Who Gets Left Behind? Inside the Senate Plan Reshaping America's Clean Energy Future

The U.S. Senate Finance Committee just dropped a bombshell in the world of clean energy. While the new proposal preserves core carbon capture incentives under the 45Q tax credit, it cuts deep into the heart of wind, solar, and hydrogen sectors. The draft legislation, spearheaded by Senator Mike Crapo, shifts the playing field toward legacy technologies and fossil-adjacent strategies, creating uncertainty for developers relying on the broader renewable ecosystem.

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Carbon Capture Comes Out Strong

Despite fears of rollback, carbon capture and storage (CCS) managed to retain support across the board. The 45Q tax credit remains largely intact and even sees improvements. Projects involving both enhanced oil recovery (EOR) and geologic storage will now qualify for $85 per ton of captured CO2, up from $60.

For direct air capture (DAC), the credit spikes from $130 to $180 per ton—a major win for companies like 1PointFive, AirCapture, and Again, which are rapidly scaling DAC infrastructure. This parity across CO2 use cases responds to years of industry feedback on balancing incentives.

"These updated credit values can unlock billions in private investment," said Jessie Stolark, Executive Director of the Carbon Capture Coalition. But she also warned that inflation has eroded the real value of 45Q, and the new bill fails to immediately fix that.

Inflation Risks Still Loom

The Senate proposal delays inflation adjustments by resetting the indexing year to 2028 and pushing the base year for credit calculation to 2026. According to analysis from the Carbon Capture Coalition, inflation has already shaved the effective value of the $85/ton credit down to just $55/ton, while deployment costs continue to rise.

The delay may cause developers and investors to pause, especially as federal funding has recently been pulled from over 20 major carbon capture projects. DOE cut $3.7 billion in clean energy demonstration grants, affecting players like Calpine, ExxonMobil, and PPL Corp.

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Wind and Solar on the Chopping Block

In sharp contrast to carbon capture’s momentum, solar and wind developers are facing a steep cliff. The Senate bill calls for a full phase-out of wind and solar tax credits by 2028. The current credit value will drop to 60% by 2026, then disappear entirely.

Shares of U.S. solar companies plummeted in extended trading after the proposal dropped. Abigail Ross Hopper, President of the Solar Energy Industries Association, called the move "a threat to one of the greatest economic success stories in American history."

While hydropower, nuclear, and geothermal projects enjoy extensions until 2036, the exclusion of upgrades to existing hydro plants has drawn criticism from groups like the National Hydropower Association.

Hydrogen Caught in the Crossfire

Perhaps the biggest shock came in the treatment of the hydrogen sector. The bill proposes to slash deadlines for the 45V clean hydrogen tax credit—cutting the window for project eligibility from 2033 to 2026. Industry leaders warn this could drive investments overseas.

Lee Beck, SVP of Global Policy at HIF Global, warned that "many projects will not be able to meet the end of 2025 deadline." HIF's $7 billion green hydrogen project in Texas, already in development, now faces massive uncertainty.

Plug Power, which runs the U.S.’s largest PEM electrolyzer facility in Georgia, also stands to lose out, especially with Phase 1 funding for the Hydrogen Hubs program now under review.

CHART: US estimated clean hydrogen demand at threshold prices

Source: U.S. Department of Energy's National Clean Hydrogen Strategy and Roadmap, May 2023 Purchase Licensing Rights

Winners: Carbon Capture, PTPs, and Geothermal

Despite headwinds, the Senate proposal contains silver linings. Transferability of tax credits is preserved, allowing developers to sell credits to third parties—critical for project financing.

Publicly traded partnerships (PTPs) also get a boost, as carbon capture and electricity generation from CCS are newly qualified as income-generating activities. This opens new doors for infrastructure funds and utilities investing in CCS-heavy portfolios.

Geothermal and nuclear, once overlooked, get extended lifelines with full credit value retained until 2033. This is a boon for firms developing modular nuclear or enhanced geothermal systems.

Losers: Rooftop Solar, Green Hydrogen, and Consumer Tax Breaks

The bill cuts consumer-facing incentives like rooftop solar credits and home energy upgrades. Ari Matusiak, CEO of Rewiring America, called the cuts "a profound mistake," arguing they strip middle-class families of tools to save on energy costs.

The early removal of the 45V credit not only affects projects, but jobs and global competitiveness. Frank Wolak, President of the Fuel Cell and Hydrogen Energy Association, warned that "walking away from the 45V credit would cede our competitive edge to China and Europe."

Without U.S.-wide incentives for hydrogen offtake, developers are struggling to scale beyond pilot phase. Current hydrogen demand is met mostly by grey hydrogen, which is still cheaper than green or blue alternatives.

What’s Next for the Clean Energy Market

This isn’t the final version of the bill. Negotiations are ongoing, and clean energy advocates are pressing the Senate to reinstate timelines and expand credit eligibility for renewables and hydrogen. The House already passed a more restrictive version of the same bill.

Several Republican moderates, including Senators Lisa Murkowski and John Curtis, are pushing for more reasonable deadlines and extensions. Meanwhile, groups like FCHEA and API are lobbying hard to preserve investment windows.

If the proposed provisions stick, project developers may pivot to states with stronger local policies—like California and Oregon—or shift focus internationally where policy support remains stronger.