Insight

Renewables Under the New Administration: Navigating an Uncertain Roadmap

June 06, 2025

Recent policy shifts at the federal level have introduced significant variability to the US renewable energy sector. While demand for clean energy continues to grow, executive orders, regulatory changes, and evolving legislative priorities are reshaping the landscape for project development and investment.

In this Insight based on our Earth Day webinar series we outline some of the key federal developments affecting renewables in 2025, including changes to permitting and National Environmental Policy Act (NEPA) implementation, vehicle emissions standards, the future of Inflation Reduction Act (IRA) tax incentives, and additional considerations for clean energy project developers, and highlight how legal and regulatory changes are being implemented and what to watch in the months ahead.

RENEWABLE INFRASTRUCTURE PERMITTING

The administration’s early executive orders have sent strong signals that it intends to prioritize domestic fossil fuel production over renewable energy development. The implications for project permitting are particularly acute.

Executive Orders

Three major executive actions will reshape the permitting landscape:

  • National Energy Emergency Declaration: Defines “energy” to include fossil fuels but excludes solar and wind, directs agencies to invoke emergency powers under the Defense Production Act to accelerate fossil fuel projects, and provides specific instructions for expediting Clean Water Act permitting and Endangered Species Act reviews for such projects.
  • Unleashing American Energy: Directs agencies to revise or repeal regulations that hinder fossil fuel development, rescinds multiple Biden-era environmental orders, and instructs the Council on Environmental Quality (CEQ) to withdraw NEPA regulations and issue new permitting guidance.
  • Offshore Wind Leasing Halt: Suspends new offshore wind leases, raising concerns about the reliability of federal permitting for renewables.

Collectively, these measures have introduced uncertainty and additional risk for clean energy projects across the country.

NEPA Reform

The rescission of the CEQ’s NEPA regulations represents a particularly significant change in federal policy for the renewables sector. The interim final rule removes the governmentwide framework for environmental reviews, replacing it with a directive that agencies craft their own NEPA regulations.

This transition period raises key questions:

  • Will agencies voluntarily follow now-rescinded CEQ guidance?
  • How will courts treat NEPA documents prepared under the old framework?
  • Will ongoing or future litigation challenge agency processes be built on unstable legal footing?

The administration has stated that permitting should continue without delay, however, the absence of consistent guidance combined with pending litigation and shifting agency procedures has introduced notable uncertainty, making it more difficult for developers to predict permitting timelines or requirements.

As agencies work to update or replace their NEPA processes, developers must stay closely engaged with regulators, monitor evolving standards, and remain flexible in project planning to avoid delays or compliance setbacks.

VEHICLE EMISSIONS STANDARDS

The transportation sector, another key pillar of the energy transition, is undergoing a similar recalibration. The previous administration’s tailpipe rules and fuel economy standards aimed to accelerate electric vehicle (EV) adoption. The current administration is now working to unwind those efforts, and a budget reconciliation bill currently making its way through the US Congress includes provisions to revise or repeal the programs discussed below.

GHG Tailpipe Rules

The previous administration’s tailpipe rules for light-duty and heavy-duty vehicles set aggressive greenhouse gas (GHG) emission limits, effectively pushing automakers toward electrification. It was projected that EVs would make up 60% of new car sales by 2030 and 67% by 2032. However, these rules are now in legal limbo.

Under the Unleashing American Energy executive order, agencies have been instructed to revise or suspend rules that limit consumer vehicle choice. The US Environmental Protection Agency (EPA) has stated its intent to revise these tailpipe standards and the 2022 nitrogen oxide rules for trucks, which also incentivized manufacturers toward EVs.

The previous administration’s rules technically remain in effect and litigation over them is paused, but they are providing little to no incentive for EV adoptions as their compliance deadlines remain years away and the industry anticipates that they will soon be repealed and replaced.

CAFE Standards

Corporate Average Fuel Economy (CAFE) standards, overseen by the US Department of Transportation’s National Highway Traffic Safety Administration (NHTSA), have received less public attention but also face revision. These fuel economy benchmarks were aligned with EPA’s tailpipe rules and similarly incentivized EV production. NHTSA is now reconsidering these standards, with litigation held in abeyance pending agency action.

The California Waiver

In May 2025, Congress passed resolutions under the Congressional Review Act (CRA) to nullify EPA waivers granted to California for its Advanced Clean Cars II and Advanced Clean Trucks programs along with related nitrogen oxide standards. These waivers issued under the Clean Air Act have long allowed California to set more stringent vehicle emissions rules. More than a dozen states follow these stricter standards, collectively representing roughly half of the US auto market.

This action by Congress followed earlier determinations by the Senate parliamentarian and the Government Accountability Office that such waivers do not constitute “rules” under the CRA and are therefore not subject to its provisions. The resolutions now await the president’s signature.

California officials, including Governor Gavin Newsom and Attorney General Rob Bonta, have announced intentions to challenge the revocation in court, arguing that it undermines the state’s longstanding authority under the Clean Air Act to protect public health and the environment. The outcome of this legal dispute could have significant implications for state-level environmental regulations and the broader framework of federalism in environmental policy.

INFLATION REDUCTION ACT INCOME TAX BENEFITS

The IRA fundamentally reshaped the US clean energy economy by introducing and expanding tax credits across the energy supply chain and for deployment and the way these credits could be monetized. While these benefits remain in place, they face political headwinds.

Background and Scope

The IRA enhanced or introduced federal income tax credits for renewable electricity, energy storage, clean hydrogen and other clean fuel, and carbon capture utilization and storage facilities, among other technologies.

It introduced credit-enhancing “adders” for meeting certain labor standards, using domestic content, “energy community” location, and investing in low-income communities. The IRA also introduced the advanced manufacturing credit for US production of clean tech equipment and critical minerals.

Critically, the IRA enacted two new ways to monetize these tax credits, transferability and direct payment. These provisions opened the market to new investors and financing structures, significantly expanding participation in the clean energy economy.

Current Status

With a Republican trifecta now in place for control of the US House of Representatives, Senate, and presidency, the future of these tax benefits is unclear. Guidance on IRA tax provisions has largely halted. A regulatory freeze was imposed shortly after the new administration took office.

Additionally, lawmakers are pursuing a budget reconciliation bill that seeks to extend the 2017 tax cuts and enact other tax cuts, and limitation and accelerated sunset of IRA tax benefits and transferability monetization are being proposed as offsetting revenue raisers.

While the tax credit transfer market has flourished since the IRA’s enactment, with a wide range of buyers and sellers now active, uncertainty is dampening enthusiasm. Developers and investors are increasingly focused on demonstrating that projects began construction early enough to hopefully “safe harbor” from any new legislative changes. Still, no strategy offers absolute protection in the current climate until legislation becomes certain.

CONSIDERATIONS FOR PROJECT DEVELOPERS

In addition to the above policy shifts, regulatory uncertainty, and market disruptions, renewable energy developers must contend with the following:

  • Permitting Risk and Offshore Wind: The abrupt halt of the Empire Wind project, despite extensive permitting and billions in secured financing, has raised concerns about the durability of federal approvals. While the stop work order was recently lifted, the lack of notice or process surrounding the pause has not only caused the developer significant financial losses but also created broader uncertainty across the project finance market, calling into question whether other federally permitted projects could face similar disruptions.
  • Impacts of Prolonged Fossil Fuel Operations: Executive orders aimed at keeping coal plants online will have an impact on electricity markets. These legacy facilities were previously scheduled for retirement and their extended operation could slow investment in renewable energy projects in the short term.
  • Tariff Uncertainty and Supply Chain Disruption: The imposition of reciprocal tariffs has complicated procurement for solar and storage projects, particularly those relying on manufacturers based in Asia. Projects already under construction are particularly exposed, as fluctuating costs and delivery schedules impact budgets and financing arrangements.
  • Tax Credit Market Caution: As noted above, the post-IRA boom spurred by the new and enhanced tax credits and monetization methods brought many new participants into the clean energy deployment, manufacturing, and financing spaces. But with policy changes under consideration, some parties are pulling back, and financings based on tax credit monetization (including credit transfers) now face increased uncertainty in light of this risk. The financing market for IRA tax credit benefitting in-development projects has generally proceeded in earnest, but pricing and terms continue to evolve on a real-time basis to react to this legislative uncertainty.
  • Defensive Strategies: Developers are responding by advancing construction timelines to qualify under current tax rules, revisiting offtake agreements to reflect cost volatility, and exploring alternative suppliers to hedge against tariff-related delays and price swings. These risk mitigation efforts are becoming essential in project planning and execution.

CONCLUSION

While renewable energy demand remains strong, the policy landscape in 2025 has so far been defined by legal uncertainty and administrative changes. Executive orders, rescinded regulations, stalled guidance, and legislative developments are forcing developers and investors to rethink strategies, assess new risks, and act decisively to protect the viability of current and future projects.

In this environment, close monitoring of agency and legislative actions and developments, proactive project planning, and agile legal guidance are more important than ever. The road ahead may be uncertain, but for those who adapt opportunity remains.