Washington, Aug. 22 – The recently passed “One Big, Beautiful Bill Act” is set to reshape the U.S. energy landscape, introducing significant changes across key sectors, particularly in oil and gas, renewable energy, and tax credits for clean energy investments.

The new law mandates quarterly oil and gas lease sales on federal lands and waters, overseen by the Bureau of Land Management, to boost domestic oil and gas production. Additionally, the bill reinforces royalty rates at 12.5% for production leases on federal lands, signaling a shift toward increased energy independence.

As part of broader regulatory changes, the law introduces Prohibited Foreign Entity (PFE) rules, restricting certain foreign-controlled entities from accessing tax credits. These restrictions, which impact foreign-influenced suppliers and projects receiving “material assistance” from PFEs, will necessitate enhanced diligence for U.S. companies managing supply chains.

The bill also maintains the Section 45Q carbon capture credit, ensuring long-term stability for carbon capture projects that begin construction before 2033. The direct pay provisions for these projects remain, providing an essential monetization option for developers.

For clean energy developers, the bill accelerates timelines for wind and solar projects, requiring construction to start within 12 months of enactment or by December 31, 2027 to qualify for clean electricity credits. The advanced manufacturing production credit (Section 45X) will continue to support eligible components like wind, solar, and battery technologies. However, the phase-out schedule for wind energy components will advance, eliminating credits for components sold after 2027.

At the same time, the bill eliminates tax credits for electric vehicle (EV) purchases and EV charging station installations after December 31, 2025. It also ends credits for certain residential energy-efficient upgrades and the construction of energy-efficient homes.

The “One Big, Beautiful Bill Act” significantly alters the energy tax credit framework, presenting new opportunities while curbing certain benefits. As businesses adjust to these changes, navigating this evolving landscape will be critical for capitalizing on emerging opportunities and remaining compliant with the evolving regulatory environment.

Source:  

https://www.esgtoday.com/guest-post-implications-of-the-one-big-beautiful-bill-act-for-energy-industry/