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Republican Megabill Is a Disaster for Energy Costs, Jobs, and Clean Energy

Our policy summary of the terrible so-called “One Big Beautiful Bill Act”

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 Kevin Dietsch/Getty Images via Getty Images News

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President Trump signed the “One Big Beautiful Bill” into law. Make no mistake: It’s a wholesale disaster.  This catastrophic legislation will lock in higher household energy bills, kill American jobs, and kick Americans off health coverage and food assistance. 

With the stroke of their pen, Trump and Congressional Republicans have become jointly responsible for the loss of roughly 900,000 jobs and raising the average American’s electricity bills by $110-$400. In a time of intense heat and grid demand, they’ll also be reducing new energy capacity installed on the grid by at least 50 percent. All this—simply to line the pockets of billionaires, fossil fuel executives, and their top corporate backers with massive tax cuts. 

We analyzed the final budget legislation, specifically looking at the provisions relating to energy and climate policies, to explain how these sweeping cuts will harm our pocketbooks, health, and planet.

 

What’s the Status of the So-Called "One Big Beautiful Bill"?

The GOP narrowly passed the so-called “One Big Beautiful Bill” in early July, and Trump signed the bill on July 4. Let’s take a closer look at how we got to this disastrous outcome. 

In August 2022, Congress passed historic clean energy investments as part of the Inflation Reduction Act (IRA). These investments were strategically designed to make energy bills more affordable, revitalize American manufacturing, create millions of good jobs for working Americans, and cut pollution to tackle the escalating climate crisis. But from day one of the new Congress and the second Trump administration, Republican lawmakers in D.C. have unleashed a full-scale attack on these transformational investments. Even though the lion’s share of the benefits from these investments has been flowing to GOP districts.   

The first part of the GOP’s plan culminated in May, when House Republicans passed their so-called “One Big Beautiful Bill.” This bill lumped together a series of devastating cuts to Medicaid and food assistance with an attempt to functionally repeal or completely eliminate critical programs like clean energy tax credits, advanced manufacturing tax credits, Environmental Justice Block Grants, and the Greenhouse Gas Reduction Fund (GGRF).

The GOP’s disastrous tax bill then moved to the Senate, where Republicans proposed further cuts to clean energy provisions, food assistance, and Medicaid. Next, the Senate Parliamentarian combed through the legislation to determine which provisions of the GOP’s megabill must be taken out of the package, a procedural prerequisite for passage of any ‘budget reconciliation’ bill. Among the provisions knocked out of the bill were the previously proposed repeal of the light-duty and medium-duty vehicle emissions standards and a former provision that would have allowed natural gas exporters to pay a fee to have dangerous liquefied natural gas (LNG) projects automatically deemed in the public interest. Still, the worst aspects of the bill survived. And following a “vote-o-rama process that obtained a narrow majority, the Senate passed the final bill. On July 4, President Trump signed the bill into law. 

Let’s be clear: The GOP’s budget legislation is still a staggering affront to American communities who are already struggling with a cost-of-living crisis, working people who are trying to support their families, those living in sacrifice zones with polluted air and water, and anyone counting on a livable future on our planet.

 

 

Tax Title Analysis

The energy tax provisions cover the tax-writing and revenue-raising elements of the reconciliation package. The final legislation includes major cuts to the federal energy tax credits that are already delivering enormous benefits, particularly in Republican districts. This proposal will be disastrous for households across America, raising the average American’s electricity prices by 7-10 percent and their bills by an average of $110-$400 per year. The cuts to tax credits will kill energy and manufacturing jobs at a time of economic hardship for many families across the nation.

 

Summary of the Energy Tax Provisions

  • The One Big Beautiful Bill Act (OBBBA) guts critical tax credits for clean energy, clean vehicles, home efficiency, and clean manufacturing. These changes will kill clean energy and manufacturing jobs, raise energy prices, and increase pollution. 
  • Tax credits for wind and solar will be rapidly phased out. These changes will make the grid less reliable by cutting back 50 percent of the new capacity that was expected to be added to it within the next decade. 
  • The law eliminates tax credits for new and used electric vehicles, commercial clean vehicles, and fueling infrastructure. This would stall the American-made EV industry, resulting in significant job losses across the auto industry. 
  • The law places devastating restrictions on manufacturing tax credits that support American businesses and supply chains, and which have brought billions of dollars in investments to the U.S.
  • The law cuts tax credits that make homes and buildings more efficient and more affordable to operate. Eliminating these credits will not only take money out of the pockets of Americans who rely on these credits but also add more pressure to the electric grid.

 

1. Clean Energy Tax Credits (45Y and 48E)

Let’s start with one of the most powerful tools supporting the rapid deployment of new energy generation and a modern, reliable, and affordable electricity grid for American homes and businesses: the IRA’s clean electricity tax credits.

The Production Tax Credit (PTC) (45Y) is a technology-neutral tax credit that subsidizes the production of zero-emission energy sources like solar, wind, nuclear, hydropower, and geothermal. For every kilowatt hour (kWh) of clean energy generated, the producer gets a base credit of 2.6¢/kWh if they meet certain criteria. Similarly, the Investment Tax Credit (ITC) (48E) provides a credit of 30 percent (or more) of the investment into these same zero-emission energy generation technology projects, including energy storage.

2. Electric Vehicle Credits (45W, 30D, 30C, 25E)

The IRA’s electric vehicle (EV) tax credits have been rapidly accelerating America’s clean auto industry and job growth. At the same time, these tax credits have made EVs more financially accessible for some families. Households and commercial companies can receive tax credits for purchasing new electric vehicles (up to $7,500) and used electric vehicles (up to $4,000), as well as for chargers and installation. 

3. Manufacturing Tax Credits (45X and 48C)

The Advanced Energy Manufacturing Production Credit (45X) provides an incentive to manufacturing facilities that produce clean energy components or systems in the U.S. Facilities that produce solar, wind, advanced batteries, and certain critical minerals are rewarded for re-shoring supply chains in America. The Advanced Manufacturing Investment Credit (48C) incentivizes investment in advanced energy projects, such as clean energy manufacturing and recycling, critical mineral processing, and industrial decarbonization projects. The 48C tax credit supports the development of a domestic supply chain for these clean energy projects. 

Thanks to the IRA, households have been able to take tax credits of 30 percent off (up to $2,000) for installing a heat pump or heat pump water heater, plus $1,200 for weatherization and insulation via the Energy Efficient Home Improvement Credit (25C). The 25C tax credit helped 2.3 million American families improve their homes and reduce their monthly energy bills in 2023. Families have been saving an average of $130 a year in energy costs. Homeowners had been expected to use the credit enough to cut peak electric demand by 3,400 MW by 2032.

The New Energy Efficient Home Credit (45L) provides incentives to builders of homes that meet Energy Star or Zero-Energy Ready Home standards. This credit assisted with the construction of nearly 350,000 efficient new homes in 2024 and cut homeowner energy bills by about $450 per year.

The Energy Efficient Commercial Buildings Deduction (179D) provides a tax deduction for installing energy-efficient appliances and equipment in commercial buildings, like energy-efficient heating, lighting, and hot water. This deduction applies to building upgrades on existing properties, as well as new construction.

5. Residential Clean Energy Tax Credits (25D)

Dating back to 2005, the Residential Clean Energy Tax Credit provides households with a 30 percent tax credit for rooftop solar, wind power, geothermal heating systems, and battery systems. In 2023, 1.2 million American families took advantage of the residential clean energy tax credit, and now 5 percent of US households have solar. And all of that small-scale solar adds up, with over 66GW installed, amounting to more than one-third of US solar capacity.

6. Foreign Entity of Concern 

The final law contains extreme restrictions on the clean energy tax credits through the “Foreign Entity of Concern” (FEOC)/Prohibited Foreign Entity (PFE) provisions. A FEOC has previously been considered an entity that is owned, controlled by, or subject to the jurisdiction of a particular nation, such as China, Russia, or North Korea. Though FEOC requirements have been imposed in the past (such as through the Bipartisan Infrastructure Law), they have never before been applied in this broad manner. And notably, the OBBBA applies them only to clean energy tax credits, not to tax breaks for other industries (like fossil fuels), nor even to other tax incentives created in this new bill.

7. Other IRA Programs Affected by Senate Finance Text

  • Direct Pay (aka Elective Pay): These provisions in current law are not themselves amended, but they will be functionally unusable for wind and solar projects. 
  • Clean Fuels Credits (45Z): The final law extends the 45Z credit through 2029 and adds a requirement that the fuel must be produced or grown in the U.S., Mexico, or Canada. It amends the credit such that the emissions rate cannot be less than zero; amends the credit to exclude any emissions attributed to indirect land use changes, and allows the Secretary to determine adjustments on regulations and methodologies; and amends the credit with respect to fuel derived from animal manure, by giving a specific emissions rate for each animal manure feedstock. All these changes will take effect in 2026.
  • Carbon Capture Credits (45Q): The law retains 45Q and applies FEOC restrictions. It increases the credit value each year. 
  • Hydrogen Production Tax Credit (45V): Provides for a two-year extension of the credit. 45V is provided for projects that begin construction before December 31, 2027.
  • Nuclear Tax Credit (45U): Retains 45U.

 


 

 

Environment and Public Works (EPW) Title Analysis

The Environment and Public Works (EPW) title covers, among other things, elements related to air and water pollution, environmental policy, and public buildings. This part of the OBBBA repeals many federal grant programs created by the IRA.

 

Summary of the EPW Title

  • The final law text largely mirrors the final House text, harming flagship climate programs.
  • The law rescinds the $27 billion Greenhouse Gas Reduction Fund (GGRF). And it rescinds unobligated balances from key programs like Environmental Justice Block Grants and the Climate Pollution Reduction Grants (CPRG).
  • The OBBBA delays the imposition of a historic methane fee for ten years, rendering the effort to cut this climate super pollutant ineffective. 
  • The law proposes an “opt-in” fee for project sponsors to pay that expedites their project’s environmental review under NEPA.

 

8. Greenhouse Gas Reduction Fund

The $27 billion Greenhouse Gas Reduction Fund (GGRF) is the largest grant program within the IRA. This $27 billion is divided into three programs: the National Clean Investment Fund (NCIF), the Clean Communities Investment Accelerator (CCIA), and Solar for All. Not only does this program provide a significant investment in pollution-reducing clean energy technology and green banks, but it also benefits communities that have been historically overlooked and underserved, bringing greater equity to the clean energy transition. For months, the Trump administration has waged an unsubstantiated assault on this fund. At every turn, the administration has been unable to justify its attacks to undermine this program, failing to offer evidence to support its bogus claims of fraud, waste, or abuse.

 

9. Climate Pollution Reduction Grants

The Climate Pollution Reduction Grants (CPRG) are an EPA program established as part of a new Clean Air Act Section 137 created in the IRA, which provides grants to state, local, and Tribal governments to create and implement programs that reduce emissions and support jobs and communities. It was funded with $5 billion, including $250 million in planning grants, $4.6 billion for implementation grants, and the remaining balance for technical assistance and program implementation. These grants have been used to support state, local, and Tribal governments in nearly all 50 states.

10. Environmental Justice Block Grants

This first-of-its-kind $3 billion federal program aims to empower disadvantaged communities to determine and design their own visions of pollution reduction and clean energy investment. The Environmental Justice (EJ) Block Grants, also known as the Community Change Grants, provide highly flexible funding that goes directly to nonprofit organizations serving these communities. This means projects are designed by and for communities to address their unique needs and build resilience to extreme weather events and environmental risks.

11. Methane Emissions and Waste Reduction Incentive Program

Methane is a potent, planet-heating greenhouse gas that oil and gas operators often flare or leak into the atmosphere. That’s why Congress passed the Waste Emissions Charge (WEC) through the IRA in 2022, requiring oil and gas operators to pay a penalty fee if they exceed a certain level of methane pollution. Soon after, the Biden-led EPA introduced a rule implementing the WEC. But at the beginning of 2025, the Republican-controlled Congress voted to eliminate that rule. And now, Congress has delayed the fee by passing OBBBA. 

12. Opt-In Fee Program under the National Environmental Policy Act (NEPA) 

The National Environmental Policy Act (NEPA) is our nation’s bedrock environmental law. It requires federal agencies to assess the environmental impact of all major proposed government projects.

13. Other IRA Programs Affected by the EPW Title

Here’s a selection of programs that saw funding rescissions:

  • Clean Heavy-Duty Vehicles Program under Sec. 132 of the Clean Air Act
  • Air quality monitoring in fenceline communities (Sec. 60105 of the IRA).
  • Air quality monitoring in schools (Sec. 60106 of the IRA).

 

What Didn’t Survive the "Byrd Bath" in the Senate EPW Text? 

The Senate Parliamentarian advised that several provisions in the Senate’s former EPW bill text did not meet the requirements of the Byrd rule. This means that the following provisions have been struck from the final law:

  • Republicans tried to repeal statutory authorizations for the Inflation Reduction Act and rescind funds. The parliamentarian ruled that the GOP’s megabill can rescind funding, but it cannot repeal their authorization. This means Congress could provide funding for them in the future. 
  • Republicans wanted to repeal the EPA’s tailpipe emissions rule, also known as the multipollutant emissions standards for model years 2027 and later light-duty and medium-duty vehicles. Fortunately, this provision has been struck from the final law. 
  • Republicans wanted to enable project sponsors to speed up environmental reviews and skirt judicial review for a fee. The parliamentarian found the judicial portion violated the Byrd rule and was therefore struck.

 


 

 

Energy and Natural Resources (ENR) Title Analysis

The Energy and Natural Resources (ENR) title covers policies related to energy resources and development, which include regulations and conservation efforts, nuclear energy, as well as Tribal affairs, public lands and their renewable resources, and federal leasing and related activities. This component of the reconciliation law repeals critical IRA programs that were putting the nation on track to be energy dominant, while also cutting health-harming air and climate pollution.

 

Summary of the ENR Title

  • The OBBBA will generate more climate disasters and harm to frontline communities by lowering fees required to lease land for oil and natural gas drilling and establishing a minimum number of required onshore and offshore oil and gas sales annually.
  • The law will sell off public lands in nine western states.
  • Republicans will eliminate the majority of new funds and programs under the Department of Energy Loan Program Office, which will undermine American businesses and U.S. technology leadership. 
  • The GOP will repeal and rescind the remaining funds for the Advanced Industrial Facilities Deployment program, which will be a major blow to US economic competitiveness.

 

14. Oil, Gas, and Coal Leasing Handouts

America’s public lands and waters are precious—and coal, oil, and gas extraction that currently occurs there must end if we want to align with the latest climate science. But in this law, the GOP has promised to further plunder lands currently managed by the Bureau of Land Management (BLM) and the Bureau of Ocean Energy Management (BOEM) — while slashing the royalty rates paid by oil and gas corporations to exploit America’s public lands.

15. Derailing Transmission Reforms

There are several IRA programs at DOE that support the expansion of electricity transmission infrastructure in the U.S. and are critical to providing affordable and reliable power for Americans. These include the Transmission Facility Financing program; the Offshore Wind Electricity Transmission Planning, Modeling, and Analysis program; and the Grants to Facilitate the Siting of Interstate Electricity Transmission Lines. These programs are especially important at a time of rising electricity demand, fueled by data centers to power artificial intelligence (AI), increasing electrification of vehicles and buildings, and an American manufacturing renaissance.

16. Department of Energy Loan Programs Office

The Department of Energy Loan Programs Office (LPO) was created with strong bipartisan support during the George W. Bush administration, and for the last two decades, it has provided critical financing for American energy, manufacturing, mining, and other industrial projects that reduce emissions and support American leadership in the fast-growing clean energy economy. To date, LPO has financed approximately $90 billion in innovative energy and manufacturing projects, including a $465 million loan to Elon Musk’s Tesla Motors in 2010. At the end of 2024, LPO had collected over $5 billion in interest payments from its loans, meaning that it has made a profit for American taxpayers.

17. Advanced Industrial Facilities Deployment Program

The Advanced Industrial Facilities Deployment Program (AIFDP) was created in the IRA and funded with over $5.8 billion to advance industrial decarbonization and support American manufacturing’s global economic competitiveness. The program has provided funds for innovative low-carbon cement manufacturing projects in Indiana, Georgia, Texas, and Virginia, for next-generation aluminum manufacturing in Colorado, for low-carbon steel production in multiple states, and much more.

What Didn’t Survive the "Byrd Bath" in the Senate ENR Text?

The Senate Parliamentarian advised that a handful of ENR provisions did not comply with the Byrd rule. That means they have been struck from the final law. Struck provisions include:

  • The GOP wanted to introduce a “pay-to-play” approach to proposed liquefied natural gas (LNG) exports by allowing exporters to pay a $1 million fee to have their projects deemed in the “public interest,” effectively allowing them to buy out one of the approval stages from DOE.
  • Republicans wanted to introduce a provision that would declare that offshore oil and gas projects are automatically compliant with the National Environmental Policy Act (NEPA).
  • The GOP also wanted to require offshore oil and gas leases to be issued to successful bidders within 90 days of sale.
  • Republicans wanted to mandate the sale of millions of Bureau of Land Management (BLM) and U.S. Forest Service lands.
  • The GOP wanted to require the Secretary of the Interior to rubber-stamp the construction of Ambler Road, a proposed mining road in Alaska.
  • Republicans wanted to remove the Secretary of the Interior’s discretion to lower fees for solar and wind projects on public land.
  • The GOP wanted to require the Secretary of the Interior to hold annual geothermal lease sales and make changes to geothermal royalties.

 


 

 

Conclusion

Republicans are taking money out of working people’s pockets to give tax breaks to billionaires. Throughout the entire reconciliation process, the GOP has taken a wrecking ball to programs that make energy affordable for households, reduce toxic pollution, combat the climate crisis, provide life-changing healthcare, and nourish families with food assistance. Let’s not mince words: This is a big, terrible disaster.