Big Beautiful Break for wind and solar? Not quite, says Trump EO

The One Big Beautiful Bill Act passed into law on July 4, 2025. With it came sharp rollbacks of some Inflation Reduction Act tax credits but not others.

There have been a number of myths circulating about the law, including that it will harm reliability and raise electricity prices, including in Minnesota. Paige Lambermont, Research Fellow at the Competitive Enterprise Institute and a colleague of mine at the Independent Women’s Forum, takes aim at the conceptual basis of those myths:

The two credits that are drawing the most attention are the Clean Energy Production Credit (45Y) and the Clean Energy Investment Credit (48E). These tax credits pay wind, solar, and other clean energy developers for each Megawatt of power produced and for investment in new facilities, respectively.

Proponents of these subsidies claim that getting rid of them will be bad for the power grid. They claim that it will cause power prices to rise and will harm reliability. But this description is far more fitting for the subsidies themselves than for their removal. In the absence of subsidies, power plants will still be built, but they will be built based on the electricity needs of Americans not because they receive massive subsidies…

Removing these wind and solar subsidies would not make the grid less reliable, rather, it would remove a distortion in the market and allow more reliable sources of power to compete. In addition to the distortions that they cause, these subsidies are incredibly expensive. The overall cost of the IRA energy credits is estimated to be $4.7 trillion by 2050, of which the 45Y and 48E tax credits make up a significant portion.

Imagine the opportunity costs: all the jobs not created, and the inventions developed, because the market has been encouraged to build wind and solar to the exclusion of almost everything else.

Congress blundered the opportunity to permanently end the IRA subsidies. The Senate version, which was approved by the House and signed into law, has a requirement that new solar and wind projects be “placed in service” by 2027 to be eligible for subsidies. That would be significant progress; however, projects that begin “construction” by July 2026 can be placed in service up until 2030 and still be eligible for subsidies. Construction can amount to dead-simple steps like committing five percent of the expected project cost to resalable assets, after which some projects can get tax credits for another ten years. In addition, subsidies

Cue an executive order from President Trump yesterday for “ending market distorting subsidies for unreliable, foreign controlled energy sources.” The order recognizes that “the Federal Government has forced American taxpayers to subsidize expensive and unreliable energy sources like wind and solar.”

The executive order calls for the Treasury to act as “necessary and appropriate to strictly enforce the termination of the clean electricity production and investment tax credits under sections 45Y and 48E… for wind and solar facilities.” The EO specifically addresses the concern that policies “concerning the ‘beginning of construction’ are not circumvented, including by preventing the artificial acceleration or manipulation of eligibility.”

With a definition of “placed in construction” coming soon from the Treasury that wind and solar projects will adhere to, there’s hope yet that the U.S. taxpayer may save billions of dollars and bolster the reliability of the electric grid.