“One Big, Beautiful Bill Act”— How Tax Rollbacks Redefine the Energy Transition
At the intersection of Sustainability & Policy, The One Big, Beautiful Bill Act proposes a sweeping rollback of IRA tax credits—reshaping capital flows, project economics, and long-term decarbonization bets.
Key rollbacks and impact:
45Y / 48E (Clean Electricity PTC & ITC): Phased out by 2031; transferability repealed.
→ Renewables will need merchant revenue strategies or guaranteed cost recovery to remain bankable. Expect more risk-adjusted repricing of wind, solar, and storage portfolios.
45X (Advanced Manufacturing Credit): Sunsets for most by 2027–2031; includes strict foreign entity restrictions.
→ This puts pressure on U.S.-based clean tech manufacturers while limiting cost-competitive global sourcing. Supply chain localization gets costlier. With all the tariff noise, this is an early indicator of how geopolitical conflicts with foreign “entities of concern” can influence progress of energy transition.
• 45V (Clean Hydrogen) & 45Q (CCS): Terminated for projects not underway by 2025; foreign-influenced projects restricted.
→ Oil & gas players must fast-track project timelines or risk stranded assets in their energy transition portfolios. The bill’s early sunset of 45V, repeal of transferability, and foreign entity restrictions compress timelines and financing options—throwing regional hydrogen hub planning into deep uncertainty.
• 30D / 45W (EVs & Refueling Infrastructure): Accelerates sunset to 2025.
→ OEMs, fleet managers and consumers are exposed to a higher Total Cost of Ownership. Overall EV adoption is at higher risk with tighter rollout windows for manufacturers, and also undermines infrastructure buildout that is heavily reliant on EV penetration. With Tesla deliveries slowing down and EV charging stocks at the bottom of the market, this could be a severe blow.
• Clean Fuels & 45Z (with North American-only sourcing): Extended through 2031, but restricted to U.S., Canada, and Mexico; excludes “foreign entities of concern.”
→ There appears to be a sustained on biofuels, despite the retracting lens on cleaner energy. The bills limits 45Z tax credits to fuels made from North American feedstocks and removes indirect land use (ILUC) emissions from carbon intensity calculations, improving the competitiveness of historically salient Canadian feedstocks. Higher-intensity Canadian feedstocks could gain an increasing market share, reducing the number of carbon credits generated and raising overall pricing and downstream margin pressure. This introduces fragility in credit prices and compliance market dynamics that’s were already walking a tight rope, now potentially with increased volatility in both LCFS and RFS markets.
• Transferability repeal across credits: Eliminates flexible financing for tax-exempt entities and newer market entrants.
→ Expect tougher capital stacks and constrained liquidity in community-scale and early-stage infrastructure projects as clean energy financing and monetization of carbon reductions is stalled. Transferability allowed developers without big tax bills (e.g., startups, co-ops, public utilities) to monetize credits directly, instead of relying on complex tax equity deals. It created a new market for clean energy credits, increasing liquidity and lowering barriers to entry for small and mid-sized projects. It accelerated project financing—especially critical for capital-intensive technologies like hydrogen, CCS, and energy storage. All of this is at risk!
So, what now? How can you respond?
This bill doesn’t cancel the energy transition—but it radically shifts who benefits, who pays more, and who needs to get creative. Here’s how it affects your corner of the industry:
Utilities: IRPs need massive reconsiderations. Generation mix decisions just got more expensive. IRPs are built on decade-scale planning assumptions. The proposed bill fundamentally shifts the financial incentives and feasibility of clean energy projects, especially in the second half of this decade. Utilities will need to reprice, re-prioritize, or re-time their resource roadmaps.
Oil & Gas: New energy businesses for carbon capture and hydrogen must now scale faster—or get priced for policy risk and risk abandonment mid-flight. Downstream and renewable fuels business lines will require more savvy price risk and margin optimization, especially with transferability repeal.
Developers & EPCs: Expect repricing of LCOE, financial restructuring, and capital rationing overall. Procurement challenges with sourcing from “foreign entities of concerns”, delayed FIDs, and compression of development timelines. Risk of increased “no bid” outcomes overall.
Investors: Transferability is gone. Tax equity diligence must now include domesticity, partner sourcing, and policy durability. Direct ownership and domestic sourcing just became critical diligence items.
Start-ups: Several businesses built on the premise of a tradable, liquid, democratized clean credit market now face a shrinkage in scope, speed, and scalability. The repeal of transferability is like pulling the rug out from under their growth plans. This can significantly impact investor relations and revenue streams.
The “One Big, Beautiful Bill Act” might be politically beautiful—but practically, it pushes us toward a more fragmented, risk-sensitive, and regionally stratified clean energy economy. For companies that have built their entire strategy on federal incentives, this moment feels like a cliff. For those that anticipated volatility, invested in flexibility, and diversified their value streams—this is just the next pivot.
