‘Clean Energy Nightmare’ Labelled to Big Beautiful Bill Act
TL/DR –
The US House has passed the “One Big Beautiful Bill Act” which will effectively end most clean energy tax credits, reversing a significant part of President Joe Biden’s climate agenda. The bill requires wind and solar projects to begin construction within 60 days or start operations within two years in order to receive the credits before they expire and completely eliminates tax credits for electric vehicles by the end of next year. Analysis indicates that the clean-energy transition is already underway and will continue regardless of the financial incentives, however, the passing of this bill will negatively impact growth in the sector, with cumulative wind, solar and battery installations expected to fall 20% through 2040.
The Future of Clean Energy Transition
The “One Big Beautiful Bill Act” recently passed by the House may put the future of clean energy transition at risk. This Act would significantly reduce most clean energy tax credits, effectively setting back President Biden’s climate agenda.
Wind and solar projects would need to start construction within two months of passing the bill or commence operations within two years to qualify for the credits. Clean energy manufacturers using Chinese inputs or equipment will essentially be excluded from federal funding. Electric vehicles’ tax credits are set to be entirely erased by the end of next year.
According to Sam Huntington, director of North American power research at S&P Global Commodity Insights, the future seems bleak for clean energy if the bill gets Senate approval. He anticipates a drop in cumulative wind, solar, and battery installations by 20% through 2040. BloombergNEF called the House bill a “nightmare scenario for US clean energy advocates”.
While some analysts expect the Senate to dilute the bill’s spending cuts, it’s apparent that as climate change accelerates, efforts to green the energy system are being slowed down.
However, Arjun Murti from research firm Veriten believes electric vehicles and zero-carbon resources like solar and batteries will continue to grow over the next three decades. He argues that these technologies are already competitive with fossil fuels and will grow even without financial incentives.
Emissions Backslide
Despite slowed emissions growth in recent years, greenhouse gas levels have slightly risen due to increased emissions in developing countries like China and India. The United Nations International Panel on Climate Change states that risks of extreme weather rise with each tenth of a degree increase in global warming.
The US may be on the brink of regression, as American emissions have been decreasing due to cheap natural gas, rising renewables, and stagnant electricity demand, which resulted in numerous coal plant retirements.
However, due to a current rise in artificial intelligence and data centers, electricity demand is soaring, leading to harder-running coal plants and a surge in natural gas demand. Carbon Monitor reports a 5% increase in U.S. emissions in the first quarter of 2025.
Reversal in budget bill discussions for clean energy industries may impact solar the least, while wind energy faces a grim future due to manufacturing challenges. Moreover, the dominance of China in stationary battery manufacturing for the power sector makes them particularly susceptible to trade wars.
With a shift in political and economic focus globally, the once aligned stars for climate action seem to have dimmed. High interest rates, wars prioritizing energy security, and the rise of populist governments globally have all contributed to this change.
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