Insights and Analysis

House passes “One Big, Beautiful Bill”– Impact on energy

15 May 2025

On May 13, 2025 the House passed the “One Big, Beautiful Bill,” which includes significant cuts to the Inflation Reduction Act (IRA) energy incentives.

The changes shorten the duration of or eliminate 17 IRA “green” energy incentives. The bill terminates the 25E, 30D, 45W, and 30C clean vehicle incentives after 2025 (with 30D carrying over until 2026 in some cases). The bill also terminates the 25C, 25D, and 45L residential incentives after 2025. The bill materially curtails clean fuel, CO sequestration, nuclear, hydrogen, and advanced manufacturing incentives. Finally, the bill causes an early sunset of the Section 48(a) and 48E investment tax credit and the Section 45Y production tax credit, all as set forth in the chart below. Click here for the section-by-section summary.

Of the changes, the renewable energy industry is particularly concerned about (1) the denial of credits based on a vague new rule that components or subcomponents cannot be acquired from a Foreign Entity Of Concern (FEOC), such as a China-based entity; (2) the termination of the Section 45Y and 48E credits through a new placed in service deadline of 2028 instead of the customary “beginning of construction” deadline; and (3) the termination of the Section 6418 transferability rules (with different termination schedules for different credits).

Bill Section; IRC Section	Title	Effect	HL Observations
Automotive Incentives
§§ 112001; 25E(g)	Termination of previously-owned clean vehicle credit	Accelerates the expiration of credit: terminates for vehicles acquired after end of 2025. (Current law: expires end of 2032.)	Accelerates expiration of the credit by 7 years.
§§ 112002; 30D	Termination of clean vehicle credit.	Accelerates the expiration of credit: terminates for vehicles placed in service after end of 2026. (Or, for vehicles made by OEMs with more than 200,000 new vehicle tax credit (30D) credited vehicles since 2009, termination is end of 2025.) Current law: expires for vehicles placed in service after 2032.	Accelerates expiration of the credit by 7 years. Tesla, GM, Ford, and Toyota have all reportedly reached 200,000 credited vehicle sales already. Vehicles from all other OEMs would be eligible for one additional year, 2026, of EV credits, subject to 30D requirements.
§§ 112003; 45W(g)	Termination of qualified commercial clean vehicles credit	Accelerates the expiration of credit: Currently the credit is not allowed for any vehicle placed in service after December 31, 2032 and the proposal instead terminates the credit for vehicles acquired after 2025 with grandfathering for vehicles acquired pursuant to a written binding contract entered into before May 12, 2025 and placed in service before 2033.	Accelerates expiration of the credit by 7 years.
§§ 112004; 30C(i)	Termination of alternative fuel vehicle refueling property credit	Accelerates the expiration of credit: terminates for property placed in service after December 2025. (Current law: Expires at end of 2032).	Accelerates expiration of the credit by 7 years.
Residential Incentives
§§ 112005; 25C(i)	Termination of energy efficient home improvement credit	Accelerates the expiration of credit: terminates for property placed in service after 2025. (Current law: expires at end of 2032).	Accelerates expiration of the credit by 7 years.
§§ 112006; 25D(h)	Termination of residential clean energy credit	Accelerates the expiration of credit: terminates for property placed in service after 2025. (Current law: expires at end of 2034).	Accelerates expiration of the credit by 9 years.
§§ 112007; 45L(h)	Termination of new energy efficient home credit	Accelerates the expiration of credit: terminates for homes acquired after December 31, 2025 (December 31, 2026 if construction commenced before May 12, 2025). (Current law: expires at end of 2032.)	Accelerates expiration of the credit by 7 years.
Sections 45Y, 48, and 48E Energy Production & Storage Incentives
§§ 112015; 48(a)	Phase-out of credit for certain energy property	Accelerates the phase-out for geothermal property by allowing 30% credit for property that begins construction by the end of 2029, and reducing this percentage to 26% in 2030, 22% for construction begun in 2031, and zero thereafter. New credit exclusions related to ‘foreign entities of concern’ are added. Repeals transferability for projects that haven’t begun construction within 2 years of enactment, except for certain geothermal projects.	The credit phase down for Section 48(a) is based on the more favorable “beginning of construction” standard, in contrast to the new “placed in service” standard being proposed for the technology neutral credits under Sections 45Y and 48E.
§§ 112008; 45Y(d)	Phase-out and restrictions on clean electricity production credit	Replaces existing phase-out with a placed in service deadline of end of 2028 for full credit, with 80% of credit for placed in service in 2029, 60% for 2030; 40% for 2031; and no credit after 2031. Transferability is allowed only with respect to facilities the construction of which begins within 2 years of the date of enactment of this bill. New credit exclusions related to ‘foreign entities of concern’ are added.	This materially shortens the last year of the full credit to 2028 and replaces the former “beginning of construction” grandfathering rule with the more onerous “placed in service” standard, making it difficult for longer-construction projects to qualify if such change is adopted as final. The transferability termination retains the more favorable “beginning of construction” standard.
§§ 112009; 48E(e)	Phase-out and restrictions on clean electricity investment credit	Replaces existing phase-out with a placed in service deadline of end of 2028 for full credit, with 80% of credit for placed in service in 2029, 60% for 2030; 40% for 2031; and no credit after 2031. Transferability is allowed only with respect to facilities the construction of which begins within 2 years of the date of enactment of this bill. New credit exclusions related to ‘foreign entities of concern’ are added.	This materially shortens the last year of the full credit to 2028 and, equally important it replaces the former “beginning of construction” grandfathering rule with the more onerous “placed in service” standard, making it difficult for longer-construction projects to qualify if such change is adopted as final. The transferability termination retains the more favorable “beginning of construction” standard.
Clean Fuel; CO Sequestration; Nuclear; Hydrogen; Advanced Manufacturing
§§ 111112; 45Z	Extension and modification of clean fuel production credit	Extends existing credit termination to end of 2031. (Current law expiration is end of 2027.) Provides clarifications related to emissions rate determination. Adds restrictions related to use of foreign feedstocks. New credit exclusions related to ‘foreign entities of concern’ are added.	Extends the credit by 4 years.
§§ 112010; 6418(f)	Repeal of transferability of clean fuel production credit	Eliminates transferability for fuel produced after December 31, 2027.	Allows for transferability for 2025 and 2026 credits.
§§ 112011; 45Q(f)	Restrictions on carbon oxide sequestration credit	Repeals transferability for carbon capture equipment where construction begins 2 years or more after the date of enactment of this bill. New credit exclusions related to ‘foreign entities of concern’ are added.	Provides a 2 year window after bill enactment.
§§ 112012; 45U(e)	Phase-out and restrictions on zero-emission nuclear power production credit	Replaces existing phase-out with a placed in service deadline of end of 2028 for full credit, with 80% of credit for placed in service in 2029, 60% for 2030; 40% for 2031; and zero credit after 2031. Eliminates transferability for credits earned after December 31, 2027. New credit exclusions related to ‘foreign entities of concern’ are added.	The more onerous “placed in service” standard will make it difficult for new build nuclear projects to qualify for the full credit if such change is adopted as final.
§§ 112013; 45V(c)(3)	Termination of clean hydrogen production credit	Terminates the credit for projects the construction of which has not begun by the end of 2025. (Current credit: Begin construction deadline of December 31, 2032.)	Accelerates expiration of the credit by 7 years.
§§ 112014; 45X(b)(3)	Phase-out and restrictions on advanced manufacturing production credit	Accelerates existing phase out by eliminating the credit for wind energy components sold after 2027, and eliminating the credit for all other components sold after 2031. Full credit ends after 2029For eligible components sold during calendar years 2030, 2031, and 2032, the otherwise allowable amount of credit is reduced by 25 percent, 50 percent, and 75 percent, respectively. This phasedown does not apply to applicable critical minerals. The credit is fully phased out for eligible components except for applicable critical minerals after 2032. Transferability is repealed for components sold after December 31, 2027. New credit exclusions related to ‘foreign entities of concern’ are added.	Eliminates wind energy credit after 2027 and phase-down for other components starting after 2029. Allows for transferability of credits for 2025 and 2026 credits.
§§ 112016; 7704(d)(1)(E)	Income from hydrogen storage, carbon capture added to qualifying income of certain publicly traded partnerships treated as corporations	Expands the activities that can be categorized as qualifying income to include the transportation or storage of liquified hydrogen or compressed hydrogen, and the generation of electricity or capture of carbon dioxide at a direct air capture or carbon capture facility, for taxable years beginning after December 31, 2025.	Expands the ability of publicly traded partnerships to invest in hydrogen and carbon capture.