The passage of the Big Beautiful Bill (OBBBA) on Friday, July 4, marks a major pivot in U.S. clean energy policy. With the rollback of key Inflation Reduction Act (IRA) tax credits, companies are now facing real-time operational, financial, and compliance challenges. For executive leaders — especially those in energy, operations, finance, and sustainability — the implications are immediate. Projects previously underwritten with generous federal incentives are now under pressure. Capital schedules may need to be reshuffled. Supply chains will require closer scrutiny. And organizations will need to sharpen their strategic focus to deliver environmental results without relying on expired or narrowed tax credits. This isn’t just a policy change — it’s an execution challenge.
What management needs to know
- Projects may no longer pencil out.
Many clean energy investments assumed a stable IRA policy environment. With the OBBBA repealing or accelerating the sunset of several credits, financial models will need to be reevaluated. Some projects may no longer deliver a strong enough return to justify the investment, especially those with long lead times or overseas content. - Supply chains just got more complex.
Stricter domestic content and foreign entity rules are now in place for any projects hoping to qualify for remaining incentives. Materials sourcing, supplier audits, and traceability will need tighter controls and likely require renegotiation of current supplier agreements. - Investment momentum is at risk.
More than $500 billion in clean energy projects announced since 2022 have yet to break ground. A growing portion may now stall. For companies betting on scaled production, delayed or canceled projects could undermine economies of scale and competitive positioning. - The global innovation race continues — especially in China.
OBBBA doesn’t alter the broader global push toward clean energy. If anything, it creates new urgency to look abroad for innovation, manufacturing capacity, and lessons in efficiency — particularly from China, which continues to lead in solar, hydrogen, and battery tech. - AI can help take cost out of decarbonization.
Leaders should explore how AI and automation can make decarbonization strategies more efficient, resilient, and less incentive-dependent — mitigating reputational and financial risk as policy landscapes shift.
What’s changed in the policy landscape
- Terminations: Key IRA incentives (EVs, residential energy) will expire by end of 2025 or sooner.
- Stricter requirements: Clean energy tax credits now require tighter domestic content and foreign-entity compliance.
- Faster phase-outs: Credits that were expected to last a decade may now sunset in just a few years.
- Technology-neutral limitations: Restrictions added to the 45Y/48E tax credits, narrowing eligibility.
- Carbon capture & hydrogen: 45Q carbon credits remain; however, hydrogen incentives (45V) terminate at end of 2025.
- Clean fuels: Extended through 2029, but only for U.S., Mexico, or Canada-based feedstocks starting 2026.
Implications for the U.S. energy mix
The net result is a likely slowdown in clean energy deployment. Estimates suggest that without these credits, new clean tech additions to the U.S. grid could fall by 50–70% by 2035. Greenhouse gas emissions reductions may also slip below targets—eroding progress toward net-zero goals.
Which states and facilities are most at risk?
Clean energy projects in major states like Texas, California, and Louisiana now face the highest exposure, according to data from the Clean Investment Monitor. These include solar, geothermal, SAF, hydrogen, and component manufacturing sites—many of which assumed full IRA incentive support.
What corporate management teams should do now
Reassess project timelines and capital allocation
- Conduct a full inventory of energy-related projects and timelines.
- Identify which must break ground before mid-2026 to retain tax eligibility.
- Update IRR and NPV models based on the new incentive landscape.
Review supply chain compliance and contracts
- Institute traceability and compliance protocols for domestic content rules.
- Adjust supplier charters and contracts where needed.
- Prepare for enhanced due diligence demands from customers or regulators.
Refresh enterprise energy strategy
- Consider diversification into assets like nuclear (including SMRs), carbon capture, battery storage, and clean fuels.
- Prioritize technology partnerships in global markets leading clean energy innovation.
Stress-test ESG and net-zero plans
- Update internal decarbonization roadmaps based on potential project delays or cancellations.
- Proactively manage reputational risk by identifying alternative paths to carbon reduction goals.
Activate AI for decarbonization cost control
- Deploy AI and digital tools to identify energy efficiency wins, automate compliance, and streamline sustainability reporting.
Strategic questions for your executive team
- Which in-flight projects need to be accelerated—or paused?
- What changes must we make to maintain compliance under stricter domestic sourcing rules?
- What’s our exposure to credit phase-outs or clawbacks?
- How do we adjust our capital allocation model to reflect more limited or uncertain incentives?
- Where can we reinvest—smartly—to secure energy reliability, cost control, and progress toward ESG goals?
- Are our teams equipped to monitor and adapt to future swings in energy or industrial policy?
From policy disruption to competitive advantage
Regulatory shifts like OBBBA are not new — but the stakes are growing. Management teams that respond quickly, revise plans proactively, and align internal resources effectively will be the ones that continue to lead through uncertainty.
Additional Telesto resources:
- Atlas, equips your organization’s corporate directors and leaders with the insights and knowledge necessary to stay up to date, mitigate risks, and seize business opportunities associated with sustainability, climate, and ESG
- The Golden Dome moment: A new agenda for national security and innovation
- Management Briefing: When trade policy hits the balance sheet – Navigating impairment risk in a volatile environment
- Prism, our ESG benchmarking tool, helps your organization to rapidly strengthen its sustainability, climate, and ESG performance and disclosures through in-depth benchmarking of industry peers and identification of gaps and areas of distinction
- Recently released by Telesto Strategy’s CEO & Founder, Alex Kruzel, The Courage to Continue: Stay the Course on Sustainability to Secure our Future, explores the connection between corporate priorities and President Trump’s national security agenda
Connect with us to turn volatility into value — and move forward with confidence.
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