The Senate budget bill pares back incentives for renewable energy and aims to boost fossil fuels like coal.
The first solar cell ever made was built in the United States. Tesla, based in the US, was once the largest EV manufacturer in the world. The lithium-ion battery was codeveloped in the US.
But today, China — not the US — is the largest manufacturer of solar cells and batteries. China’s BYD — not Tesla — is the largest EV manufacturer in the world. And China is starting to outrun the US on research and development investment.
The US has a long history of taking the lead in clean energy, and a long history of losing it. And President Donald Trump’s “big, beautiful bill,” which passed the Senate on Tuesday, would again leave the US on the margins of a global clean energy revolution that it could have dominated.
For years now, clean power has been the largest source of new electricity in the US. Solar, batteries, and wind are on track to make up more than 90 percent of new electricity capacity on the US power grid this year. Wind and solar now produce more electricity on the US power grid than coal. Almost twice as many Americans work in clean energy compared to fossil fuels, and the sector is still growing.
But thanks to the bill, that may not be the case for much longer.
Some of the more extreme provisions in earlier drafts of the bill have been removed, like an excise tax targeting renewable energy. But the latest version of the bill rolls back many of the investments from the 2022 Inflation Reduction Act, the single-largest US investment to address climate change by giving the energy transition a boost. It calls for more rapid phaseouts of tax credits for wind and solar power and eliminates a $7,500 tax credit for the purchase of a new electric vehicle. The spending bill working its way through Congress doesn’t just undo incentives for clean energy — it also creates a new tax credit for coal.
These provisions are in line with Trump’s longstanding antipathy toward renewable energy and disbelief in climate change. But they stand to hobble the US economy more broadly.
The US is facing significant load growth on the power grid for the first time in decades as the tech industry scrounges for electrons to power their electricity-devouring data centers. Energy demand is rising and the cheapest, most readily deployable supplies of energy are being throttled.
The alternatives, however, are not likely to make up the gap in time. Fossil fuels take longer to ramp up. The US is currently the largest oil and gas producer in the world, but it can take years to site, permit, and acquire the materials to build power plants that burn these fuels. Since these are internationally traded commodities, their prices can fluctuate based on factors beyond the US’s control.
Right now, oil prices are at four-year lows and natural gas prices are falling, and when prices are low, it’s much harder to make the business case for more mining, drilling, and power plants, even with incentives. Trump may have some levers to pull — he can, for example, open up more federally managed lands for energy production — but many of those leases sit unused because energy companies don’t want to create a supply glut. Meanwhile, employment in the oil and gas industry remains volatile, while coal jobs are continuing their decades-long decline.
“We’re in this moment of surging demand and you can’t build another gas turbine for at least five years beyond what’s already been booked,” said Robbie Orvis, senior director for modeling and analysis at the think tank Energy Innovation. “We have this demand growth that’s going to have to be met. The only thing you can build to meet it on the timeline needed over the next five to 10 years is solar, wind, or battery storage.”
The Senate bill does extend tax credits and loan programs for nuclear energy and geothermal power. However, the cuts in the bill would also slow efforts to build up the domestic energy supply chain needed to bolster other zero-emissions technologies, from raw materials like lithium and rare earth minerals to battery factories. It would do little to relax the bottlenecks for connecting new power plants to the grid, which are adding years to project timelines. The US is also dismantling research and development that could yield the next energy breakthrough. On top of all this, Trump’s tariffs are raising operating costs not just for renewables, but also for the fossil fuels he loves so much.
The net result is a policy suite that will not only hamper clean electricity, but energy overall, making it more expensive for everyone across the country. According to Energy Innovation, the Senate bill would reduce how much energy the US adds to the grid in the years to come compared to the current trajectory, thereby increasing household electricity prices on average by $130 per year, eroding almost a trillion dollars in economic productivity, and costing 760,000 jobs by 2030.
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While the US is putting clean energy in reverse, other countries are racing ahead. Clean energy technology investment is poised to increase to $2.2 trillion this year around the world. Renewables are on track to overtake coal as the biggest power source in the world this year. Wind, solar, and batteries are still getting cheaper. Effectively, the US is ceding one of the biggest growth industries in the world to China, particularly as developing countries industrialize and other wealthy countries look to decarbonize their economies.
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The case for more clean energy — lower costs, faster deployment, fewer greenhouse gas emissions — remains robust. Even with all the deliberate obstacles the Trump administration is placing ahead, there are some wind, solar, and battery projects still poised to come online in the US as they work their way through the pipeline, albeit at a much slower pace than before.
But without continued investment, the US will lose ground to the rest of the world and condemn itself to dirtier, more expensive energy while worsening a problem that will extract a dear toll from the economy.
