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Senate Axes Green Credits, Pushes Fossil Fuels
Urgent read for founders looking to understand what the senate passed draft contains
Swarnav Pujari
July 02, 2025
Hi there,
Yesterday the Senate passed its version of H.R. 1, the “One Big Beautiful Bill Act.” This is the most sweeping rewrite of federal energy tax policy since the Inflation Reduction Act. The table that follows maps the tax credits or incentives touched by the bill, the section that amends it, and the concrete change founders and project developers will feel on the ground. Please share this with your friends and tell them to call their congress representatives today.
Executive Summary
Clean-energy tax window slams shut. All consumer EV credits, home-efficiency incentives, and most renewable power PTC/ITC support disappear 3-7 years early. Deadlines: Q3 2025 for vehicle credits; mid-2026 for building credits; 2027 for wind/solar PTC & ITC.
Remaining green incentives come with strings. The tech-neutral 45Y/48E credits stay alive for non-wind/solar clean power but add strict “no foreign entity” and ≥65% U.S. content rules. The manufacturing credit (45X) keeps batteries and critical minerals but drops wind components after 2027 and adds a token 2.5% credit for metallurgical coal.
Biofuels win, carbon capture loses. The clean-fuel production credit (45Z) is the lone extension—now through 2029—but usable only with North-American feedstocks and no indirect land-use penalty. By contrast, carbon-capture credits (45Q) are slashed to roughly one-third of IRA levels (max ~$36/t) and the DAC premium is gone.
Fossil sector gets a policy tail wind. IDCs are shielded from the 15% corporate book tax, dyed-diesel users receive a new excise tax refund path, and MLP status is expanded to cover hydrogen, carbon capture and advanced nuclear assets. Simultaneously, the bill mandates new oil, gas, and coal leasing, cuts federal coal royalties to 7% for a decade, and scraps the IRA methane royalty.
Net effect: A decisive pivot from broad cleantech subsidies toward fossil and fuel priorities, while retaining a narrowed set of credits for nuclear, geothermal, hydropower, hydrogen infrastructure, and U.S.-sourced clean fuel manufacturing. Founders now face a compressed timeline to monetize existing IRA incentives and a radically changed capital-stack calculus beyond 2026.
Senate Bill Slashes Clean Energy Tax Credits, Adds New Fossil Perks — What Founders Need to Know
The One Big Beautiful Bill (Senate passed bill) makes sweeping changes to federal energy tax policy. It repeals or scales back many clean energy tax credits introduced or expanded in recent laws, while introducing new incentives favoring fossil fuels and domestic energy production.
We’ve summarized the energy related incentives you need to know about.
Incentive & Section | What The Bill Does | Expanded Notes |
|---|---|---|
70502 Clean Vehicle Credit (New Electric Vehicles, IRC §30D) | Terminates clean vehicle credit | Expires for vehicles acquired after Sep 30, 2025 (moved up from 2032). No credit on new EVs purchased Q4 2025 onward. |
70501 Previously-Owned EV Credit (Used EVs, IRC §25E) | Terminates previously owned clean vehicle credit | Expires for sales after Sep 30, 2025. Credit for used EVs no longer available after that date. |
70503 Commercial Clean Vehicle Credit (IRC §45W) | Terminates commercial clean vehicles credit | Expires for vehicles placed in service after Sep 30, 2025. No credit for commercial EVs after Q3 2025. |
70504 Alt Fuel Refueling Property Credit (EV chargers, IRC §30C) | Terminates alt-fuel refueling property credit | Expires June 30, 2026 for qualifying property. EV charging and alt-fuel stations installed after that date get no credit. |
70505 Energy-Efficient Home Improvement Credit (IRC §25C) | Terminates energy efficient home improvement credit | Expires after 2025 (no credits for improvements placed in service in 2026 or later). |
70506 Residential Clean Energy Credit (Solar etc., IRC §25D) | Terminates residential clean-energy credit | Expires after 2025 for expenditures. The 30% rate is maintained through 2025 with later phase-out removed. |
70507 Energy-Efficient Commercial Building Deduction (IRC §179D) | Terminates commercial bldg. deduction | No deduction for construction begun after June 30, 2026. Ends the incentive for projects starting in 2H 2026 onward. |
70508 New Energy Efficient Home Credit (IRC §45L) | Terminates new energy efficient home credit | Expires for homes placed in service after June 30, 2026. Builders’ credit no longer available beyond mid-2026. |
70509 Cost Recovery for Energy Property (5-year MACRS for renewables) | Ends accelerated cost recovery for energy property | Repeals 5-year depreciation class for renewable energy property (strikes §168(e)(3)(B)(vi)(I)). Renewable assets placed after 2024 depreciate on normal (longer) schedules. |
70510 Zero-Emission Nuclear Production Credit (IRC §45U) | Modifies zero-emission nuclear production credit | Credit (through 2032) is retained, but facilities with any “prohibited foreign entity” involvement are disqualified. (Prevents Chinese/Russian-owned plants from claiming it.) |
70511 Clean Hydrogen Production Credit (IRC §45V) | Terminates clean-hydrogen production credit early | Expires for facilities after 2027 (construction after 2027 not eligible). (Cuts off the hydrogen credit 5 years sooner.) |
70512 Clean Electricity Production Credit (Tech-neutral PTC, IRC §45Y) | Terminates / restricts clean electricity production credit | Wind and solar projects placed after 2027 get no credit (credit only for those in service by 2027). Reported by Politico reverted to start of construction. All projects: no credit if built with material aid from foreign entities (post-2025); and no credit for foreign-owned/influenced companies. (Credit still available to 2032 for other clean tech under domestic control.) |
70513 Clean Electricity Investment Credit (Tech-neutral ITC, IRC §48E) | Terminates / restricts clean electricity investment credit | No ITC for wind/solar projects placed after 2027 (except storage at such facilities is still eligible). Reported by Politico reverted to start of construction. Plus “foreign entity” material support bans after 2025 and no credit if claimant is foreign-influenced (with claw-back for subsequent foreign control). |
70514 Advanced Manufacturing Production Credit (IRC §45X) | Phases-out & restricts advanced manufacturing production credit | Credit phase-out accelerated: e.g. no credit for wind components after 2027; no credit for metallurgical coal after 2029. Other critical minerals phased down 75%-50%-25% in 2031–2033. Foreign entity content disallowed in components. New: Adds metallurgical coal as an eligible product (for steelmaking) at 2.5% credit rate – a new tax credit for domestic coal. Tightens rules: components must have ≥65% U.S.-sourced material cost to qualify. |
70515 Advanced Energy Project Credit (IRC §48C) | Bars further expansion of advanced-energy project credit | Blocks any increase in available credit allocations. (No new funding rounds beyond current $10B; existing credits remain but program won’t expand.) |
70521 Clean Fuel Production Credit (IRC §45Z) | Extends/overhauls clean-fuel production credit | Extended through 2029 (2-year extension). New rules: Feedstocks must be 100% from US/Canada/Mexico (no foreign biomass/oil); no negative-carbon credit (emissions rate floor at 0) except manure-based fuels can go <0; ignore indirect land-use emissions in scoring (helps crop biofuels). Prevents double-claiming with other fuel credits. |
70522 Carbon Oxide Sequestration Credit (IRC §45Q) | Adds foreign-entity limits to carbon-oxide sequestration credit | Credit rates slashed: e.g. base ~$17/ton, up to ~$36/ton with inflation (vs. $85–$180/ton under prior law). DAC no longer has its own higher credit (DAC treated same as point-source; separate DAC paragraph repealed). Foreign-owned entities cannot claim. EOR treated on par with direct storage (no distinction in rates). Overall 45Q substantially weakened. |
70523 Intangible Drilling & Development Costs (IDCs) | Lets intangible drilling & development costs (IDCs) reduce book income for corporate AMT | Fully retains immediate IDC deductions; bill amends corporate AMT so that expensed IDCs reduce book income for AMT, avoiding any minimum tax penalty. (Ensures new 15% book-income tax does not claw back IDC tax benefits.) |
70524 Publicly Traded Partnerships (MLPs) for Energy | Expands PTP “qualifying income” to hydrogen storage, carbon capture, advanced nuclear, hydro, & geothermal | New categories qualify for MLP tax treatment: income from hydrogen storage/transport, CO₂ capture & storage, advanced nuclear power, hydropower, geothermal, and renewable fuels now counts as qualifying income for PTPs. Oil/gas MLP rules unchanged. |
70525 §6435 Dyed-Diesel Payment | Creates refund mechanism | Pays back highway excise tax when taxed diesel is later dyed for off-road use |
50201 Coal Leasing Reforms | Mandates new lease sales | Requires Interior to resume/expand federal coal leasing |
50202 – Federal Coal Royalty | Cuts royalty rate | Caps at 7% (down from 12.5%) through FY 2034; refunds over-payments |
50203 – Known-Recoverable Coal Resources | Speeds lease approval | Streamlines leasing for proven coal areas |
50204 – Authorization to Mine Federal Coal | Eases boundary mining | Fast tracks approvals for adjacent-seam mining |
50101 – On-shore Oil & Gas Leasing | Expands leasing | Directs timely sales on federal land |
50102 – Offshore Oil & Gas Leasing | Expands leasing | Requires additional Gulf/Alaska sales |
50103 – Royalties on Extracted Methane | Repeals methane fee | Removes IRA royalty on vented/flared gas |
50104 – Alaska Oil & Gas Tracts | Opens new tracts | Adds new lease offerings in Alaska |
50105 – NPR-A Leasing | Increases access | Loosens limits in National Petroleum Reserve–Alaska |
50401 – Strategic Petroleum Reserve | Authorizes sales/swaps | Broadens SPR drawdown & repurchase authority |
50403 – “Energy Dominance” Financing | Creates bonding vehicle | Allows Treasury-backed bonds for fossil energy projects |
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