It looks like the Senate is abandoning solar and wind power in the United States. The U.S. solar stocks dropped in premarket trading on Tuesday after a Senate panel proposed a full phase-out of solar and wind energy tax credits by 2028, as part of changes suggested to President Donald Trump’s sweeping tax-cut and spending bill.
In June, the U.S. Senate Finance Committee introduced a bill aiming to phase out federal tax credits for solar and wind energy projects by 2028, accelerating the original timeline set by the 2022 Inflation Reduction Act. The proposal calls for a 20% annual reduction in the Investment Tax Credit (ITC) and Production Tax Credit (PTC), culminating in their full elimination within three years.
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Additionally, the bill imposes a 60-day construction start deadline for projects to qualify and tightens rules on credit transferability and foreign ownership. Proponents argue that solar and wind technologies have matured enough to compete without subsidies and that continuing tax credits distort energy markets and drive up costs.
The language released by the committee chair envisages phasing out subsidies enshrined by the Biden-era 2022 Inflation Reduction Act for solar and wind in 2026 by reducing the incentive to 60% of its value and ending it by 2028.
Critics of this proposal argue that eliminating these incentives abruptly will stall the growth of renewable energy, leading to significant job losses in the sector. They warn it could increase electricity costs for consumers and slow the U.S. transition to a cleaner, more sustainable energy future. Many also fear that the rollback will increase dependence on fossil fuels, undermining climate goals and national security. Groups like the Solar Energy Industries Association (SEIA) actively campaign against the bill, urging lawmakers to preserve vital support for renewables.
Under current law, the tax credits would not start phasing out until 2032. Citi strategists said they “remain a sell on residential solar.”
“This is a slight improvement compared to the prior sharp termination of credits for projects not placed in service by 12/31/2028 but is far more restrictive than the original bill’s phase-out starting in 2029 and elimination of credits in 2032,” they said.
If enacted, this proposal could slow the expansion of clean energy infrastructure, impacting industry growth, innovation, and job creation. This change may lead to increased reliance on traditional energy sources, potentially reversing recent progress on climate goals and energy independence. Moreover, higher energy costs could affect consumers and businesses alike. The debate around this proposal highlights the broader tension between economic priorities, environmental concerns, and national security interests.
How the U.S. balances these factors will shape its energy landscape for decades to come. Ultimately, this legislation will signal whether the country prioritizes a swift transition to sustainable energy or opts for a more cautious, market-driven approach. Its outcome will have lasting implications not only for the energy sector but also for the global effort to combat climate change.