Transition Finance Weekly - 5/22/2025
Clean Energy’s Poison Pill, Empire Wind’s Resurrection, and Devastation in the Heartland
1. ON THE MOVE IN CONGRESS: GOP Tax Bill Kneecaps Clean Energy
Clean energy tax credits are on the chopping block.
At this writing, House Republicans have passed and sent to the Senate a budget plan that puts the entire IRA-driven clean energy boom at risk. The latest revisions would also end clean energy tax breaks by 2029, and revoke tax breaks on projects that don’t begin construction within 60 days.
Buried in the bill is a “foreign entities of concern” clause, disqualifying clean energy projects from federal tax credits if they’re linked in any way to China, at any point in their supply chains.
Why is this a “poison pill”? Because finding clean-energy components that were not “extracted, processed, recycled, manufactured, or assembled” in China is nearly impossible, thanks in large part to years of GOP efforts to stall clean energy buildout at home. Virtually every clean power project could be impacted, and as the dominoes fall, investor confidence will, too.
Kristina Costa, former Biden admin clean energy advisor: “No one anywhere, in any part of the economy, has ever had to understand their supply chains to the degree of specificity that this bill applies to clean energy companies and manufacturers. It’s going to grind everything to a standstill.”
2. SENATE BREAKS RULES TO UNDERCUT STATES: The GOP Uses the “Nuclear Option” to Stall Clean Cars
Senators broke the rules to make America’s air quality worse.
Senate Republicans under Majority Leader John Thune forced a late night “norm busting” repeal of California’s zero-emission vehicle policy, conspiring with Lee Zeldin and the EPA to target California’s Clean Air Act waivers, a foundation of the state’s nation-leading climate policy—even though both the General Accounting Office and the Senate parliamentarian have said they don’t have the authority.
The EPA waivers allow California (and 11 other states following its lead) to set stricter vehicle emissions standards than the federal government, and they underpin California’s plan to phase out gasoline-powered cars by 2035.
Thune, despite pushback, was undeterred in bypassing Senate rules to undermine both federal rulemaking and state power. The GOP plan threatens decades of California’s independence on emissions regulations, and its authority to set policy for the nation’s largest automotive market. Pushback from Democrats in Congress was fierce and will continue in California as it prepares to mount a robust defense.
California Gov. Gavin Newsom: “This Senate vote is illegal. Republicans went around their own parliamentarian to defy decades of precedent. We won’t stand by as Trump Republicans make America smoggy again — undoing work that goes back to the days of Richard Nixon and Ronald Reagan — all while ceding our economic future to China.”
3. Empire Wind Is Back
New York Gov. Hochul notches a clean energy victory, at least for now.
In a surprise victory for clean energy, the Trump administration has lifted its freeze on the Empire Wind project, previously stalled by a politically motivated stop-work order last month. Also approved: New York will allow the Constitution gas pipeline, cancelled in 2020, to be reconsidered.
Gov. Kathy Hochul’s team worked hard to organize a full-court press of labor and business interests to convince Trump and Interior Secretary Doug Burgum to let Equinor proceed with construction (already 30% complete when the administration shuttered the project), stunning the global wind industry and alarming investors.
So much was at stake if the project didn’t move forward: thousands of jobs, billions in investment, energy reliability for a state that had counted on the new generation capacity. This project’s long-term future is not guaranteed, but it does appear that when states fight to protect clean energy, wins are possible.
Vanessa Fajans-Turner, Executive Director of Environmental Advocates NY: “This reversal is a win for New York workers and for the future of our energy economy…. Offshore wind is how we grow paychecks and protect the planet at the same time—and it’s exactly the kind of win-win policy New York needs more of.”
4. Texas Energy Fund Falls Flat
Why can’t Texas manage to give away five billion dollars?
Projects backed by the Texas Energy Fund, a $5.4 billion program that offers low-interest, high-risk loans to build new gas plants, are being pulled by their developers, who say the economics are too uncertain even with subsidies. The fund has been pitched as a fix for grid reliability after Tropical Storm Uri (despite the role fossil fuel infrastructure played in the 2021 blackout); but now much of the 9.8 GW it aimed to build are on the financial rocks or already canceled.
Winning on the merits — battery storage. Storage in Texas has grown 5,500% since 2019.
Texas leaders keep prioritizing fossil fuel giveaways while trying to block renewables, even as clean energy thrives on its own in the state. But companies that build power infrastructure are rational, and they can see what’s right in front of their faces: fossil fuel projects aren’t good investments, no matter how much public money you put behind them.
5. Youngkin Vetoes Clean Energy Bills
Environmentalists and Dominion Energy were both on the other side of the issue.
Virginia Gov. Glenn Youngkin just vetoed two clean energy bills that would have expanded rooftop solar access and supported battery storage to reduce long-term fuel costs, while also saving billions for the state’s biggest utility, Dominion Energy. The veto shocked both climate advocates and Dominion alike, which had formed an unlikely alliance to support the bills.
Youngkin claims the bills would raise costs for ratepayers, but blocking renewable energy generation and storage won’t make energy cheaper. He has called himself an “all-of-the-above” energy guy, but at the end of the day, his actions show, as the Southern Environmental Law Center’s Josephus Allmond put it, that he “just doesn’t like clean energy.”
Virginia Delegate Rip Sullivan: “Instead of signing 2537, or even suggesting to us constructive changes, which of course we’d have entertained, he has used it to give the Clean Economy Act one last sort of derisive swipe at the back of his hand as he prepares to walk out the door toward his next campaign.”
6. Devastation Hits the Heartland
Tornadoes rip through Kentucky and Missouri—without enough warning.
At least 28 people are dead, with thousands of homes wiped out or severely damaged, in Kentucky and Missouri after devastating tornadoes struck Friday night. Tornado warnings came too late for many, in part because of staff shortages at National Weather Service offices in the region following federal cuts.
This devastation came just one day after this New York Times exposé warned that staffing cuts, largely driven by DOGE, would put disaster-prone communities at severe risk. The Times specifically cited the NWS office in Jackson, Kentucky, right in last week’s tornado zone, as one that was no longer staffed for 24/7 monitoring.
The devastation is a preview of what Trump’s cuts to NWS, FEMA, and other readiness agencies are likely to do elsewhere. Remember: every dollar spent at the NWS is repaid 73 times; there’s no financial case for cuts.