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Restrictions on buying from prohibited countries impact wind and solar projects
Energy companies need to more closely track the origin of materials and components
Under the new U.S. federal budget, renewable-energy companies that count on tax credits are restricted from purchasing from Foreign Entities of Concern such as Chinese companies. They cannot claim energy credits if they receive material assistance from, have certain ties to, or make significant payments to such entities.
However, there is an exception for goods acquired under a binding contract signed before June 16, 2025, used in wind or solar projects that begin construction before July 5, 2026, and placed into service by December 31, 2027. These goods do not need to be included in the required calculation of goods sourced from a prohibited entity.
Additionally, a temporary transition rule allows for the use of “impracticable-to-trace battery materials” from prohibited entities through the end of 2026, though companies must submit plans for compliant sourcing by 2027. The effective dates of the restrictions depend on the specific tax credit and the nature of the relationship with the prohibited entity.
Energy companies will need to meticulously track the origin of materials and components to ensure compliance with these new sourcing restrictions and avoid the forfeiture of valuable tax credits. Proactive identification and diversification of compliant suppliers will be essential to successfully navigate these regulations and maintain eligibility for incentives.
The C.H. Robinson Sourcing Analysis Tool helps our customers identify alternative sourcing strategies and potential cost savings.
Energy products spared from new U.S. tariff on Brazilian imports
Starting August 7, 2025, the United States has imposed a 40% national emergency tariff on a wide range of Brazilian products. Exemptions include crude petroleum, petroleum oils, natural gas, and coal—which are Brazil’s top exports to the United States.
Federal budget bill impacts the biofuel industry
Sustainable aviation fuel (SAF), produced from renewable sources, offers a lower carbon footprint over conventional crude-based jet fuel. It currently accounts for less than 1% of jet fuel, but is expected to have a compound annual growth rate of 65.5% during the next five years, growing to $25.6 billion by 2030. SAF is designed as a drop-in fuel, meaning it can be used without redesigning current aircraft fueling systems.
The U.S. federal budget passed in July amends tax credits for SAF that were first introduced under the Inflation Reduction Act. Section 45Z provides a performance-based tax credit for producing low-emission transportation fuels. The new budget modifies the 45Z framework:
- The tax credits are extended through 2027, with options to add extensions in the future.
- The previous credit of up to $1.75 per gallon was reduced to $1.00 per gallon.
- With the aim of increasing the use of U.S. sourced corn, soy, and tallow, the credit will be reduced 20% if imported feedstock is used.
Biofuels are also growing in use in the trucking industry. Biodiesel is made from renewable sources such as vegetable oils, animal fats, and recycled grease. Most diesel trucks can operate on a blend of up to 20% biodiesel (B20) without engine modifications. Retrofitting engines to consume higher percentages of biofuel can also be affordable compared to the price of a new truck.
Biodiesel blends, like B20, are also often priced lower than petroleum diesel, making them attractive to companies looking for both cost savings and sustainability in their supply chain.
A recent proposal by the Environmental Protection Agency (EPA) to update the Renewable Fuel Standard would require refiners to blend larger volumes of domestically sourced biofuels into the U.S. fuel supply. Relying on more domestic raw materials such as soybean oil or feedstock, it could increase renewable fuel volumes by 1.69 billion gallons by 2027—adding a level of increased demand that the domestic biofuel market has not yet been able to produce.
As public comment on the proposal closes on August 8, 2025, advocates for and against the change have been debating the potential for supply/demand driven increases in the cost of fuel against the benefit to U.S. producers and farmers.
New U.S. tariff on goods from India is affecting energy markets
A new executive order has increased duties on imports from India by an additional 25%, related to the White House’s concerns about India purchasing oil from Russia. On top of a 25% reciprocal tariff, it is slated to go into effect August 27, 2025.
In response to the August 6 announcement, oil prices began fluctuating—initially rising on supply worries then cooling as the market waited for details of formal implementation and results of U.S.-Russia talks that could influence Russia sanctions. This comes against a backdrop of trade negotiations between the United States and India that have proven to be more challenging than either country initially expected.