The following statement can be attributed to David Soll, Industrial Decarbonization Manager of the Great Plains Institute, regarding the final passage of the One Big Beautiful Bill Act (H.R.1). The Industrial Innovation Initiative (I3) is a coalition of leaders from industry, labor, and nonprofit organizations focused on strengthening American industry and reducing industrial emissions.
“The reconciliation bill, as amended and passed by the Senate on Tuesday, July 1st, and passed through the House of Representatives on Thursday, July 3rd, makes changes to several energy tax credits critical to industrial transformation.
The bill preserves and strengthens two important industrial tax credits:
- 45Q: Preserving the basic structure of the 45Q tax credit provides momentum for carbon capture, removal, reuse, transport, and storage applications across industries. The bill also creates level parity for all end uses of captured carbon, which is likely to increase the use of carbon management across the industrial spectrum.
- 45Z: The Senate’s decision to extend 45Z from 2027 to the end of 2029 will encourage clean fuel manufacturers to make investments that reduce the carbon intensity of their products.
The bill weakens several important INDUSTRIAL tax credits that are critical for American industry:
- 45V: Changing the deadline to begin project construction from 2033 to January 1, 2028, for taxpayers to qualify for the 45V Clean Hydrogen Production Tax Credit runs the risk of undermining America’s competitive advantage in producing clean hydrogen. While the final text is a vast improvement over the original House bill (requiring developers to begin construction by the end of 2025), moving back the deadline for project construction injects significant uncertainty into the clean hydrogen market, which will be critical to modernize American steel and other materials.
- 48C: The language restricting the Secretary of Energy from reallocating funds from projects unable to meet certification requirements to new projects may result in some portion of the last $10 billion allocation to 48C projects going unclaimed, reducing federal support for American manufacturing.
- 48E/45Y: Termination and restrictions to the Clean Electricity Investment and Production Credits (48E/45Y) requiring wind and solar projects be “placed in service” no later than December 31, 2027 (from the original December 31, 2033, expiration date) could significantly diminish production of electricity required to power American industry and households. At a time of skyrocketing demand for power, reducing incentives for electricity production is counterproductive. (The final language provides a delay in the effective date for one year from enactment, seeming to leave the existing “commence construction” safe harbor in place for the next year.)
I3 was disappointed that the final bill rescinds more than $3 billion in unobligated balances from the Industrial Demonstrations Program (IDP). This language, along with the Department of Energy’s abrupt cancellation of 18 IDP awards, will make it difficult for manufacturers and producers of chemicals, glass, cement, iron, and other essential materials to complete these important projects, which were on track to demonstrate the viability of cross-cutting technologies required to modernize American industry, while increasing global competitiveness and creating thousands of local, well-paying jobs. Rescinding these funds increases the likelihood that these technologies will be developed and deployed outside of the United States.
I3 looks forward to continuing to work with Congress and the Administration to develop and support the policies and programs required to ensure a thriving American industrial sector.”
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The Industrial Innovation Initiative (I3) is an ambitious coalition focused on strengthening American industry and reducing industrial emissions through policy development and implementation, technology demonstration and adoption, and demand-side market development. The Initiative builds on years of stakeholder engagement by its co-conveners, Great Plains Institute and World Resources Institute, to establish consensus around and advocate for key industrial policies and initiatives.