Mitchell Beer/The Energy Mix
By a 215-214 vote last Thursday, the United States House of Representatives adopted a massive tax bill that eliminates hundreds of billions of dollars in clean energy tax credits to households and businesses and increases the country’s climate pollution by more than a billion tonnes per year in 2035.
The House bill, which must still be taken up by the U.S. Senate, guts key elements of the Inflation Reduction Act that Democrats managed to shoehorn through Congress in 2022. Tax credits under the IRA were meant to continue through 2032, but Yale Climate Connections reports that the following measures will be phased out at the end of this year:
• For individuals: Credits for clean vehicles, used clean vehicles, alternative fuel vehicle refuelling, energy efficient home improvements, and residential clean energy;
• For businesses: Commercial clean vehicles, new energy-efficient homes, and clean hydrogen production.
“The bill has climate implications beyond gutting clean energy incentives,” Yale Climate Connection writes, with measures that eliminate the federal tax on methane pollution and speed up approval for new fossil fuel projects. “The bill also proposes major cuts to Medicaid, thus limiting access to health care for many vulnerable people, even as climate change increases health risks from weather disasters, insect-borne diseases, and extreme heat. And if passed, the bill would eliminate environmental and climate justice block grants.”
“This policy about-face couldn’t come at a worse time: Energy prices have surged 30% since 2020,” Ari Matusiak, CEO of the non-profit Rewiring America, said in a statement. “Maintaining these tax credits gives American households an opportunity to offset these price hikes.”
Climate author and Third Act co-founder Bill McKibben has a summary of the day on his The Crucial Years blog.
The House measure, literally titled the One Big Beautiful Bill Act, eliminates technology-neutral clean energy tax credits for projects that go into service after 2028, or begin construction more than 60 days after the bill is adopted, Utility Dive writes, while allowing longer lead times for nuclear projects. It also creates a “truly untenable” situation for renewable energy developers by tightening restrictions on “foreign entities of concern” like China, one analyst told the industry publication. And it shuts down a tax credit transfer arrangement under the IRA that helped small and medium projects arrange financing and previously had support from Republicans as well as Democrats.
The bill “abruptly dismantles bipartisan, long-standing tax policy that has catalyzed billions in private investment for affordable, reliable energy while sparking a rebirth of manufacturing across America,” said Heather O’Neill, president and CEO of Advanced Energy United. “If enacted as written, this bill will weaken our power system and send shockwaves throughout the U.S. economy by raising electricity prices, killing tens of thousands of jobs, and ceding energy dominance to China.”
“This unworkable legislation is willfully ignorant of the fact that deploying solar and storage is the only way the U.S. power grid can meet the demand of American consumers, businesses, and innovation,” the Solar Energy Industries Association said in a statement. “If this bill becomes law, America will effectively surrender the AI race to China and communities nationwide will face blackouts.”
As recently as March, 21 House Republicans were urging their colleagues to protect the IRA tax credits from a premature phaseout. Last week, 14 of the original signatories were still standing behind the credits, Inside Climate News reports.
In the end, none of them voted against the bill. One of them, Rep. Andrew Garbarino (R-NY) missed the vote, but had planned to support the measure.
Related: Moderate Republicans Defended Biden’s Climate Law—Then Voted to Repeal It
“They’re feeling pressure to go along with whatever Trump wants and whatever the [Republican House] leadership wants,” David Spence, a professor and energy law specialist at the University of Texas at Austin, told Inside Climate. “What’s putting counter pressure on them is that for some of them that means giving up a lot of jobs and money” that their districts received thanks to the IRA. “And for others, it’s about how far they can be pushed away from their principles.”
“These clean energy tax credits have been a game changer for communities across the nation, including in the districts of the Republican representatives,” said BlueGreen Alliance Executive Director Jason Walsh. “The GOP caved to the MAGA extremists in their party so they could screw over America’s workers to stuff the pockets of billionaires.”
Princeton University associate professor and energy transition veteran Jesse Jenkins says the bill will:
• Increase U.S. greenhouse gas emissions by roughly 500 million tonnes per year in 2030 and more than a billion tonnes per year in 2035;
• Raise U.S. household and business energy expenditures by US$25 billion per year in 2030 and more than $50 billion in 2035;
• Increase average U.S. energy costs by roughly $100 to $160 per household per year in 2030 $270 to $415 per household per year in 2035;
• Reduce U.S. electricity and clean fuels production by a cumulative $1 trillion through 2035;
• Imperil $522 billion in announced but pending investments in U.S. clean energy supply and manufacturing;
• Reduce annual electric vehicle sales by roughly 40% in 2030 and “end America’s battery manufacturing boom”;
• “Substantially slow” new grid additions, raising national average retail electricity rates and monthly household electricity bills by about 9% in 2030, and up to 17% in states like Texas, Oklahoma, and swing state Pennsylvania;
• Kill off the country’s emerging clean hydrogen, carbon dioxide management, and nuclear power sectors.
Now, after Donald Trump campaigned last year against what he called the “Green New Scam”, Republicans in the U.S. Senate “must grapple with the reality behind the slogan: cutting hundreds of billions of dollars of clean energy subsidies that are flowing to their own states,” the Washington Post reports.
“The majority of the government spending is creating jobs and manufacturing capacity in red states,” Jason Bordoff, founding director of Columbia University’s Center on Global Energy Policy y, told the Post. “So this puts Republicans, generally and now in the Senate, in the position of having to choose whether to support the party line or maintain support for government programs that are creating a lot of economic activity in their states.”
After the House adopted the bill, the U.S. fossil lobby weighed in in support of a measure it said would “help restore American energy dominance.”
“By preserving competitive tax policies, beginning to reverse the ‘methane fee,’ opening [oil and gas] lease sales, and advancing important progress on permitting, this historic legislation is a win for our nation’s energy future,” American Petroleum Institute President and CEO Mike Sommers said in a statement. “We look forward to working with the Senate to strengthen pro-investment provisions and keep America at the forefront of energy innovation.”
But despite the U.S. president’s loud mutterings about his “Drill, Baby, Drill” agenda, the country’s fracking executives say the combination of higher costs due to Trump’s tariff wars and lower prices due to higher OPEC+ output will likely drive down U.S. production, the Financial Times reports this week.
“We’re on high alert at this point,” Devon Energy CEO Clay Gaspar told investors earlier in May. “Everything is on the table as we move into a more distressed environment.”






