Jacob Wills | July 10, 2025
On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBB or OBBBA) into law, reshaping many federal incentives and programs for clean energy, fuels, and climate action. While the bill rolls back or eliminates many forms of federal support, the mission of building a cleaner, more resilient future remains urgent.
Now more than ever, it is essential that we work together—across industries, public-private partnerships, and entities of all kinds—to continue driving meaningful climate action.
Our Top Five Takeaways:
1. Clean Energy Tax Credits: Accelerated Deadlines Demand Quick Action
Wind and solar projects hoping to receive the Clean Electricity Production and Investment tax credits (45Y and 48E) now face a much shorter window to qualify. Originally scheduled to phase out in 2032, these credits will now be cut off after 2027, unless your project starts construction within 12 months of the bill’s passage.
What this means: If you’re in planning mode—accelerate. ClimeCo can help navigate eligibility and timelines to ensure your project doesn’t miss out on support.
2. Clean Hydrogen & Carbon Capture Credits: Still Alive, But Narrower
The Hydrogen Production Tax Credit (45V) is now only available for projects that begin construction before 2028, not 2032 as before. Meanwhile, 45Q carbon capture credits are still in place—and even see an increase in incentives for enhanced oil recovery and CO₂ conversion—but with new exclusions for companies with certain foreign ties.
What this means: Hydrogen and CCUS projects must move quickly—and entities with complex ownership should review eligibility. ClimeCo offers due diligence and compliance support.
3. Clean Fuel Incentives: Limited Geography, Extended Timeline
The 45Z clean fuels credit is extended through 2029, but starting in 2026, only fuels made from feedstocks sourced in North America (U.S., Mexico, or Canada) will qualify. The bill also introduces new eligibility rules excluding land use change and reduces the special SAF incentive to $1/gallon, aligning it with incentives for ground fuels.
What this means: Supply chain and feedstock origin matter more than ever. Our team can help trace and verify eligibility.
4. Advanced Manufacturing & Mineral Credits: A Phaseout on the Horizon
The Advanced Manufacturing Tax Credit (45X) for wind energy components ends after 2027, and credits for key minerals like lithium begin to phase down after 2030, hitting zero by 2034. The credit for metallurgical steel ends after 2029.
What this means: Manufacturers should reassess their timelines and material sourcing. ClimeCo supports strategic planning for sustainable supply chains.
5. Climate Programs Cut: A Broad Retraction of Funding
The OBBB repeals or rescinds funding for nearly two dozen climate and environmental programs, including:
- Greenhouse Gas Reduction Fund
- Low-Emission Electricity Program
- Methane Emission Reduction Incentives
- Federal procurement of low embodied carbon materials
- Climate Data Collection
What this means: These cuts represent a significant shift away from previously funded federal programs. Stakeholders should prepare for a leaner federal landscape and consider state/regional and market-based alternatives. ClimeCo continues to monitor where gaps emerge—and how to fill them.
What Now?
While the OBBB tightens or eliminates many decarbonization incentives, opportunities remain—but timing is critical. Whether you’re building a project, sourcing fuel, or managing supply chains, ClimeCo is here to help you understand what’s changed and how to move forward with confidence.
As traditional tax incentives narrow, market-based solutions like insetting are becoming more important than ever. Insets—emissions reductions or removals within a company’s own value chain—offer a powerful tool for organizations looking to maintain climate commitments in a leaner federal funding environment. These approaches, along with broader decarbonization strategies, can help fill the gaps left by policy shifts.
Contact us to learn more about how ClimeCo can support your organization in navigating this evolving landscape.
About ClimeCo
ClimeCo is an award-winning leader in decarbonization, empowering global organizations with customized sustainability pathways. Our team of respected scientists and industry experts collaborates with companies, governments, and capital markets to develop tailored ESG and decarbonization solutions. Recognized for creating high-quality, impactful projects, ClimeCo is committed to helping clients achieve their goals, maximize environmental assets, and enhance their brand. Partner with ClimeCo to drive meaningful environmental change and take your climate initiatives to new heights.
Contact us at +1 484.415.0501, info@climeco.com, or through our website climeco.com.
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