The Treasury Department provided updated guidance on Friday, limiting the scope of wind and solar energy projects eligible for tax credits that were mostly revoked under the recent legislation known as the “big and beautiful bill,” pushed by Republicans.
This law, which was passed last month, focuses on credits for projects that won’t start generating electricity until after 2028.
However, there are exemptions for projects that begin construction in the coming year. These projects can still qualify for subsidies even if they fail to meet the timeline for electricity production.
That said, the new guidance from the Trump administration imposes additional restrictions on what constitutes the beginning of construction.
It states that construction must be “continuous” and includes the actual “physical work of a significant nature.” Examples of qualifying activities include assembling equipment, land excavation, and beginning various installations. However, it does not count activities like surveying, testing, or digging done merely for landscape modification.
The guidance further specifies that even if a project meets other outlined requirements, it still must produce electricity by the end of the fourth year after construction kicks off.
This has drawn criticism from the renewable energy sector, which argues that these restrictions will hinder the growth of low-carbon energy sources.
“This is just another energy regulation from the Trump administration that will delay the development of affordable, reliable electricity. As a result, American families and businesses will face higher electricity costs,” they stated.
Climate advocates echo these concerns.
“The Trump administration’s new tax credit guidelines are another blow to clean energy, which can help lower electricity costs, enhance reliability, stimulate the economy, and mitigate health issues caused by air pollution,” they remarked.
This development follows a divide between moderate and conservative Republicans regarding the pace of eliminating tax credits. President Trump has indicated that if members of the House Freedom Caucus back his bill, he will go further in restricting tax credits.
After the bill’s passage, he directed the Treasury to adopt a stringent policy towards limiting tax incentives.
In recent weeks, Trump has also implemented various other policies aimed at curbing renewable energy initiatives. Concerns were voiced earlier by Senators Chuck Grassley (R-Iowa) and John Curtis (R-Utah), who, while more supportive of renewable energy than many of their GOP peers, noted skepticism about the Treasury’s guidance.
