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The Republican-controlled House of Representatives passed — by a single vote — the “big, beautiful bill” crucial to enacting President Donald Trump’s legislative hopes.
Shares in renewable energy companies took a tumble as cuts to the clean energy incentives foundational to the Inflation Reduction Act proved more aggressive than expected.
The investment and production tax credits are being phased out at an accelerated pace. Projects must begin construction 60 days after the bill passes and be placed in service by 2028.
Tax breaks for electric vehicles, hydrogen and residential solar face the axe at the end of 2025.
But there is optimism that as the bill passes through the Senate the cuts will be watered down. Some, like those to nuclear incentives, have already had their timelines extended.
“There are no neat lines here of pro-renewables versus anti-renewables,” said Justin Sayfie, a lobbyist at Ballard Partners. “They’re going to have to find a middle ground that they can live with.”
In today’s Energy Source, we speak to former West Virginia Senator Joe Manchin, who expressed optimism and caution about the rollback of the bill his vote was instrumental in passing.
IRA architect (and antagonist) reflects on the bill’s fate and Trump’s energy strategy
Joe Manchin has a turbulent relationship with former president Joe Biden’s energy agenda.
In a conversation with Energy Source last week, he said that Republican legislators should “kick the living daylights” out of the parts of the Inflation Reduction Act that the Biden administration over-reached on.
“Some of these rollbacks I encourage,” he said.
“The way the IRA was implemented by the Biden administration was not how we intended it to be . . . they changed the rules to their liking.”
But he paired this with a caution to Trump to not gut the bill in its entirety.
In a sharply divided Senate, the West Virginia centrist’s vote was essential in passing the IRA, which pledged $369bn of climate and clean energy investments. Manchin used that leverage to his advantage when pressing for the bill to focus on energy security, deficit reduction and marrying support for renewables and fossil fuels.
But Manchin later became one of the bill’s most vocal critics, encouraging manufacturers and the Government Accountability Office to question its legality.
The House ways and means committee last Monday published far-reaching plans to reduce government support for clean energy, as part of plans to fund the sweeping tax cuts promised by Trump.
One of Manchin’s main concerns — that the Biden administration was too soft on clean technologies with Chinese-sourced materials receiving tax credits — has been addressed. He said this had made the US “more dependent on China . . . and unreliable foreign supply chains”.
The draft law would prohibit the majority of the IRA’s clean energy tax credits from being claimed by companies designated as Prohibited Foreign Entities and place even stricter rules on the 45X Advanced Manufacturing Production Credit — which subsidises solar, wind, battery and critical mineral production — disallowing companies that licence, source or make significant payments to PFEs from claiming it.
Tax credits that subsidise the purchase and maintenance of electric vehicles, another area of rancour for Manchin, are being phased out at the end of the year.
But he warned against aggressive cuts to the bill, which helped bring manufacturing back to the US.
“Look at the good that came from what we did . . . why go back to uncertainty and create harm?”
While Manchin claims proudly that the IRA helped to produce “record amounts of fossil fuels”, when commenting on the Trump administration’s very public fights with industries such as wind, he encouraged interior secretary Doug Burgum to find common ground with the sector. On Monday the Bureau of Ocean Energy Management lifted the stop work order placed on Equinor’s $5bn Empire Wind project off the coast of New York.
“Any time you have extreme swings in policies, it’s going to be detrimental to the economy and certain industries will never recover,” he said. “So you’ve got to be conscious of that.”
Post-Senate, Manchin is focused on bringing more energy sources to the grid, after failing to pass comprehensive permitting reform in his last days in the chamber. In order to meet growing data centre energy demand he maintains that the US’s energy mix should be a “balanced attack” of oil, gas and coal (he has just joined the board of coal and aspiring critical mineral mining company Ramaco Resources) as well as renewables, and that data centres should be given more freedom to develop their own behind-the-meter energy sources.
“Those are the things that hopefully they’re looking at,” he said. “I’m happy to help.” (Martha Muir)
Job moves
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Ron Stark was appointed senior vice-president controller and principal accounting officer of solar company Solv Energy.
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Monica Opderbeck became senior vice-president of corporate development at Vesper Energy.
Power Points
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A Reform UK mayor has signed up to a new body that backs green energy investment, despite his party vowing to wage war on net zero.
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A fifth of Shell’s shareholders have cast doubt on its strategy to become the world’s biggest supplier and trader of gas and LNG.
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Elliott Management won two seats on the board of oil refiner Phillips 66.
Energy Source is written and edited by Jamie Smyth, Martha Muir, Alexandra White, Tom Wilson and Malcolm Moore, with support from the FT’s global team of reporters. Reach us at energy.source@ft.com and follow us on X at @FTEnergy. Catch up on past editions of the newsletter here.
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