong Kong with heavy rain • More than 60 million Americans are facing heat alerts as temperatures surge • The unusually warm 21-degree Fahrenheit temperature recorded at Summit Station in Greenland is just a few degrees off a record high.
EPA Administrator Lee ZeldinKevin Lamarque-Pool/Getty Images
The Environmental Protection Agency announced plans on Friday afternoon to shut down its research arm and fire hundreds of biologists, chemists, toxicologists, and other scientists whose work helps determine safe pollution levels for regulations. The announcement comes after months of denials from EPA administrator Lee Zeldin that he planned to close the division in question, the Office of Research and Development, which studies the threat from climate change, toxic chemicals, and air and water pollution on human health, and funds university research programs.
The closure comes as part of deep job cuts at the agency. In a statement on Friday, Zeldin said the more than 500 layoffs — which, combined with voluntary buyouts, will slash the EPA’s workforce by nearly one-quarter compared to January’s numbers — would save taxpayers nearly $750 million. The nation’s biggest chemical manufacturers’ lobby agreed, arguing to NPR that the cuts would “ensure American taxpayer dollars are being used efficiently and effectively.” But environmentalists warned that the cuts would “not only cripple EPA’s ability to do its own research, but also to apply the research of other scientists.”
Shares in non-Chinese producers of graphite surged on Friday after the Trump administration slapped new anti-dumping duties of 93.5% on imports of the key mineral for batteries, the Financial Times reported. Combined with existing tariffs on Chinese materials, the new trade levies total more than 160%, according to the consultancy Benchmark Minerals. In response, the stock price for Australia-listed Syrah Resources, the world’s largest non-Chinese graphite miner and the developer behind a key Inflation Reduction Act-funded project in Louisiana, shot up 22%. Canada’s Nouveau Monde Graphite spiked 26%. The dual-listed Australian-U.S. producer Novonix surged 15%.
Not all of President Donald Trump’s mineral tariffs are causing excitement for U.S. allies. Earlier this month, the White House announced 50% tariffs on copper to begin in August, but it has yet to clarify whether those tariffs will apply to refined metal, semi-refined products, or copper ore. The uncertainty is causing “anxiety,” Máximo Pacheco, the chairman of Chile’s state-owned copper miner, told the FT. As Heatmap’s Matthew Zeitlin wrote when the tariffs were first announced, they have the potential to “provide renewed impetus to expand copper mining in the United States. But tariffs can happen in a matter of months. A copper mine takes years to open — and that’s if investors decide to put the money toward the project in the first place.”
Regulators in Virginia last week ordered electricity and natural gas provider Dominion to lay out a clearer blueprint for meeting the state’s legally-enshrined carbon-free electricity targets. But the State Corporation Commission still accepted the monopoly utility’s plans to build out more fossil fuel generation, Canary Media reported.
The Virginia Clean Economy Act, passed in 2020, requires Dominion to generate 100% of its electricity from carbon-free sources by 2045. The accepted plan runs up to 2039, leaving just six years to sort out the details of decarbonization. The regulators cautioned that “acceptance does not express approval.” While the statement stopped short of calling into question a proposed 944-megawatt gas complex just south of Richmond, Virginia’s capital, the commission said it would debate plans for another roughly 5 gigawatts of gas-burning power plants before approving construction..
British energy giant BP is selling off its U.S. onshore wind business as the Trump administration appears ready to smother the industry. On Friday, New York-based developer LS Power said it agreed to buy BP’s share of 10 wind projects totaling 1,700 megawatts of capacity. As part of the deal, LS Power plans to fold the wind projects into its renewable energy subsidiary, Clearlight Energy, increasing its fleet to 4,300 megawatts.
BP’s exit comes as the Trump administration has vowed to crack down on the expansion of wind and solar power in the U.S. Trump has long personally opposed wind energy, dating back to his unsuccessful fight against turbines erected near his golf course in Scotland before entering politics. Last week, Heatmap’s Jael Holzman reported on a memo from the Department of the Interior calling for political reviews of essentially all solar and wind developments in the U.S. This would at minimum stretch out the already challenging development timeline for projects, a problem especially as developers rush to qualify for federal tax credits.
Mercedes-Benz is pumping the brakes on U.S. production of its EQ line of electric vehicles as the Trump administration winds down federal tax credits to support purchases of battery-powered cars. The German automaker told InsideEVs that, by the start of September, it planned to temporarily pause assembly lines of all variants of its EQE and EQS sedans and SUVs that are either located in the U.S. or producing vehicles bound for the American market. The manufacturer is no longer taking orders from dealers for the cars.
Reviewers had criticized the EQ models for lacking the quality and sophistication of similar gas-powered lines of Mercedes vehicles. Even before Republicans in Congress rolled back the federal government’s landmark $7,500 tax credit for EVs, Mercedes faced trouble finding buyers. Sales of the EQS sedan and EQS SUV were down 52% in the U.S. in 2024 compared to the previous year. China’s biggest electric automakers, meanwhile, are racing to build factories in Brazil, the largest car market in South America.
Like tiny winged Magellans measuring barely an inch in size, the Bogong moth of Australia regularly travels more than 600 miles using celestial navigation, according to a new study in Nature. “The moths really are using a view of the night sky to guide their movements,” a researcher told Euronews.
From the Inflation Reduction Act to the Trump mega-law, here are 20 years of changes in one easy-to-read cheat sheet.
The landmark Republican reconciliation bill, which President Trump signed on July 4, has shattered the tax credits that served as the centerpiece of the country’s clean energy and climate policy.
Starting as soon as October, the law — which Trump has dubbed the One Big Beautiful Bill Act — will cut off incentives for Americans to install solar panels, purchase electric vehicles, or make energy efficiency improvements to their homes. It’s projected to raise household energy costs while increasing America’s carbon emissions by 190 million metric tons a year by 2030, according to the REPEAT Project at Princeton University.
The loss of these incentives will in part offset the continuation of tax cuts that largely benefit wealthy Americans. But the law as a whole won’t come close to paying for those cuts in their entirety. The legislation is expected to swell federal deficits by nearly $3.8 trillion over the next 10 years, according to the Tax Foundation, a nonpartisan think tank. This explosive deficit expansion could make it more difficult for the Federal Reserve to cut interest rates, possibly further constraining energy development.
President Trump has described the law as ending Democrats’ “green new scam,” and conservative lawmakers have celebrated the termination of Biden-era energy programs. The law is particularly devastating for programs encouraging electric vehicle sales, as well as wind and solar energy deployment.
But the act is more complicated than a simple repeal of Democrats’ 2022 Inflation Reduction Act. In one case, Trump’s big law ends a federal energy incentive that has been in place, in some form, since the 1990s. In others, Republicans have tied up existing energy incentives with new restrictions, regulations, and red tape.
Some parts of the IRA have even remained intact. GOP lawmakers opted to preserve Biden’s big expansion of incentives to support nuclear energy and advanced geothermal development. That said, the Trump administration could still gut these tax credits by making them effectively unusable through executive action.
It can be confusing to keep the One Big Beautiful Bill Act’s many changes to federal energy law in your head — even for experts. That’s why Heatmap News is excited to publish this new reference “cheat sheet”on the past, present, and future of federal energy tax credits, compiled by an all-star collection of analysts and researchers.
The summary takes each clean energy-related provision in the U.S. tax code and summarizes how (and whether) it existed in the 2000s and 2010s, how the Inflation Reduction Act changed it, and how the new OBBBA will change it again. It was compiled by Shane Londagin, a policy advisor at the think tank Third Way; Luke Bassett, a former Biden administration official and Senate Energy committee staffer; Avi Zevin, a former Biden official and a partner at the energy law firm Roselle LLP; and researchers at the REPEAT Project, an energy analysis group at Princeton University. (Note that I co-host the podcast Shift Key with Jesse Jenkins, who leads the REPEAT Project.)
You can find the full summary below.
On presidential proclamations, Pentagon pollution, and cancelled transmission
Current conditions: Over 1,000 people have evacuated the region of Seosan in South Korea following its heaviest rainfall since 1904 • Forecasts now point toward the “surprising return” of La Niña this fall • More than 30 million people from Louisiana through the Appalachians are at risk of flash flooding this weekend due to an incoming tropical rainstorm.
The Hugh L. Spurlock Generating Station in Maysville, Kentucky.Jeff Swensen/Getty Images
President Trump on Thursday signed four proclamations allowing certain highly polluting industries to bypass regulations established by the Biden administration. In addition to chemical manufacturers that help produce semiconductors and medical device sterilizers, the proclamations singled out coal-fired power plants and taconite iron ore processing facilities for two years of exemptions. Taconite is a low-grade iron ore primarily mined in the Upper Peninsula of Michigan and northern Minnesota, which is then processed for use in the production of iron and steel. Trump justified the move by arguing that compliance with the current emissions rule for coal-fired power plants raises the “unacceptable risk” of shutdowns, “eliminating thousands of jobs, placing our electrical grid at risk, and threatening broader, harmful economic and energy security effects,” while the iron processing emissions rule “risks forcing shutdowns, reducing domestic production, and undermining the nation’s ability to supply steel for defense, energy, and critical manufacturing.”
The proclamations allow industries to comply with the Environmental Protection Agency standards that predate former President Joe Biden’s tenure. Trump justified the pause by claiming the former administration had mandated compliance with “standards that rely on emissions-control technologies that have not been demonstrated to work.” Researchers have previously found that air pollutants related to coal power plants cause nearly 3,000 attributable deaths per year. Taconite iron ore processing facilities produce harmful acid gases, including hydrogen chloride and hydrogen fluoride, as well as mercury, which have been linked to numerous adverse health effects.
Separately, the House passed Trump’s $9 billion rescissions package late last night, which includes cuts to international climate, energy, and environmental programs like the Clean Technology Fund. Republicans Brian Fitzpatrick of Pennsylvania and Mike Turner of Ohio joined Democrats in objecting to the bill. Trump is expected to sign the package Friday. An additional rescissions package is expected “soon.”
The Pentagon’s 2026 budget will enable the Department of Defense’s planet-warming emissions to grow by an additional 26 megatons, or about the equivalent of 68 gas power plants, a new analysis by the Climate and Community Institute found. The U.S. military was already the single largest institutional polluter in the world due to its “vast global operations — from jet fuel consumption and overseas deployments to domestic base maintenance,” as well as its manufacturing of weapons and vehicles, the think tank notes. With the passage of the One Big Beautiful Bill Act, the Pentagon’s budget will exceed $1 trillion in 2026, representing a 17% increase over 2024. Its emissions, in turn, could grow to the point that if the DOD were its own country, it’d be the 38th largest polluter in the world, producing more CO2 emissions than the Netherlands, Bangladesh, or Venezuela. But “the Pentagon’s true climate impact will almost certainly be worse” than what the researchers found, The Guardian notes, “as the calculation does not include emissions generated from future supplemental funding such as the billions of dollars appropriated separately for military equipment for Israel and Ukraine in recent years.”
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New York’s Public Service Commission decided Thursday against moving forward with a major transmission project that would have had the capacity to deliver at least 4,770 megawatts of offshore wind power to New York City by the early 2030s. The commissioners said they were unable to justify “charging ratepayers for the multibillion-dollar project when feds are stymying” offshore wind, New York Focus’ Colin Kinniburgh reported on Bluesky. “We will continue to press forward regarding infrastructure needs for offshore wind in the future once the federal government resumes leasing and permitting for wind energy generation projects,” PSC chair Rory Christian said.
The canceled Public Policy Transmission Need determination was not specific to a particular offshore wind project, but rather was intended to match New York’s general offshore wind ambitions when it was approved in 2023. But as Heatmap has previously reported, Trump’s crusade against offshore wind has been a “worst case scenario” for the industry since day one, and, per ABC News 10, effectively “eliminates any reason for building new power lines in the first place.”
Microsoft has inked a deal to purchase 4.9 million metric tons of durable carbon dioxide removal from Vaulted Deep, a waste management startup, for an undisclosed amount. The companies boasted that the deal, which runs through 2038, represents “the second-largest carbon removal deal to date.” Vaulted Deep, an Xprize Carbon runner-up, diverts organic waste from landfills and incinerators by injecting it into wells thousands of feet underground using fracking technologies, which it says ensures over 1,000 years of durability, TechCrunch reports. Since Vaulted’s launch in the summer of 2023, the Houston-based company has removed 18,000 metric tons of carbon dioxide. Microsoft, meanwhile, has slipped behind its 2020 goal to remove more carbon from the atmosphere than it generates by the end of the decade due to its rush to build out data centers.
The Environmental Protection Agency’s reorganization and downsizing are set to continue, with the agency offering another round of buyouts and early retirements to staffers in offices it aims to restructure, Politico reports. Among the affected offices are the Office of Enforcement and Compliance Assurance, which the EPA said it seeks to tweak to “better address pollution problems that impact American communities by re-aligning enforcement with the law to deliver economic prosperity and ensure compliance with agency regulations,” as well as the Office of Land and Emergency Management, which works on Superfund and disaster response issues. The Office of Research and Development, the Office of Mission Support, and the Office of the Chief Financial Officer are also affected.
Separately, in a preliminary decision earlier this week, the agency moved to block the state of Colorado from closing its six remaining coal-fired power plants by 2031. Colorado was attempting to codify the retirement dates in its Regional Haze Plan, which is typically used to protect the air quality of federal wilderness and national parks; however, the EPA rejected the proposal, according to CPR News. “We believe that the Clean Air Act does not give anybody the authority to shut down coal generation plants against the owner’s will,” Cyrus Western, the administrator of EPA Region 8, said. Jeremy Nichols, a senior advocate for the Center of Biological Diversity’s environmental health program, claimed the EPA’s move shows the limits of what climate-conscious states can do on their own. “We may have state rules, but they won't be federally approved,” Nichols told CPR.
“There are so many developers and so many projects in so many places of the world that there are examples where either something goes wrong with a project or a developer doesn’t follow best practices. I think those have a lot more staying power in the public perception of renewable energy than the many successful projects that go without a hiccup and don’t bother people.” —Heatmap Pro’s Charlie Clynes, in conversation with Jael Holzman about his new project tracking all of the nation’s county-level restrictions on renewable energy.