The clean energy sector is raising red flags after the House of Representatives passed a sweeping budget reconciliation bill on Thursday that significantly scales back clean energy tax credits. Industry leaders warn the move could slow clean energy development, cut jobs, and raise energy prices.

The bill, titled the “One Big Beautiful Bill Act,” rolls back much of the support provided by the Inflation Reduction Act (IRA). It invalidates technology-neutral clean energy production and investment credits for projects that haven’t begun construction within 60 days of the bill's enactment. These tax credits have been crucial in driving clean energy development and private investment across the country.

“This bill threatens U.S. energy development and risks ceding the AI race and tech leadership to China,” said Scott Elias, vice president of policy and market development at CleanCapital, a clean energy investment firm. According to him, it would increase project risks, reduce investor confidence, and cancel previously announced clean energy projects.

For Crux, a marketplace that tracks clean energy tax credits, the bill eliminates incentives for non-nuclear clean energy projects entirely after 2028. While nuclear projects are protected until 2031, other areas like carbon capture, clean fuels, and manufacturing production also face restrictions.

One of the hardest-hit segments is the residential solar market. A tax credit for leased residential and community solar projects was scrapped retroactively for any installations that began after January 1, 2025. Following the news, shares of SunRun, America’s largest residential solar company, plunged almost 40%.

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Industry leaders argue the bill could destabilize the country’s energy future. Heather O’Neill, president and CEO of Advance Energy United, called the legislation a sharp break from bipartisan tax policies that have fueled billions in private clean energy investment.

“If enacted as written, this bill will weaken our power system and send shockwaves through the U.S. economy, by raising electricity prices, killing tens of thousands of jobs, and ceding energy dominance to China,” O’Neill said. She believes it’s not a scalpel but a meat cleaver that will end up hurting everyone. 

The bill also changes provisions around “foreign entities of concern,” accelerating the start date for restrictions to 2026. While some Republicans had suggested easing these rules to help the U.S. clean energy industry, the change could now add further complications for domestic developers.

Environmental nonprofit Ceres criticized the bill as “unworkable” and warned that it would halt progress in critical sectors of the clean economy. “Unless redone, this legislation will raise prices across the country, resulting in less energy and more scarcity,” said Zach Friedman, the group’s senior director of federal policy.

Despite the House vote, hope remains that the Senate will revise the bill. Crux noted that the Senate typically acts as a moderating force, often softening the more aggressive measures proposed by the House.

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“Our view remains unchanged that the Senate will act as a significant moderating force for many of the energy and manufacturing credits, and their changes will be much lighter in touch,” Crux shared.

For now, the clean energy sector is holding its breath, hoping the final version of the Senate reconciliation bill restores some of the stability and support needed to keep America’s clean energy transition on track.

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Source: MSN