What’s in the Big Beautiful Bill: President Trump signed the "Big, Beautiful Bill" on Friday after the House narrowly passed it 218-214, effectively repealing much of the 2022 Inflation Reduction Act's clean energy provisions and dramatically reshaping America's energy landscape.
The legislation severely restricts clean energy tax credits through complex timelines and restrictions. Solar and wind projects must start service by end-2027 to access incentives, but projects beginning construction after 2025 face "foreign entity of concern" restrictions that experts say are unworkable, effectively eliminating credits for solar, wind, storage, and geothermal technologies.
Electric vehicle incentives face the most aggressive phaseout, ending September 30, 2025 for new and used vehicle purchases plus commercial vehicles. Charging station credits expire June 2026. Energy efficiency home improvement credits end this year, while commercial building incentives require construction to start by June 2026.
Nuclear, hydropower, and geothermal have a longer runway until 2033, while hydrogen credits expire January 2028—a small win for the struggling industry.
The bill eliminates funding for numerous programs including the Loan Programs Office, Greenhouse Gas Reduction Fund (which funded local emissions-reducing projects), federal building decarbonization, low-carbon transportation infrastructure materials, state/municipal emissions-reduction planning grants, methane reduction programs for gas companies, transmission development for offshore wind, tribal energy loans, and clean heavy-duty vehicle programs.
The Energy Infrastructure Reinvestment program was modified to prioritize "known or forecastable electric supply" (fossil fuels) over emissions reduction, with funding increased from $5 billion to $6 billion.
The Senate passed the bill 50-50, with VP JD Vance casting the tie-breaking vote after Republicans Susan Collins, Rand Paul, and Thom Tillis joined Democrats in opposition.
Impact on US Emissions: The OBBB is all but certain to take the US off course of its emissions reduction goals, with analysis showing the nation is now expected to fall well short of its Paris Agreement commitments.
According to Princeton University’s REPEAT project modeling, US emissions will drop only 3% from current levels by 2030—effectively flatlining—rather than the required 40% reduction needed to meet climate targets. This means emissions will be just 20% lower than 2005 levels by 2030, instead of the pledged 50-52% reduction.
The policy reversals will add an extra 7 billion tonnes of emissions to the atmosphere by 2030, leaving the US 2 billion tonnes short of its greenhouse gas target for that year. This shortfall equals roughly 4% of current global emissions annually—equivalent to adding Indonesia's entire annual output (the world's sixth-largest emitter) each year.Using EPA estimates, these 7 billion extra tonnes would cause over $1.6 trillion in global climate damages.
Cost of Electricity: The bill is expected to significantly increase electricity costs across the US. Without tax credits to support new renewable energy construction, residential electricity prices will rise by 7% - or $110 per average customer - by 2026, according to Clean Energy Buyers Association analysis.
Some states face much steeper increases: Wyoming could see electricity prices surge by 30% over the next year, while other Republican states like North Carolina and Tennessee expect double-digit price rises in the near term.
Overall household energy costs will climb by $165 in 2030 and more than $280 by 2035 under the new policies. The bill requires wind and solar projects to start construction within a year to qualify for tax credits (previously available until 2034), drastically reducing new capacity - solar by 29GW by 2030 and wind by 43GW.
Higher electricity costs are expected to rise alongside power demand, combined with multi-year backlogs for gas plant construction that will prevent fossil fuels from filling the gap. The elimination of $7,500 electric vehicle tax credits will also increase demand for gasoline and diesel consumption, further driving up energy costs.
Can States Make Up the Gap: A study using energy system optimization modeling examined how 23 climate-minded states pursuing net-zero emissions targets would compare to federal carbon policy achieving equivalent CO2 reductions. The research found that state-led decarbonization can achieve substantial nationwide emissions reductions of 46%, though this falls short of ambitious climate goals.
This state-driven approach results in distinct technology choices and a 0.7% increase in system costs compared to federal policy. The pathway relies heavily on electrification, requiring 952 terawatt-hours more electricity generation by 2050 and reallocating 17.2% of emissions to the power sector.
Regional variations emerge, with some areas favoring solar, wind, and storage solutions, while direct air capture becomes critical in California and the Northeast. Inter-regional trading both supports and complicates mitigation efforts, depending on the future development of heavy electric vehicles, and which states adopt more EV infrastructure.
The findings suggest that state-led and federal decarbonization approaches can produce different energy portfolios while achieving similar emissions reductions, but the impact of losing federal funds will nonetheless be felt.
Fossil Future Uncertain: The energy provisions of the new law are still playing catchup with other facets of Trump’s energy policy that are shaping fossil fuel consumption. US shale executives plan to drill significantly fewer wells in 2025 than initially planned, according to a Federal Reserve Bank of Dallas survey.
Nearly half of oil executives expect to drill fewer wells this year, with 42% of large firms (producing 10,000+ barrels daily) anticipating significant decreases. Trump's tariffs have increased drilling costs by 4-6%, while steel tariffs are weighing on customer demand and delaying drilling due to uncertain casing prices.
One executive criticized the administration: "We were promised a better environment for producers but were delivered a world that has benefitted OPEC to the detriment of our domestic industry."
Lower oil prices driven by tariff-related economic concerns and increased OPEC+ production are hurting profits in the oil sector. Service companies struggle to pass costs to customers, with some vendors potentially facing survival issues. The survey highlights how Trump's trade policies are creating headwinds for the domestic oil industry despite promises to boost US energy production.
