The clean energy industry is set for a hard hit from the Trump administration's budget bill, with many tax credit programs on the chopping block

There are three main types of clean energy credits at the federal government: tax breaks for energy generator projects, like commercial wind and solar farms, tax breaks for home and business owners, and tax breaks for the electric vehicle industry.

“All of those credits are under significant threat for pullback or termination,” said Harry Godfrey, managing director for Advanced Energy United, an alternative energy advocacy group.

The United States has offered clean energy tax credits for decades. For example, a tax credit for homeowners who install solar panels on their house was passed in 2005. Many of those credits were expanded in the Biden administration’s Inflation Reduction act. Now? The Trump administration is reversing course.

Most of the credits for home owners, non-energy business owners, and the electric vehicle industry—will be discontinued in the current version of the budget bill.

The Technology Neutral Tax Credits, which are for those commercial clean energy projects, will stay in place. However...

“They've done a variety of things in order to effectively kill them,” Godfrey said. “Even if ostensibly the credit is still in code.”

If a project qualifies for the credit, that project would have a short time-window to start construction... or risk losing the credit.

Also- lawmakers wanted to prohibit companies from using parts from countries like China or Russia. Measures like these are called “foreign entity of concern” rules. Godfrey says these types of prohibitions can be accepted by the industry— but the rules in the bill are overly strict and complicated.

“Literally, like we're talking about like— where did the silica in your poly-silicon panels come from?” Godfrey said. “If the laws applied to singular components, like the solar panels or turbines, that is doable. But getting into this level of detail, there’s traceability issues."

If those production credits got cut, the U.S. Budget office estimates the government would save around $308 billion over 10 years— and there could be a 1/3 decrease in project investments. Advanced energy united says Pennsylvania has $119 billion in clean energy projects planned for the future.

“If you don't have those credits, lots of these projects don’t get built,” Godfrey said. "These are the projects that are setting the marginal price power. And those that do get built are more expensive.”

On the tax credit cuts, Democrat Governor Josh Shapiro says 26,000 Pennsylvania jobs are at risk because the state could lose $3 billion in energy projects.

“Because of the devastating cuts to energy, you’re putting a whole lot of people out of work, and making it harder for us— a net energy exporter— to do the work we need to do to generate more energy, particularly more clean energy,” Shapiro said.

The governor wants Pennsylvania to restructure some of the state’s tax credits to be more available for “reliable” energy projects, which is defined as mostly alternative energy sources.

Most of Pennsylvania’s energy production comes from natural gas— which electric grid operators define as reliable, but is also tied to the ups and downs in global markets.