Executive Order Accelerates Clean Energy Subsidy Rollback

Action: On July 7, the President issued an Executive Order directing Federal agencies to eliminate taxpayer support for renewable energy sources such as wind and solar, which the Administration described as “unreliable,” “unaffordable,” and dependent on “foreign adversaries.” The new Order directs the Department of the Treasury to enforce strictly the repeal of these credits and restrict the use of safe harbor provisions unless a significant portion of a covered facility has already been built. The Order is intended to implement provisions included in the recently enacted One Big Beautiful Bill Act (OBBBA), which repealed a number of Federal tax credits for clean electricity production and investment.

Trusted Insights for What's Ahead^®

• The Executive Order justifies the Administration's broader agenda to support American energy production. It argues that subsidies in the 2022 Inflation Reduction Act distorted energy markets and that eliminating them will promote greater energy diversity and help lower costs for American consumers.
• In practice, this may encourage greater development of US fossil fuel resources, particularly given other provisions of the OBBBA expanding leasing activities for oil and gas as well as coal.
• The Order directs the Department of Treasury to enforce the clean energy credit rollbacks to production and investment tax credits under sections 45Y and 48E, and the Department of Interior to eliminate any regulations providing preferential treatment for wind and solar facilities within the next 45 days.
• In this way, it may bring this stricter enforcement of the provisions closer to policies in the House version of the bill than to the compromise on phase-out of the credits worked out in the Senate.
• The OBBBA has an exception for wind and solar facilities that begin construction 12 months after enactment, if placed in service after Dec. 31, 2027. This exception accelerates construction timelines for clean energy companies seeking to meet eligibility before the credits expire, potentially prompting earlier start dates for projects to secure incentives. Clean energy industry proponents argue that the new timelines may lead to confusion and uncertainty for firms that previously qualified for the credits, potentially complicating project planning, financing, and execution.
• The Treasury Department is also instructed to implement enhanced Foreign Entity of Concern (FEOC) restrictions as defined in the new law within 45 days. These restrictions—based on ownership thresholds, licensing arrangements, and indirect “material assistance”—may affect companies with global supply chains, potentially influencing eligibility decisions under the new credit regime. The provisions are widely understood to be aimed at limiting the role of Chinese firms in the US clean energy supply chain.