Understanding the Executive Order on Terminating Green Energy Subsidies

July 7, 2025, WASHINGTON, D.C. – President Donald J. Trump (R) issued a new executive order titled – ENDING MARKET DISTORTING SUBSIDIES FOR UNRELIABLE, FOREIGN CONTROLLED ENERGY SOURCES – that dramatically shifted the direction of United States energy policy. Issued by the President, this order targets what it describes as "expensive and unreliable energy sources like wind and solar" and seeks to eliminate taxpayer-funded subsidies that support these industries. The action builds on legislative changes introduced in the "One Big Beautiful Bill Act" by directing federal agencies, particularly the Department of the Treasury, to enforce an end to certain tax credits and to implement strict restrictions related to foreign-controlled supply chains in the energy sector.

This article explores the motivations behind the executive order, the policies it sets forth, and the likely impacts on the energy market, federal budgeting, national security, and the broader national landscape.

The Purpose Behind the Executive Order

The executive order opens with a clear critique of federal subsidies for wind and solar energy. The administration's principal argument is that these subsidies have distorted energy markets, forced taxpayers to support technologies deemed "expensive and unreliable," and undermined both the reliability of the national electric grid and the aesthetic value of the country's landscapes. Moreover, the order stresses a concern that reliance on green energy supply chains, which often originate overseas, could present a national security risk-especially if those supply chains are controlled by foreign adversaries.

The document frames its action as essential to restoring "energy dominance," boosting national security, enabling economic growth, and safeguarding the fiscal health of the United States. This rhetoric signals a return to prioritizing traditional, domestic energy sources, such as natural gas, coal, and oil, which the administration views as more dependable and cost-effective.

Key Policies Established by the Order

The executive order lays out several concrete policies:

• Elimination of Green Energy Subsidies: The federal government will rapidly eliminate subsidies for wind, solar, and other so-called "green" energy sources. The order refers to these subsidies as "market distortions" that increase costs for taxpayers and weaken the country's energy foundations.

• Strengthening Legislative Actions: The order builds upon recent legislative changes enacted through the "One Big Beautiful Bill Act." This law, although not detailed in the order, apparently repeals or modifies tax credits and incentives previously available to renewable energy projects.

• Ending Support for Foreign-Controlled Energy Supply Chains: The executive order explicitly targets taxpayer support for supply chains "built in, and controlled by, foreign adversaries." This provision reflects growing concern among U.S. policymakers about dependence on overseas suppliers for critical energy infrastructure, especially in light of recent global tensions.

Department of the Treasury: Implementation Mandates

To ensure the policy objectives are translated into concrete action, the order directs the Secretary of the Treasury to take specific steps within 45 days of the One Big Beautiful Bill Act's enactment:

• Enforcement of Terminated Tax Credits: The Secretary must enforce the end of clean electricity production and investment tax credits (notably, those under sections 45Y and 48E of the Internal Revenue Code) for wind and solar facilities. The order instructs the Treasury to issue new or revised guidance to prevent projects from exploiting loopholes or accelerating construction timelines simply to remain eligible for subsidies now slated for elimination.

• Restrictions on Foreign Entity Involvement: The Secretary is also charged with implementing enhanced restrictions on "Foreign Entities of Concern" (presumably tied to national security risks), as outlined in the One Big Beautiful Bill Act. This means even if a project otherwise qualified for previous incentives, if it involves entities linked to foreign adversaries, it will face new limitations or outright exclusion from federal support.

What Are Sections 45Y and 48E?

Prior to this order and the legislative act, Sections 45Y and 48E of the Internal Revenue Code were central to federal efforts to speed the transition to renewable electricity. They provided:

• Section 45Y: A clean electricity production credit, rewarding the generation of electricity from zero-emission sources, primarily wind and solar.

• Section 48E: An investment tax credit for capital expenditures on clean energy properties, again mostly favoring wind, solar, and associated storage technologies.

By mandating an end to these credits for wind and solar, the order seeks to erase the financial edge these technologies have enjoyed in recent years. This shift is likely to have broad implications for both the economics of renewable energy projects and for the companies that specialize in developing them.

Implications for the Energy Market

The executive order's most immediate impact will be on the renewable energy sector. Wind and solar developers have long relied on federal tax credits to make their projects competitive with fossil fuel-based generation. By terminating these incentives, and by taking a hard line on project "construction start" definitions, the administration is signaling that the era of federal support for renewables may be over-at least for the foreseeable future.

• Impact on Project Financing: Many ongoing or planned renewable energy projects will now face greater financial hurdles. Without subsidies, the upfront costs of wind and solar can be harder to recoup, potentially stalling new development and jeopardizing projects already in the pipeline.

• Electricity Grid Stability: The order argues that wind and solar are "unreliable" because they are intermittent-dependent on the wind blowing or the sun shining. Supporters of the order believe that a renewed focus on dispatchable sources, such as natural gas or coal, will improve grid reliability. Detractors, however, argue that renewables, paired with storage and grid modernization, can be just as reliable and are crucial for cutting emissions.

• Market Competition: With tax credits gone, market competition may tilt back toward traditional energy firms. This could result in lower costs for fossil fuel producers and higher costs-or at least slower growth-for renewable energy providers.

Fiscal and Economic Considerations

A major justification for the executive order is fiscal responsibility. The administration views green energy subsidies as a drain on the federal budget and believes their removal will contribute to stronger national finances. The actual fiscal impact depends on how quickly the market adjusts and whether lost renewable jobs and investments are offset by gains in traditional energy sectors.

On the economic front, states that have invested heavily in wind and solar may see a slowdown in construction and possible job losses. Conversely, regions with major coal, oil, or natural gas resources may benefit as demand for their products rebounds.

National Security and Foreign Policy

The executive order places heavy emphasis on national security, particularly the risk of relying on foreign-controlled supply chains for critical energy technology. Solar panels, for instance, are often manufactured using components sourced from countries considered strategic competitors or adversaries. By restricting federal support for projects with foreign ties, the administration hopes to bolster domestic manufacturing and reduce exposure to overseas shocks or manipulation.