Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Politics

Trump Opened a Back Door to Kill Wind and Solar Tax Credits

The Senate told renewables developers they’d have a year to start construction and still claim a tax break. Then came an executive order.

Trump burning a calendar.
Heatmap Illustration/Getty Images

Renewable energy advocates breathed a sigh of relief after a last-minute change to the One Big Beautiful Bill Act stipulated that wind and solar projects would be eligible for tax credits as long as they began construction within the next 12 months.

But the new law left an opening for the Trump administration to cut that window short, and now Trump is moving to do just that. The president signed an executive order on Monday directing the Treasury Department to issue new guidance for the clean electricity tax credits “restricting the use of broad safe harbors unless a substantial portion of a subject facility has been built.”

The broad safe harbors in question have to do with the way the government defines the “beginning of construction,” which, in the realm of federal tax credits, is a term of art. Under the current Treasury guidance, developers must either complete “physical work of a significant nature” on a given project or spend at least 5% of its total cost to prove they have started construction during a given year, and are therefore protected from any subsequent tax law changes.

As my colleague Matthew Zeitlin previously reported, oftentimes something as simple as placing an order for certain pieces of equipment, like transformers or solar trackers, will check the box. Still, companies can’t just buy a bunch of equipment to qualify for the tax credits and then sit on it indefinitely. Their projects must be up and operating within four years, or else they must demonstrate “continuous progress” each year to continue to qualify.

As such, under existing rules and Trump’s new law, wind and solar developers would have 12 months to claim eligibility for the investment or production tax credit, and then at least four years to build the project and connect it to the grid. While a year is a much shorter runway than the open-ended extension to the tax credits granted by the Inflation Reduction Act, it’s a much better deal than the House’s original version of the OBBBA, which would have required projects to start construction within two months and be operating by the end of 2028 to qualify.

Or so it seemed.

The tax credits became a key bargaining chip during the final negotiations on the bill. Senator Lisa Murkowski of Alaska fought to retain the 12-month runway for wind and solar, while members of the House Freedom Caucus sought to kill it. Ultimately, the latter group agreed to vote yes after winning assurances from the president that he would “deal” with the subsidies later.

Last week, as all of this was unfolding, I started to hear rumors that the Treasury guidance regarding “beginning of construction” could be a key tool at the president’s disposal to make good on his promise. Industry groups had urged Congress to codify the existing guidance in the bill, but it was ultimately left out.

When I reached out to David Burton, a partner at Norton Rose Fulbright who specializes in energy tax credits, on Thursday, he was already contemplating Trump’s options to exploit that omission.

Burton told me that Trump’s Treasury department could redefine “beginning of construction” in a number of ways, such as by removing the 5% spending safe harbor or requiring companies to get certain permits in order to demonstrate “significant” physical work. It could also shorten the four-year grace period to bring a project to completion.

But Burton was skeptical that the Treasury Department had the staff or expertise to do the work of rewriting the guidance, let alone that Trump would make this a priority. “Does Treasury really want to spend the next couple of months dealing with this?” he said. “Or would it rather deal with implementing bonus depreciation and other taxpayer-favorable rules in the One Big Beautiful Bill instead of being stuck on this tangent, which will be quite a heavy lift and take some time?”

Just days after signing the bill into law, Trump chose the tangent, directing the Treasury to produce new guidance within 45 days. “It’s going to need every one of those days to come out with thoughtful guidance that can actually be applied by taxpayers,” Burton told me when I called him back on Monday night.

The executive order cites “energy dominance, national security, economic growth, and the fiscal health of the Nation” as reasons to end subsidies for wind and solar. The climate advocacy group Evergreen Action said it would help none of these objectives. “Trump is once again abusing his power in a blatant end-run around Congress — and even his own party,” Lena Moffit, the group’s executive director said in a statement. “He’s directing the government to sabotage the very industries that are lowering utility bills, creating jobs, and securing our energy independence.”

Industry groups were still assessing the implications of the executive order, and the ones I reached out to declined to comment for this story. “Now we’re circling the wagons back up to dig into the details,” one industry representative told me, adding that it was “shocking” that Trump would “seemingly double cross Senate leadership and Thune in particular.”

As everyone waits to see what Treasury officials come up with, developers will be racing to “start construction” as defined by the current rules, Burton said. It would be “quite unusual” if the new guidance were retroactive, he added. Although given Trump’s history, he said, “I guess anything is possible.”

You’re out of free articles.

Subscribe today to experience Heatmap’s expert analysis 
of climate change, clean energy, and sustainability.
To continue reading
Create a free account or sign in to unlock more free articles.
or
Please enter an email address
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Economy

The U.S. Clean Energy Manufacturing Boom Is Sputtering

More than $30 billion of clean energy investments are now on ice since Trump took office, according to new data from Wellesley College’s Big Green Machine.

EV parts being crossed out.
Heatmap Illustration/Getty Images

America’s EV factory building boom is beginning to falter.

Since President Donald Trump took office, at least 34 factories or mineral refineries — totaling more than $30 billion in investment — have been paused, delayed, or canceled, according to a new report from researchers at Wellesley College who track the country’s clean energy manufacturing base.

Keep reading...Show less
Yellow
Politics

AM Briefing: Big Oil's Green Contrarian

On abandoning Antarctica, an EV milestone, and this week’s big earnings

An Oil Giant Makes a Contrarian Bet on Clean Energy
Heatmap Illustration/Getty Images

Current conditions: Heavy rainfall in China has left at least 30 dead as forecasters predicts more days of downpours ahead • Severe thunderstorms are hitting the Midwest as a cold front suppresses the heat dome • The wildfires blazing across Canada are stretching into Alaska, with dozens of fires raging in the foothills of the Brooks Range.


THE TOP FIVE

1. An oil giant bucks the majors by betting on green energy

Last year, oil giants Shell, ExxonMobil, and BP either abandoned their decarbonization goals or dialed down investments in green energy. Last week, the Financial Times also reported that the oil industry had put its effort to establish a net-zero emissions standard on pause as major companies quit the initiative. But at least one oil titan is doubling down on clean energy. On Monday, the Italian oil giant Eni said it expects its green business to rival revenues from oil and gas within a decade.

Keep reading...Show less
Yellow
A heat dome.
Heatmap Illustration/Getty Images

Like a bomb cyclone, a polar vortex, or an atmospheric river, a heat dome is a meteorological phenomenon that feels, well, a little made up. I hadn’t heard the term before I found myself bottled beneath one in the Pacific Northwest in 2021, where I saw leaves and needles brown on living trees. Ultimately, some 1,400 people died from the extreme heat in British Columbia, Washington, and Oregon that summer weekend.

Since that disaster, there have been a number of other high-profile heat dome events in the United States, including this week, over the Midwest and now Eastern and Southeastern parts of the country. On Monday, roughly 150 million people — about half the nation’s population — faced extreme or major heat risks.

Keep reading...Show less