Republican Reconciliation Act Reverses Key Inflation Reduction Act Provisions

Republican legislators passed a reconciliation act Thursday, rolling back much of the Inflation Reduction Act (IRA). The bill, which passed 218-214 with two Republicans voting no, now awaits President Donald Trump’s signature, who is expected to approve it.
The legislation removes incentives for solar, wind, and clean hydrogen projects, while preserving some IRA benefits for nuclear and geothermal energy. Tax credit timelines for clean energy projects have been extended slightly compared to earlier drafts. Solar and wind developers must connect to the grid by the end of 2027 or begin construction within 12 months of the bill’s passage to qualify for tax credits.
The data center sector may face significant challenges, as solar and wind projects have been a quick and inexpensive power source. Solar farms typically take 12-18 months to complete, unlike new natural gas turbines, which face lengthy backlogs into 2030.
Climate tech startups, particularly green hydrogen firms, will likely suffer the most. Tax credits for hydrogen, worth up to $3 per kilogram, are set to expire in 2027—five years earlier than under the IRA. Geothermal, nuclear, and battery storage projects retain incentives through 2033, though new rules targeting “foreign entities of concern” may complicate access to credits.

Published: 7/3/2025