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Politics

The Biden Administration Is Pitching Trump on Its Final Clean Energy Tax Credits

The technology-neutral investment and production tax credits will save consumers money, the Treasury Department says.

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The Treasury department exterior.
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The Biden administration rolled out the pièce de résistance of its Inflation Reduction Act tax credits on Tuesday, publishing the final rules for its overhaul of the clean energy subsidies at the heart of both the bill and United States alternative energy policy going back decades.

The final rules, which largely match proposed ones published in May, define what sources of energy are eligible for production and investment tax credits, known as 45Y and 48E — not, as before, by writing a list of qualifying energy technologies specified by Congress, but rather by lumping together all zero-emissions energy sources into one big group of winners and then letting developers choose which credit they want to use.

The tax credits cover “wind, solar, hydropower, marine and hydrokinetic, geothermal, nuclear,” according to a Treasury Department release, as well as “certain waste energy recovery property” (heat from buildings), and sets out a process for determining how combustion-dependent sources such as biogas, biomass, and natural gas derived from sources like cow manure could qualify. And unlike the tax credits they replaced, which had fixed time periods they were in effect, the tech neutral credits either begin phasing out in 2032 or when electricity sector greenhouse gas emissions are a quarter of their 2022 level, whichever comes second.

It’s not lost on anyone at Treasury or in the Biden administration that with Trump set to take office again in less than two weeks, these rules will be cast into doubt almost as soon as they’re rolled out. The administration is thus making an effort to cast the tax credits as a money-saving proposition for energy consumers — especially households — and a spur for investment across the country.

On Monday, the power market forecasting firm Aurora Energy Research released an analysis finding that scrapping certain IRA provisions, including the technology neutral credits, would “result in $336 billion less investment, 237 gigawatts less clean energy generation capacity, and at least 97,000 net fewer American jobs by 2040.” But what will likely catch the attention of policymakers is its conclusion that “consumers could see monthly household energy bills rise by an average of 10%, with states like Texas facing an increase of up to 22% compared to a scenario with continued tax credit support.”

Deputy Secretary of the Treasury Wally Adeyemo emphasized America’s energy competitiveness on a call with reporters Monday about the final rules. “The tech neutral ITC and PTC” — that is, investment tax credit and production tax credit — “will drive innovation by creating conditions for new zero-emission technologies to develop over time,” Adeyemo said. These policies together constitute an “energy moon shot,” he added, “because they reward innovation and innovative technologies developed in America to drive down energy costs while creating good paying jobs.”

Whether these arguments will convince to the Trump administration we will soon find out. While some Republicans have lined up in support of Inflation Reduction Act tax credits that have led to jobs in their districts, the incoming economic braintrust has taken a dim view of the bill, and Congress will be on the hunt for any spare dollar they can find to offset the costs of extending the 2017 Tax Cuts and Jobs Act. Trump’s incoming chair of the Council of Economic Advisors, Stephen Miran, has described the IRA, along with other Biden industrial policy initiatives like the Bipartisan Infrastructure Law and the CHIPS Act, as “tilting at windmills to boost politically favored sectors that can survive only with permanent subsidization.” Trump’s designee for the Secretary of Treasury, Scott Bessent, has said the IRA “will severely distort the supply side of the economy by crowding out investment in more productive sectors.”

While specific technologies have long been popular with specific Republicans — see “wind” and “Chuck Grassley” — lumping together the technologies along with a variety of bonuses designed to achieve Democratic policy goals around serving specific communities or workers could put the entire edifice of clean energy support at risk.

A few weeks ago, the Treasury released final rules governing the old tax credits, which were also updated under the IRA. Projects would qualify for 48E and 45Y for projects placed into service this year or later, while those that began construction before the end of the year could still qualify for the old credits. Many analysts think that even if the IRA were adjusted or repealed, an administrative process could be put in place to protect credits for projects that have already started.

In any case, in just 13 days, we’ll start getting answers, or at least putting the theories to the test.

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Spotlight

A Giant Data Center Offers a Permitting Reform Test Case

What would happen to Project Jupiter if the Bipartisan American Affordability and Jobs Act is passed?

Project Jupiter.
Heatmap Illustration/Project Jupiter, Library of Congress

One of the nation’s largest data centers is struggling under permitting woes. So let’s play a game: would the bipartisan permitting bill in Congress make the path easier, or might the federal legislation be irrelevant to large hyperscalers under development today?

Meet Project Jupiter, a mega project in southern New Mexico in Dona Ana County under development by Oracle and OpenAI, with financial backing from SoftBank and political support from the Trump administration for being a part of Stargate, a major Trump administration public-private initiative boosting AI development. Project Jupiter would be one of the largest data centers in the country if completed and currently is expected to run on a microgrid powered by fuel cells converting gas to electricity, which the developers claim will burn much cleaner than a typical off-grid gas turbine power plant.

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And more of the week’s top news around project fights.

The United States.
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1. New England (and Maryland) – The Trump administration is still messing with offshore wind farms, even while trying to pass a permitting reform deal. Examining the court filings reveals why they may feel empowered to do it — and I’m not sure how this ends.

  • Last Friday, in a legal case brought by anti-wind activists, the Justice Department submitted a motion in federal court to send the construction and operations plan for Orsted’s Revolution Wind project in New England back to the Interior Department for more analysis. On Wednesday, the DOJ entered a similar motion in another case challenging the construction and operations plan for U.S. Wind’s MarWin project off the coast of Maryland in a lawsuit brought by the state’s coastal community of Ocean City.
  • Trump’s actions led some to question whether the president was sabotaging the deal, and others to claim the media coverage itself was an attempt to kill it. Going further, supporters of the bipartisan bill claimed the DOJ's motions were precisely why the bill should become law, implying it would guard offshore wind farms against this sort of maneuver.
  • However, for the bill’s backers, it’s worth considering why the Trump administration believes it has the legal authority to do this. It’s also time to ask whether the bill would actually protect these wind farms against this tactic.
  • To answer those questions, you have to rewind. On May 1, 2025, the Interior Department withdrew a Biden solicitor’s opinion instructing the agency to “strike a rational balance” between wind power and fishing interests. This revocation document is technically not in effect at the moment; one year later, a federal court ruled the opinion was potentially illegal as a part of a preliminary injunction on five anti-renewables actions requested by solar and wind trade groups. The Trump administration is contesting that ruling, and the administration has filed a notice of appeal.
  • In August, despite that opinion being in doubt, a federal judge granted Trump permission under the Outer Continental Shelf Lands Act to remand the construction and operations plan for the now-defunct Atlantic Shores offshore wind farm in the waters of New Jersey. U.S. District Judge Jia Cobb specifically wrote that Atlantic Shores failed to demonstrate the federal government had limitations under OSCLA on revisiting these plans and that the injunction from the litigation on appeal “did not prohibit all reevaluation of agency action.”
  • In the recent Revolution and MarWin filings, Trump’s Justice Department argues the construction and operations plans should be remanded under OSCLA without being vacated. The DOJ motions include claims that previous decision documents did not adequately explain impacts to commercial fishing and other industries that use OSCLA waters. It’s not clear if the administration will win these motions.
  • The bipartisan permitting bill would bar the Interior Department and other federal agencies from taking “any new action that would revoke, rescind, withdraw, terminate, suspend, amend, or alter a federal authorization or permit in effect on or after September 16, 2026,” or “any other action to interfere with or prevent the construction or operation at full capacity of a project that has secured all necessary federal authorizations and permits.” The restriction exempts cases where “the agency is required to take such action by order of a court.” As I wrote in our lengthy piece explaining the bill, this provision has a damages component that allows companies impacted by violations to pursue financial compensation.
  • Here’s the billion-dollar question I expect we won’t have answered unless the bill language is enacted and then litigated: Would the court order exception apply to rulings that grant these motions? Or would the developers be able to sue for damages?

2. Columbia County, N.Y. – New York’s renewable energy permitting office has rejected an upstate solar farm on farmland as a House Democrat representing the area joined hands with the Trump administration in publicly railing against the project.

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These seven elections could change state energy policy.

Watching voting.
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No matter how well Democrats do in the House and Senate in November, it’s unlikely to mean anything new on climate policy in Washington, D.C., for as long as Donald Trump remains in the White House.

That is not true when it comes to the other elections this year.

Several states are on the verge of a possible Democratic trifecta, meaning unified control of both chambers of the state legislature and the governor’s mansion. It’s a position that could enable such states to either top off existing climate and energy policies passed in the last decade or to make the first real run at climate legislation in recent history.

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