The legal landscape is witnessing an unexpected surge in clean energy projects, primarily driven by recent political dynamics in the United States.
Despite the pro-fossil fuel stance of President Donald Trump, the renewable energy sector is experiencing a notable increase in legal activity. Lawyers attribute this to the potential rollback of clean energy subsidies and the substantial investments initiated by the Biden-era Inflation Reduction Act (IRA) of 2022. This Act has spurred over $550 billion in investments, as reported by a clean energy advocacy group.
However, these investments face uncertainty as the Trump administration has paused certain fund disbursements, and Congressional Republicans are considering reductions to the tax credits established by the IRA. Consequently, many clients are hastening to launch their projects while the current tax incentives remain intact, heralding what some law firms anticipate as the busiest quarter for their renewable energy practices.
Zach Crowley, a partner at the Clean Energy Counsel, noted, “There was a lot of concern, certainly, in the legal industry at the end of last year, about what 2025 would look like,” yet the firm is witnessing an unprecedented level of activity in Q1.
While clean energy sectors are bustling, other Big Law areas, such as mergers and acquisitions, aren’t seeing the expected boom. Instead, the focus has shifted to addressing potential changes in tax laws. Lawyers are busy drafting provisions to safeguard contracts against policy shifts, with some allowing financiers to exit or adjust agreements in response to legislative changes.
Vaughn Morrison, a partner at Troutman Pepper Locke, likened the current frantic pace to working during the Covid-19 pandemic, citing a looming threat of tax credit reductions. “We were busier than we ever had been, but there was this looming threat of something really bad happening,” he mentioned.
The 2022 legislation also introduced a market for trading tax credits, which has become a lucrative area for legal firms. According to Crux Climate Inc., $30 billion worth of tax credit deals were completed last year, tripling from the previous year. This market activity suggests confidence in the longevity of these credits despite political uncertainties.
The anticipated new tax bill could impact various clean energy segments differently, with electric vehicles and wind power potentially facing cuts, while solar energy might remain less affected. BloombergNEF has revised its forecast for utility-scale solar installations due to Trump’s $500 billion artificial intelligence initiative, Stargate, which will require significant energy, including renewables.
The United States is expected to increase its utility-scale solar installations by 10% this year, surpassing the 39.8 gigawatts added last year. This growth is more than double the installation rate in 2022 when the IRA was enacted.
Some legal experts believe that the influx of investments in traditionally Republican areas could deter drastic cuts to tax credits. However, clarity from Congress is not expected until summer, providing ample discussion points for the upcoming Solar and Wind finance summit in Phoenix.
Josh Heideman of Vinson & Elkins remarked, “What Congress does is going to have a huge impact on the growth and outlook and ability to finance,” yet he affirmed that renewable energy will continue to grow in prominence. Vinson & Elkins anticipates its most active quarter for renewable energy to date.
Reflecting the industry’s growth, Clean Energy Counsel expanded its team by eight attorneys last year and plans further hires to manage the increased workload. Crowley commented, “While the industry as a whole is in an uncertain place, the need for these practices seems to be booming.”
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Original Story at news.bloomberglaw.com