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Tanish Doshi was in high school when he pushed the Tucson Unified School District to take on an ambitious plan to reduce its climate footprint. In Oct. 2024, the availability of federal tax credits encouraged the district to adopt the $900 million plan, which involves goals of achieving net-zero emissions and zero waste by 2040, along with adding a climate curriculum to schools.
Now, access to those funds is disappearing, leaving Tucson and other school systems across the country scrambling to find ways to cover the costs of clean energy projects.
The Arizona school district, which did not want to impose an economic burden on its low-income population by increasing bonds or taxes, had expected to rely in part on federal dollars provided by the Biden-era Inflation Reduction Act, Doshi said.
But under HR1, or the “one big, beautiful bill,” passed on July 4, Tucson schools will not be able to receive all of the expected federal funding in time for their upcoming clean energy projects. The law discontinues many clean energy tax credits, including those used by schools for solar power and electric vehicles, created under the IRA. When schools and other tax-exempt organizations receive these credits, they come in the form of a direct cash reimbursement.
At the same time, Tucson and thousands of districts across the country that were planning to develop solar and wind power projects are now forced to decide between accelerating them to try to meet HR1’s fast-approaching “commence construction” deadline of June 2026, finding other sources of funding, or hitting pause on their plans. Tina Cook, energy project manager for Tucson schools, said the district might have to scale back some of its projects unless it could find local sources of funding.
“Phasing out the tax credits for wind and solar energy is going to make a huge, huge difference,” said Doshi, 18, now a first-year college student. “It ends a lot of investments in poor and minority communities. You really get rid of any notion of environmental justice that the IRA had advanced.”
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The tax credits in the IRA, the largest legislative investment in climate projects in U.S. history, had marked a major opportunity for schools and colleges to reduce their impact on the environment. K-12 school infrastructure releases an estimated 41 million metric tons of emissions per year, according to an analysis from the New Buildings Institute. The K-12 school system’s buses — some 480,000 — and meals also produce significant emissions and waste. Clean energy projects supported by the IRA were helping schools not only to limit their climate toll but also to save money on energy costs over the long term and improve student health, advocates said.
As a result, many students, consultants, and sustainability leaders said, they have no plans to abandon clean energy projects. They said they want to keep working to cut emissions, even though that may be more difficult now.
Solar panels, electric vehicles affected by policy changes
Sara Ross, cofounder of UndauntedK12, which helps school districts green their operations, divided HR1’s fallout on schools into three categories: the good, the bad, and the ugly.
On the bright side, she said, schools can still get up to 50% off for installing ground source heat pumps — those credits will continue — to more efficiently heat schools. The network of pipes in a ground source pump cycles heat from the shallow earth into buildings.
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In the “bad” category, any electric vehicle acquired after Sept. 30 of this year will not be eligible for tax credits — drastically accelerating the IRA’s phase-out timeline by seven years. That applies to electric school buses as well as electric vehicle charging stations at schools. EPA’s Clean School Bus Program still exists for two more years and covers two-thirds of the funding for all electric school buses districts acquire in that time. The remaining one-third, however, was to be covered by federal and state tax credits.
The expiration of the federal tax credits could cost a district up to $40,000 more per vehicle, estimated Sue Gander, director of the Electric School Bus Initiative run by the nonprofit World Resources Institute.
Solar projects will see the most “ugly” effects of HR1, Ross said.
Los Angeles Unified School District is planning to build 21 solar projects on roofs, carports and other structures, plus 13 electric vehicle charging sites, as part of an effort to reduce energy costs and achieve 100% renewable energy by 2040. The district anticipated receiving around $25 million in federal tax credits to help pay for the $90 million contract, said Christos Chrysiliou, chief eco-sustainability officer for the district. With the tight deadlines imposed by HR1, the district can no longer count on receiving that money.
“It’s disappointing,” Chrysiliou said. “It’s nice to be able to have that funding in place to meet the goals and objectives that we have.”
LAUSD is looking at a small portion of a $9 billion bond measure passed last year, as well as utility rebates, third-party financing, and grants from the California Energy Commission, to help make up for some of the gaps in funding.
Many California State University campuses are in a similar position as they work to install solar to meet the system’s goal of carbon neutrality by 2045, said Lindsey Rowell, CSU’s chief energy, sustainability, and transportation officer.
Tariffs on solar panel materials from overseas and the early sunsetting of tax credits mean that “the cost of these projects are becoming prohibitive for campuses,” Rowell said.
Sweeps of undocumented immigrants in California may also lead to labor shortages that could slow the pace of construction, Rowell added. “Limiting the labor force in any way is only going to result in an increased cost, so those changes are frightening as well,” she said.
Projects will need to start work soon to qualify
New Treasury Department guidance, issued Aug. 15, made it much harder for projects to meet the threshold needed to qualify for the tax credits. Renewable energy projects previously qualified for credits once a developer spent 5% of a project’s cost. But the guidelines have been tightened — now, larger projects must pass a “physical work test,” meaning “significant physical labor has begun on a site,” before they can qualify for credits. With the construction commencement deadline looming next June, these will likely leave many projects ineligible for credits.
“The rules are new, complex, [and] not widely understood,” Ross said. “We’re really concerned about schools’ ability to continue to do solar projects and be able to effectively navigate these new rules.”
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Schools without “fancy legal teams” may struggle to understand how the new tax credit changes in HR1 will affect their finances and future projects, she added.
Some universities were just starting to understand how the IRA tax credits could help them fund projects. Lily Strehlow, campus sustainability coordinator at the University of Wisconsin, Eau-Claire, said the planning cycle for clean energy projects at the school can take 10 years. The university is in the process of adding solar to the roof of a large science building, and depending on the date of completion, the project “might or might not” qualify for the credits, she said.
“At this point, everybody’s holding their breath,” said Rick Brown, founder of California-based TerraVerde Energy, a clean energy consultant to schools and agencies.
Brown said that none of his company’s projects are in a position where they’re not going to get done, but the company may end up seeing fewer new projects due to a higher cost of equipment.
Tim Carter, president of Second Nature, which supports climate work in education, added that colleges and universities are in a broader period of uncertainty, due to larger attacks from the Trump administration, and are not likely to make additional investments at this time: “We’re definitely in a wait and see.”
Student activists look for new paths toward climate goals
For youth activists, the fallout from HR1 is “disheartening,” Doshi said.
Emma and Molly Weber, climate activists since eighth grade, said they are frustrated. The Colorado-based twins, who will start college this fall, helped secure the first “Green New Deal for Schools” resolution in the nation in the Boulder Valley School District. Its goals include working toward a goal of Zero Net Energy by 2050, making school buildings greener, creating pathways to green jobs, and expanding climate change education.
“It feels very demoralizing to see something you’ve been working so hard at get slashed back, especially since I’ve spoken to so many students from all over the country about these clean energy tax credits, being like, ‘These are the things that are available to you, and this is how you can help convince your school board to work on this,’” Emma Weber said.
The Webers started thinking about other creative ways to pay for the clean energy transition and have settled on advocating for state-level legislation in the form of a climate superfund, where major polluters in a community would be responsible for contributing dollars to sustainability initiatives.
Consultants and sustainability coordinators said that they don’t see the demand for renewable energy going away. “Solar is the cheapest form of energy. It makes sense to put it on every rooftop that we can. And that’s true with or without tax credits,” Strehlow said.
Contact editor Caroline Preston at 212-870-8965, via Signal at CarolineP.83 or on email at preston@hechingerreport.org.
This story about tax credits was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for the Hechinger newsletter.
