TL/DR –
The House of Representatives has passed a budget package, dubbed the “Big Beautiful Bill,” that includes deep funding cuts to programs like Medicaid and an extension of Trump-era tax cuts. Of particular note to the clean energy sector are provisions targeting the Inflation Reduction Act, which would significantly reduce tax credits for renewable energy projects and the domestic manufacturing base supporting them; this includes incentives for electric vehicles, EV charging infrastructure, battery storage, hydrogen, and nuclear power. BloombergNEF’s U.S. Policy Expert, Derrick Flakoll, has outlined the projected impacts of the bill on clean energy growth and investment, including potential risks and complications for project development.
House Bill Proposes Cuts to Clean Energy Programs
On May 22, the House of Representatives approved the “Big Beautiful Bill,” a comprehensive budget bill addressing taxation, federal spending, and the debt ceiling. The revised version is expected to be presented to the Senate by July.
Impacts on Clean Energy Sector
The House bill suggests sizable cuts to programs like Medicaid and prolongs the Trump-era tax cuts from 2017. More significantly for the clean energy sector, the bill targets the Inflation Reduction Act, potentially reducing tax credits for renewable energy projects and the supporting domestic manufacturing base. The legislation could also drastically decrease or eliminate incentives for electric vehicles, EV charging infrastructure, battery storage, hydrogen, and nuclear power.
Futures of Clean Energy in the U.S.
Derrick Flakoll, U.S. Policy Expert at BloombergNEF, offers an analysis of what these changes could mean for the future of clean energy in the United States. BloombergNEF’s recent report projects the impacts of the House bill on clean energy growth and investment. Flakoll discusses the resilience of clean energy markets without IRA tax credits, potential risks for certain sectors, and how the proposed “Foreign Entity of Concern” could further hinder project development.
Senate’s Potential Amendments
Flakoll also speculates on how the Senate might modify the legislation and whether any of the IRA’s clean energy incentives are likely to survive.
Correction to Previous Statement
Note: The conversation previously stated that the Foreign Entity of Concern (FEOC) material assistance provisions would take effect for renewable energy projects one year after the budget reconciliation bill signing. To correct, the FEOC provisions would apply to projects beginning construction in 2026 or later.
About Derrick Flakoll
Derrick Flakoll is Bloomberg New Energy Finance’s policy expert for the U.S. and Canada. He works on policies related to the energy transition and related markets within the U.S.
About Andy Stone
Andy Stone is the producer and host of Energy Policy Now, the Kleinman Center’s podcast series. He previously worked in business planning with PJM Interconnection and was a senior energy reporter at Forbes Magazine.
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