President Trump’s first week orders shake clean energy tax landscape

President Trump's first days in office have introduced uncertainty into the clean energy landscape, particularly regarding tax incentives and regulatory frameworks. While his "Unleashing American Energy" executive order calls for an immediate pause in clean energy-related disbursements, the impact on existing tax credits may be more nuanced than initially thought.

Immediate impact on clean energy funding

The executive order specifically targets funding under the Inflation Reduction Act and Infrastructure Investment and Jobs Act, with a particular focus on electric vehicle charging station investments made available through the National Electric Vehicle Infrastructure Formula Program and the Charging and Fueling Infrastructure Discretionary Grant Program. However, a subsequent memo to department heads has clarified that the pause applies specifically to appropriations, not tax credits — a distinction that could prove crucial for businesses planning clean energy investments.

While the executive order addresses appropriated funds, it does not directly impact Inflation Reduction Act tax credits, as these credits are not appropriated funds. However, future actions could affect these incentives, particularly through legislative changes or Treasury guidance modifications.

The administration's regulatory freeze, outlined in a separate day-one memo, introduces additional complexity. This 60-day pause affects rules published in the Federal Register but not yet effective — a standard practice during presidential transitions that allows new leadership to review and potentially modify recent regulatory actions.

The executive order also directs agencies to review their processes, policies and programs for issuing grants, loans, contracts or any other financial disbursements of the appropriated funds for consistency with the law. All agency heads must submit a report to the Director of the NEC and Director of OMB within 90 days that details the findings of the review, including recommendations to “enhance their alignment with the policy set forth in section 2 [to eliminate the ‘electric vehicle (EV) mandate’ and promote true customer choice].”

Critical tax provisions under review

This regulatory pause could significantly impact several crucial clean energy tax provisions. The Clean Electricity Production and Investment Credits (Code Sec. 45Y and 48E), which were designed to incentivize clean electricity projects, may face particular scrutiny. These credits were set to provide up to 30% of project costs for qualifying facilities, with additional bonuses available for meeting domestic content requirements.

The Clean Electricity Low-income Communities Bonus Credit, which offers additional incentives for projects benefiting disadvantaged communities, also falls under review. Similarly, the Clean Hydrogen Production Credit (Code Sec. 45V and 48), which is a 10-year incentive that provides tax credit for producing clean hydrogen, could see significant modifications in implementation.

Under the Congressional Review Act, all these recently finalized rules could be subject to modification or withdrawal. This creates a complex planning environment for businesses that have already begun structuring projects and investments around these incentives. The situation is particularly challenging for manufacturing facilities under development, as changes to these credits could affect project economics and timelines.

These changes come as many industries have been benefiting from energy incentives under the Inflation Reduction Act. The market has seen increasing demand for domestic manufacturing of clean energy projects, driven partly by domestic content requirements for maximizing certain energy credits. This trend has been expected to continue as the Investment Tax Credit transitions into the new Clean Electricity Investment Credit beginning in 2025.

Broader policy shifts and business impact

The administration's broader energy agenda, marked by the declaration of a national energy emergency, emphasizes domestic production and infrastructure development. The emergency declaration notably excludes wind, solar and hydrogen from its definition of "energy resources," signaling a potential shift in federal energy priorities. This stance creates a complex operating environment for businesses that have invested in renewable energy projects or planned future investments based on existing incentives.

The Congressional Review Act allows for the rollback of "midnight rules" submitted to Congress within 60 session days before final adjournment. This mechanism could affect recently finalized clean energy tax regulations, though any changes would require careful consideration and new policy direction.

The domestic manufacturing emphasis in current policy could create opportunities even amid uncertainty. Companies that have invested in domestic production capabilities to maximize IRA credits may find themselves well-positioned regardless of policy shifts, as the administration's "America First" manufacturing priorities align with existing domestic content requirements, albeit with different underlying motivations.

Geographic and resource-specific impacts

The administration's energy agenda extends beyond general policy shifts to include specific geographic and resource focuses. In Alaska, new executive orders aim to expedite development of natural resources, including energy, minerals and LNG potential. This includes reopening leasing and permitting in the Arctic National Wildlife Refuge and the National Petroleum Reserve in Alaska.

The orders also signal a restart of LNG export project reviews, lifting a pause enacted in early 2024. This change could particularly impact companies with pending LNG facility applications and those involved in natural gas infrastructure development.

As for environmental reviews, there are new reforms to National Environmental Policy Act (NEPA) implementation. The Council on Environmental Quality will provide new guidance and propose rescinding existing NEPA regulations, potentially streamlining permitting processes. However, these changes may face limitations, particularly regarding independent regulatory agencies like FERC and the Nuclear Regulatory Commission, which maintain some autonomy in NEPA implementation.

What’s next?

As these policies unfold, businesses should prepare for several developments:

• The Treasury Department will likely review and potentially modify existing guidance on clean energy tax credits. Companies should stay alert for new interpretations affecting credit calculations and eligibility requirements.
• State-level policies, particularly regarding generation plants and carbon emission targets, will remain important despite federal changes. Companies operating across multiple jurisdictions should prepare for potentially divergent state and federal requirements.
• Critical minerals development may see increased support through geological mapping initiatives and federal funding opportunities. Companies in the mining and processing sectors should monitor these developments.
• Infrastructure companies should watch for new opportunities in traditional energy projects while maintaining flexibility in their clean energy portfolios, particularly given varying state requirements.
• Taxpayers should source domestic content for their project to maximize energy credits.

How Wipfli can help

At Wipfli, we understand the complexity of deciphering tax credit and broader regulatory landscape changes. Our tax and energy professionals can help you evaluate investment strategies, maximize available incentives and adapt to regulatory changes as they unfold. Contact us to learn more and for continuous updates on administration policies impacting the tax and energy sector, follow our policy updates page.