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On Saturday, June 28, the US Senate voted by a narrow margin, 51 to 49, to begin debate on the Finance Committee’s budget reconciliation bill, which contains measures that could have a profound impact on the future of renewable energy in the country.
The updated bill, dubbed by President Donald Trump as the “One Big, Beautiful Bill,” effectively seeks to repeal the Inflation Reduction Act of 2022 (IRA) by eliminating tax incentives for solar and wind development.
Additionally, the new bill introduces a one-off tax on future solar activity, raising concerns among operators.
Incentive Cuts and New Solar Tax
Among the most controversial measures in the bill is the removal of the investment tax credit (ITC) for the purchase of electric vehicles (EVs) starting September 30, 2025, while the ITC for charging stations will be eliminated starting June 2026.
But the most controversial novelty is the introduction of a 50% tax on solar projects that, starting today and until 2035, use components from a Foreign Entity of Concern (FEOC) — a term that in American political jargon includes, among others, China.
In practice, if a solar plant begins construction using Chinese panels or components, the project promoter will find himself paying 50% taxes on those costs, once the current ITC and PTC incentives for industrial-scale projects expire.
Center for a Prosperous America Supports New Tax
The Center for a Prosperous America (CPA) — a bipartisan NGO that promotes protectionist policies for American manufacturing — has been a strong supporter of the FEOC tax.
The organization argues that the measure would not only protect U.S. national security, but would also help relocate solar component manufacturing to America.
CPA President Jon Toomey said: “This extraordinary tax directly forces developers to source domestically produced components, rather than importing Chinese products. This protects our energy infrastructure from cyber threats, strengthens national security, and supports American jobs.”
Strong Opposition From Renewable Energy Industry
The response from industry players and associations was immediate, calling the proposed legislation an unprecedented threat to the growth of the renewable energy sector.
American Clean Power (ACP) CEO Jason Grumet slammed the measure, saying, “The Senate has proposed a punitive tax increase that targets the fastest-growing and most dynamic energy sectors in the country.”
ACP represents a broad spectrum of players, from energy storage to utility-scale solar to clean hydrogen to transmission systems. All of these sectors are potentially at risk from the new bill.
Some Exemptions Remain, But Uncertainty Stalls Investment
Despite the potentially devastating impact on the solar and wind sectors, the bill retains one significant exception: energy storage will not be subject to the early reduction of the Investment Tax Credit (ITC), which will remain in effect until 2033.
However, this provision alone is not seen as sufficient to offset the disruptive effect the law could have on the entire renewables ecosystem.
According to the American Clean Power Association (ACP), the new measures in the draft would have the immediate effect of freezing hundreds of billions of dollars of investment, reducing the nation’s energy production, and increasing electric bills for American households.
In a statement on June 28, Grumet added: “These new taxes will stall projects that are already well underway, jeopardize the nation’s energy security, and penalize rural communities that were the primary beneficiaries of clean energy investments.”
Amendments Pending to Save Incentives, Stop FEOC
The debate over the measure was reignited on Monday, June 30, with the introduction of a joint amendment by three Republican senators: Joni Ernst (Iowa), Lisa Murkowski (Alaska), and Chuck Grassley (Iowa).
The proposed amendment would tie eligibility for tax incentives (ITCs) to the date a project begins construction, rather than the date it goes into operation, providing developers with more certainty.
The same amendment also proposes to completely abolish the FEOC tax for future projects, seeking a compromise that protects U.S. manufacturing without destroying the rapidly growing solar industry.
Solar Associations Warn: Direct Attack on American Clean Energy
The strongest reaction came from the Solar Energy Industries Association (SEIA), the largest organization representing the solar industry in the United States. President and CEO Abigail Ross Hopper struck a scathing tone in a June 28 press release:
“This bill is not just ill-conceived — it is a direct attack on American energy, American workers, and American consumers.”
Hopper added that the bill: “Dismantles industries that are lowering electric bills, revitalizing domestic manufacturing, and building more new energy capacity than any other technology combined.”
Republican-led states hardest hit by the countermove
An interesting observation came from Michael Thomas, CEO and founder of the Cleanview platform, which tracks renewable energy projects in real time. In a post on LinkedIn, Thomas warned: “Repealing the Inflation Reduction Act would shut down the fastest-growing part of the American energy economy. The impact would be felt across the country.”
But he also made a critical point: “The Republican-led states, now on the verge of a clean energy boom, would suffer the most severe environmental and economic damage. They would lose not only clean energy, but also economic momentum and a once-in-a-lifetime opportunity.”
Conclusion: A Bill That Could Redefine America’s Energy Future
The bill being debated in the Senate represents a potentially epochal shift in the trajectory of US energy policy. Just two years after the passage of the Inflation Reduction Act (IRA) — considered one of the most ambitious measures ever adopted by the United States for decarbonization — the bill promoted by the Republican majority aims to demolish its fundamental pillars.
The implications are multiple and interconnected. On the one hand, the abolition of tax incentives risks halting the momentum of private investment that has driven the development of solar, wind and electric vehicle projects in dozens of states.
On the other hand, the introduction of the FEOC tax would force the sector to restructure its supply chain in a very short time, in an already fragile global context.
On the geopolitical front, the law reflects a clear attempt to decouple from China, considered a strategic threat in many areas, including energy. However, the chosen approach — based on sanctions rather than incentives — could paradoxically slow down innovation and domestic energy security, rather than strengthen it.
In social terms, the repercussions would be profound especially for rural communities and states in the Midwest and South — many of which are Republican electoral strongholds — which in recent years had begun to derive concrete economic benefits from investments in clean energy.
Ultimately, the law proposes an industrial and environmental vision diametrically opposed to that introduced with the IRA. The choice that the Senate is called to make does not only concern incentives or taxes, but the energy and industrial model on which the United States wants to build its future.