Interview on America’s tax overhaul: Investment ‘catalyst’ across energy spheres but deadlines spell potential trouble for wind & solar

July 15, 2025, by Melisa Cavcic

The latest action the United States (U.S.) has taken to unlock its energy dominance, encapsulated in a new tax reconciliation bill, which President Donald J. Trump signed into law, has set the stage for an uptick in domestic energy to drive down costs by inciting new investments across all energy domains, encompassing oil, gas, liquefied natural gas (LNG), renewables, and other low-carbon and clean energy plays. However, fears abound that the legislation will derail the growth of the wind and solar segments, with shortened construction start-up timelines potentially putting such projects at risk.

After President Trump’s ‘One Big Beautiful Bill Act,’ which is the House of Representatives’ version of the reconciliation package that contains aspects deemed critical offshore energy provisions, crossed the finish line following a close call that enabled it to pass the Senate hurdle with a 51/50 vote, it got the green light to become the law of the land.

While the U.S. has already seen a pivot in its energy ecosystem, especially in the clean energy arena because of the offshore wind woes, the budget reconciliation legislation is poised to make things even more complicated for the clean energy domain, thanks to an imminent end to tax credits for wind and solar power, according to Ed Crooks, Wood Mackenzie’s Vice Chair Americas and host of Energy Gang podcast.

This law, in the eyes of the White House, is one of the most sweeping and impactful legislative packages in history, representing “a transformative legislative package that locks in historic tax relief, delivers border security, reforms welfare, funds critical infrastructure, and more.”

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With the aim of unleashing American energy dominance, the ‘One Big Beautiful Bill’ is said to deliver on President Trump’s promise to restore U.S. energy supremacy by driving down Americans’ cost of living, boosts American-made sources of supply to ensure energy independence, ends the so-called ‘war on American energy’ by reversing Biden-era policies with a special focus on those related to climate change, and refills the Strategic Petroleum Reserve to strengthen energy security.

This bill also reinstates quarterly onshore oil and gas lease sales, reverses Biden’s EV mandates and CAFE standards to allow families to choose a car that fits their needs and budget, and stops the alleged ‘Green New Scam’ by rescinding billions of taxpayer dollars poured into the handouts to green corporate welfare the White House sees as “radical’ climate activists,” ending subsidizing for “unreliable green energy at taxpayer expense.”

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Regulation & Policy

Once the legislation cleared its final obstacle, many industry leaders and stakeholders hailed the Senate’s vote and called on the House to swiftly send the bill to President Trump’s desk, including Mike Sommers, President and CEO of American Petroleum Institute (API), who highlighted: “We applaud the Senate for passing the One Big Beautiful Bill to bolster America’s energy advantage and support economic growth.

“This historic legislation will help usher in a new era of energy dominance by unlocking opportunities for investment, opening lease sales and expanding access to oil and natural gas development. We will continue to work with policymakers to get this final package to President Trump’s desk.”

Others were less enthusiastic about the tax bill, as illustrated by the Sierra Club, which claims that Trump and Republicans in Congress traded Americans’ health and future for polluter profits with “the most anti-worker, anti-family, and anti-environment piece of legislation in U.S. history,” emphasizing that this move will “destroy clean energy jobs, raise electricity prices, take away healthcare and food programs, auction off our public lands for extraction, and abandon working-class families in favor of tax breaks for billionaires and corporations.”

Sierra Club is adamant that the ‘One Big Beautiful Bill’ will rapidly phase out tax credits for wind and solar power, driving up energy costs and making the grid less reliable; cut support that makes homes and buildings more efficient and more affordable to operate, taking money out of citizens’ wallets; eliminate financial incentives for new and used electric vehicles, and stall the American-made EV industry, resulting in job losses across the country.

The environmental organization underlines that the bill withdraws aid for FEMA and the agencies that monitor extreme weather events, leaving many communities vulnerable to climate disaster; guts support for the National Park Service staff; bolsters drilling, mining and logging, including in places like the Arctic and on public lands, to increase big industry profits; and throws millions of children, seniors, and families off Medicaid, other forms of healthcare coverage, and food assistance.

Additionally, the Sierra Club states that this legislation drives up the cost and access to education, slowing economic growth and the ability to be globally competitive; targets immigrant communities by ballooning the budget for ICE, making it the biggest federal law enforcement agency in the country, four times larger than the FBI.

The green energy-promoting organization underscored: “It could have been much worse. But thanks to our collective advocacy, we successfully fought to remove parts that would have forced the sale of public lands across the country, implemented a steep energy tax on wind and solar energy power projects, and ended carbon pollution standards for vehicles on the road. While these are significant wins, the passage of this mega bill is still a massive loss.”

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Taking into consideration the expected boost in American energy within the oil and gas realm as a result of the tax bill, Offshore Energy got Greg Matlock’s take on the situation. He is a principal at Ernst & Young based in Houston, Texas, and serves as the EY Americas Tax Leader for Oil & Gas and Chemicals and the Metals & Mining sectors.

With a background in law, strategy, and transactions, Matlock, who helps energy and resources companies evaluate and capitalize on complex challenges and opportunities across their tax and finance function, has advised clients on projects that include carbon capture use and sequestration (CCUS), hydrogen, geothermal, renewable natural gas, wind, solar, and metal and metal-related investments.

Many aspects continue to affect the global energy landscape, and the U.S. itself has seen a major pivot in energy policy ever since President Donald Trump returned to the White House. What kind of impact will H.R.1 have on the oil, gas, and LNG chapters of the American energy story?

Greg Matlock: H.R. 1 is seen as pro-growth legislation for natural resources produced in the U.S., including LNG. It eases oil and gas leasing requirements and introduces tax provisions to boost capital spending in the sector. The oil, gas, and chemicals industries, which are capital-intensive, will benefit from provisions that allow for quicker cost recovery. In fact, all capital-intensive businesses, regardless of sector, can benefit.

What aspects of the final bill are C-suite leaders in the oil, gas, and LNG industries considering to inform their strategic planning and investment outlook?

Greg Matlock: Certainty in cost-recovery provisions is crucial for C-suite leaders in the natural resources sector. It enables clearer forecasting of investment decisions on an after-tax basis. Additionally, the commitment to reducing red tape and regulation positively influences long-term strategy and investment outlook.

What type of decarbonization measures do you expect to be the go-to solutions in the U.S. onshore and offshore oil and gas sectors, and where is the offshore hydrocarbon extraction industry headed?

Greg Matlock: Carbon capture use and sequestration, for both industrial or manufacturing facilities (point source capture) or for direct air capture facilities (DAC), is expected to continue to attract capital for decarbonization. Carbon capture-related projects, and the tax credit available to certain of those projects under Section 45Q, fared well in H.R. 1 and position oil and gas companies to continue to be both a producer of energy and a participant in large-scale decarbonization efforts.

The expansion of federal leases ought to result in increased capital investment in a variety of federal lands, including offshore. That said, while the increased pool of land is helpful from the supply side, the main driver of investment and growth will and continues to be commodity prices. So long as commodity prices support growth, the expansion of available lands to lease ought to be viewed positively.

What kind of implications will the upcoming dramatic twists and turns have on the energy security and transition to low-carbon and emission-free sources of supply?

Greg Matlock: Given long-term demand cues, there is a broader focus on increasing energy security from all forms of energy. Due to the expected dramatic increase in energy needs, a full ‘transition’ from one source of energy to another is unlikely. Rather, all energy sources will play a role in both the short-term and long-term pursuit of energy security. Natural resources are expected to play a material role in both the short-term and long-term strategy.

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What do you expect the future of global energy to look like, and which steps can the U.S. and international energy industry players take to ensure their readiness to face the challenges that lie ahead?

Greg Matlock: The global energy economy is expected to advance in a somewhat incongruent way, depending on local and regional directives and resource availability. At a macro level, all forms of energy, including natural gas, oil, and other mineral and natural resources, will play a material role on a global scale. Renewable energy will also grow; albeit advancing in different countries and geographies at a disparate pace, depending on regulatory pressures or local incentives.

Is there a particular message you would like to send to the energy industry?

Greg Matlock: The certainty provided by H.R. 1, regardless of whether a specific company or sector fared better or worse than expected ought to be a clear catalyst for new investments. The certainty in policy, in and of itself, will allow companies to properly evaluate investments and get a true feeling, on an after-tax basis, for what they are looking at. With the overarching goal of more abundant energy, that is reliable, accessible, and affordable, the hope is that H.R. 1 provides an energy boost to further fortifying the country’s energy resilience.

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Given the fears over the bill’s impact on the clean energy ecosystem, Offshore Energy discussed the implications the new U.S. legislation will have on this segment of the energy landscape with Brian Murphy, who is a partner at Ernst & Young in Boca Raton, Florida, and serves as the EY Americas Power, Utilities and Renewables Tax Leader.

With over 25 years of experience in the energy sector, Murphy helps clients—including regulated utilities, independent power producers, and private equity investors—navigate complex tax challenges and achieve their strategic ambitions amid a transforming U.S. energy system.

The clean energy boom in the U.S., especially within the offshore wind arena, is facing policy shifts that hinder its growth. Will H.R.1 bring even more challenges to America’s renewable energy revolution? Many believe that this piece of legislation threatens to rock the clean energy boat even further, so what kind of immediate and longer-term implications do you expect to see?

Brian Murphy: The U.S. is facing a sharp increase in the demand for energy over the next five to ten years. To meet that increased demand for power, it will take the deployment of all forms of energy, including wind, solar, natural gas, and nuclear, to keep pace. Under H.R. 1, the tax credits for many renewable technologies (aside from wind and solar) were either untouched or only minimally impacted. The changes to wind and solar, on the other hand, were more substantial. These key technologies face a significantly reduced qualification period where they must begin construction by July 4, 2026, or otherwise be placed in service by the end of 2027.

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In the near term, reduced incentives and new uncertainties resulting from H.R. 1 will likely impact the speed at which energy developers are able to meet this rapid increase in demand. Moreover, the Executive Order issued on July 7, 2025, exacerbated the uncertainty for wind and solar by requiring the Treasury Secretary to take ‘all actions necessary to strictly enforce the termination of the related PTC and ITC’ and to ‘issue new and revised guidance to ensure that policies concerning the beginning of construction are not circumvented’.

Renewable developers are now focused on just how much the existing beginning of construction rules might change under the new guidance and are preparing to adjust their construction and supply chains once they have clarity. If there is good news to be extracted from the EO, it’s that the Secretary was directed to act within 45 days.

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What kind of effect will the proposed policy changes in the tax bill, such as the potential phase-out of key energy incentives and transferability provisions, have on the domestic and global energy markets?

Brian Murphy: Tax credit transferability has been a significant opportunity for the renewable energy sector, with transfer markets developing rapidly since the passage of the Inflation Reduction Act. H.R.1 implements a new rule preventing the sale of credits to prohibited foreign entities, but beyond that new provision, tax credit transferability was essentially unchanged in the final version of the bill.

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Which aspects of the final bill are relevant for C-suite executives’ strategic planning and investment outlook in the renewable and clean energy industries?

Brian Murphy: Renewable C-suites, particularly for wind and solar development, are focused on two critical aspects of H.R.1. The first is the new Foreign Entity of Concern (FEOC) rules and how they might trigger needed changes throughout the supply chains to ensure projects will qualify for tax credits.

The other is the potential for material changes to how Treasury will define the rules related to the start of construction. Navigating the changes in both areas will be critical to ensuring renewable projects can access capital and qualify for either the investment or production tax credits.

What is in store for the offshore wind realm and the wider U.S. clean energy segment over the next three years?

Brian Murphy: Although there is still some uncertainty related to the FEOC and beginning of construction rules, the outlook for most renewable energy technologies, including wind and solar, is robust through at least 2027. It remains to be seen if the FEOC and the beginning of construction rules will prove to be more challenging for offshore wind due to greater supply chain constraints.

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What will the rules on Foreign Entities of Concern, which aim to prevent the use of American energy subsidies to boost companies under Chinese and Russian control, bring to the U.S. and global markets? Is there a silver bullet for this red tape conundrum or a way to circumvent it?

Brian Murphy: The new FEOC rules are complex and will kick in starting from 2026. Although we are waiting on the Treasury to give clarity around some critical definitions, there is still an opportunity for renewable energy projects to begin construction this year to avoid these project-level restrictions.