U.S. House Passes Bill to Cut Clean Energy Credits, Sparking Industry Alarm

On May 22, 2025, the U.S. House of Representatives narrowly approved the "One Big Beautiful Bill Act" (OBBBA) with a 215–214–1 vote. This legislation proposes extending provisions from the 2017 Tax Cuts and Jobs Act and introduces significant reductions in government spending. Notably, it accelerates the expiration of clean energy tax credits established under the 2022 Inflation Reduction Act (IRA), potentially reshaping the trajectory of the U.S. clean energy sector.

The OBBBA advances the expiration of tax incentives for wind, solar, and battery storage projects to 2028, imposing stringent timeline requirements that many projects may struggle to meet. It also removes key benefits such as tax credits for leased residential solar systems and the ability to transfer tax credits, mechanisms that startups and developers have relied upon to fund projects. Additionally, the legislation blocks the 45X manufacturing tax credits for foreign entities of concern, particularly targeting Chinese-owned companies or those affiliated with them.

Analysts from the Rhodium Group estimate that these changes could raise household energy costs by 7%. The rollback of tax credits is expected to result in widespread job losses and factory closures within the clean energy sector. Manufacturers have begun pausing expansion plans due to growing uncertainty, with approximately $8 billion in projects canceled or downsized in early 2025.

Despite earlier assurances, over two dozen Republican lawmakers supported the bill, even though more than half of IRA-backed clean energy projects are located in GOP-held districts. Critics argue that the policy shift cedes clean energy leadership to China and devastates U.S. energy manufacturing progress. Oil interests have welcomed the bill's support for fossil fuel projects and policies.

Following the House vote, clean energy companies experienced significant stock price declines. For instance, the iShares Global Clean Energy ETF (ICLN) saw a decrease, reflecting investor concerns over the sector's future.

The 2022 Inflation Reduction Act had spurred a surge in clean energy production by providing substantial tax credits and incentives, leading to over $321 billion in investments and the creation of thousands of jobs across various states, including Republican strongholds like Texas and Georgia. The current bill's provisions threaten to reverse these gains.

The passage of the OBBBA by the House marks a significant shift in U.S. energy policy, with potential far-reaching consequences for the clean energy sector, the economy, and the nation's position in the global renewable energy market. As the bill moves to the Senate, stakeholders from various sectors are closely monitoring its progress and potential amendments.