The Senate version of the One Big Beautiful Bill (HR 1) contains a number of provisions that speak to CRE’s interests. Provisions on bonus depreciation, Opportunity Zones, low-income housing tax credits and other programs extend many advantages contained in the Tax and Jobs Act of 2017 and, in some cases, expand or makes them permanent.
But, as a finance writer who doubles as a sustainability podcaster, I think the changes to clean energy incentives and funding are important to highlight. Eco-friendly buildings have a value proposition but, when the big budget bill passes, expectations for property owners and for cities may need to be adjusted.
HR1 repeals or sunsets earlier than written a number of the incentives and investments contained in the Inflation Reduction Act and some outside of it. With CRE still seemingly committed to sustainability, some of the changes will impact planned initiatives at the property level and others will affect infrastructure projects that investors hoped to rely on for additional, renewable capacity.
The Senate Bill was not as restrictive as what the House had planned in their bill, which passed in May. In a last-minute change to a last-minute change, for example, the Senate bill passed without the provision that placed an excise tax on wind and solar projects if they contained components from prohibited countries, particularly China.
Also, while the current administration’s goal is to phase out wind and solar tax credits, the Senate bill allows wind and solar projects that begin construction in the 12 months following the bill’s signing to get the full Clean Energy Production Tax Credit, whether or not they are in-service by Jan. 31, 2027. Current wind and solar projects need to be in-service by 2028 to get the full PTC. The same would apply for the Clean Electricity Investment Credit.
For Clean Electricity Investment Credit
What’s in the bill?
Here are other potentially pivotal provisions in the bill that the Senate sent back to the House yesterday, according to White & Case.
For other projects looking to claim clean electricity tax credits, credits would begin phasing out for construction beginning after 2032.
Credit for clean hydrogen production would end for projects starting construction after Dec. 31, 2027. That’s two years longer than House proposed.
Credits for nuclear projects remain in place until Dec. 21, 2032.
IRA’s $27 billion Greenhouse Gas Reduction Fund, which was helping finance green banks and had been frozen, will be repealed.
EV tax credit will expire after Sept. 30, 2025. It was supposed to be in effect until Dec. 31, 2032.
Residential Clean Energy Credit is set to expire for expenditures made after Dec. 31, 2025, instead of Dec. 31, 2032.
More restrictions will be placed on “foreign entities of concern” that may benefit from the tax credits.
The changes are not likely to reverse the course of decarbonization in CRE. From what I have seen, there is a lot of determination, creativity, technology and good financial sense behind the industry’s efforts. But it is a switch from what was envisioned during the Biden era, and it may slow progress
