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They haven’t even been announced yet, but the idea that they will has sent prices soaring.
China, Canada, Mexico, steel, aluminum, cars, and soon, copper. That’s what the market has concluded following a Bloomberg News report last week that copper tariffs would arrive far sooner than the 270 days President Trump gave the Department of Commerce to conduct its investigation into “dumping” of the metal.
Copper has been dubbed the “metal of electrification,” and demand for it is expected to skyrocket under any reasonable scenario to contain global temperature rise. Even according to a U.S. administration that, at best, neglects climate change considerations, copper is an “essential material for national security, economic strength, and industrial resilience,” as the Trump White House said while announcing its investigation into copper imports.
The effort to boost domestic production of copper did not start with this White House, but it has historically run into the same problems that beset the mining industry: New production can take decades to begin, even after you find the minerals you’re looking for underground. And if demand is not assured — if, for instance, subsidies for electric vehicles filled with copper disappear — then investing in new production could lead to bankruptcy, whereas holding back on new capacity would, at worst, mean forgoing some profits.
The Trump administration and the broader energy and foreign policy community have been, in general, obsessed with rocks — critical minerals, rare earths, and other minerals that are indeed “critical” to much of the economy but are not listed as such. Copper sits somewhere between these categories — while it does not appear on the United States Geological Survey list of critical minerals, which ranges from aluminum and antimony to zinc and zirconium, it does appear on the Department of Energy’s list of “critical materials.”
These lists guide federal data collection efforts, and that data can then get used to guide policymaking. Being on these lists doesn’t guarantee that a related program will get funding, but it does mean that the data is there to draw from should someone need to make a case for why their program should get funding.
This gap between the lists has been a target for Congress, especially for legislators in the Southwest, where much of America’s copper is mined. The discrepancies in the list is essentially a matter of focus for the Energy and Interior Departments — with Energy naturally focused on what’s especially important for energy infrastructure. Getting consistency between the lists, which are only a few years old, will “increase transparency within our federal agencies, ensuring all of our nation’s critical resources are developed, traded, and produced equally, and strengthen our supply chains,” Mike Lee (R-Ut), a sponsor of the Senate version of the legislation, said in a statement.
Trump’s executive order asking for the investigation sought to speed up permitting for new mines — and they’ll need all the help they can get. S&P calculates that the average copper mine takes over 30 years to develop. Rio Tinto and BHP’s Resolution Copper project in Superior, Arizona — which the companies hope will produce 20 million tons of copper — has already sucked up some $2 billion of capital while producing zero copper after about 20 years of legal and political opposition. A proposed copper-nickel mine in Minnesota has alreadyabsorbed around $1 billion worth of investment and is still wrangling over the more than 20 permits it needs.
But for the Trump administration’s strategy of tariffs and expedited permitting to actually work for American copper end users, it will have to lead to an expansion of smelting and recycling, in addition to mining.
Reuters reported last year that the Mexican conglomerate Grupo Mexico would re-open an Arizona smelter, but that has yet to happen (it’s currently a Superfund site). A copper mine in Milford, Utah said last week that it was expanding to meet rising copper demand.
The smelting sector is dominated by China. “The United States has ample copper reserves, yet our smelting and refining capacity lags significantly behind global competitors,” the White House said in its copper executive order in February. China’s dominance, “coupled with global overcapacity and a single producer’s control of world supply chains, poses a direct threat to United States national security and economic stability.”
The United States produces around 1.2 million tons of copper annually from its mines and imports around 900,000 tons, according to the United States Geological Survey. Some of that domestically mined copper — around 375,000 tons worth — ends up being exported for smelting, according to the Copper Development Association.
While the United States is near the top of national copper production (well behind the world leader, Chile, but comparable to other large-scale copper producers such as Indonesia and Australia), it has a meager copper refining industry, with only two active smelters producing around 400,000 tons of copper a year — a fraction of China’s refining capacity — leaving American industry reliant on imports.
The energy industry has been dealing with the copper issue for years. More specifically, it’s worrying about how domestic and global production will be able to keep up with what forecasters anticipate could be massive demand.
That goes not just for copper — it also includes the metals that are mined alongside it. First Solar, the U.S.-based solar manufacturing company, has benefited from tariffs on solar panels put in place during the Biden administration. But while First Solar has been a winner in the renewable energy trade conflict, it is still sensitive to the global trade in commodities. That’s in part because it is also a major consumer of tellurium, a mineral that’s a byproduct of copper mining, and which was the subject of expanded export Chinese export controls announced early last month.
“We have, over the past decade employed a strategic sourcing strategy to diversify our tellurium supply chain to mitigate a sole sourcing position in China and are undertaking additional measures to mitigate dependencies on China for certain products containing to tellurium,” Alexander Bradley, First Solar’s chief financial officer, said in the company’s February earnings call. “While we continue to evaluate [whether] there will be any operational impact from China's decision, this latest development emphasizes the urgent need for the United States to accelerate the strategic development of copper mining and processing of its byproduct materials, including tellurium.”
Electric vehicles are another major user of copper among climate technologies, with EVs having on average around 180 pounds of copper in them, according to the Copper Development Association. Tesla — which will soon be hit by auto tariffs — has been actively trying to reduce its copper consumption. Meanwhile Rivian, one of Tesla’s primary domestic competitors, announced last year that it would cut its production targets dramatically due to what turned out to be a supplier communication snafu for a copper component of its motors.
“We’re very bullish on copper prices,” Kathleen Quirk, chief executive officer of Freeport-McMoRan, which runs a number of U.S. copper mines (and a smelter, to boot), said at a financial conference in February. With boosts in demand coming from “power generation, new power generation investments, multibillion-dollar investments in infrastructure and energy infrastructure, it's going to be very positive for copper.”
Copper prices paid by American manufacturers have been rising for the past five months, according to the monthly PMI survey. Prices in New York reached record highs last week, hitting almost $12,000 per ton as the industry tried to beat the almost-certainly-inevitable tariffs, according to an ING analyst report released last week.
The actual imposition of the tariffs would constitute a “further upside risk to copper prices” — in other words, prices will continue to climb, according to the ING analysts. “The U.S. copper rush could leave the rest of the world tight on copper if demand picks up more quickly than expected,” the ING analysts wrote.
Copper futures have shot up this year by around 25%, leading to profits for those who mine it — especially in the United States.
From the perspective of Freeport-McMoRan, the market gyrations so far have generally been to the upside, with the premium on copper in the U.S. “helping us from that perspective of generating higher revenues for our U.S. price copper,” Quirk said at the conference. But the domestic copper industry as a whole does not see tariffs as the sole way to increase copper production.
“The U.S. will need an all-of-the-above sourcing strategy to secure a stable supply for domestic use. This must include increased mining in the U.S., increased smelting and refining in the U.S., enhanced recycling, keeping more copper scrap within U.S. borders, and continued trade with reliable partners to maintain the flow of critical raw material feedstocks for domestic use,” Copper Development Association chief executive Adam Estelle told me in an emailed statement.
And tariffs can come in faster than new mines and smelters can be built or their capacity expanded. American mining projects have been mired in decades of permitting delays and negotiations with local communities not because there isn’t a market opportunity for new copper, but because it just takes a very long time to open a mine.
Even as she was celebrating Freeport-McMoRan’s robust outlook, CEO Kathleen Quirk noted that “at the same time, it's become more and more difficult to develop new supplies of copper.”
That goes especially for industries related to renewable energy, where copper finds itself into grid equipment, solar panels, and wind turbines. Even so, they’ve been wary of talking about an impending tariff directly.
A number of trade groups, including the Zero Emission Transportation Association, the National Electrical Manufacturers Association, and the Solar Energy Industries Association, hailed an executive order aiming to accelerate critical minerals production released March 20. When I asked about copper tariffs, however, a ZETA spokesperson referred me to an earlier statement decrying trade conflict with Canada and Mexico, saying that “imposing tariffs on allies and trading partners like Canada and Mexico — both of which play a significant role in the North American automotive supply chain — will increase costs to consumers and make it more difficult to attract investment into our communities.”
Meanwhile, NEMA’s vice president of public affairs, Spencer Pederson, told me in an emailed statement that “any new trade policies must provide predictability and certainty for future domestic investments and businesses.”
Other manufacturing-centric industries that use copper aren’t thrilled about the prospect of tariffs, either. A spokesperson for the National Association of Manufacturers referred me to its recent survey showing that the top two concerns among its members were “trade uncertainties,” feared by more than three quarters of respondents, and “increased raw material costs,” which worried 60% of respondents. While NAM is broadly supportive of many Trump administration goals, especially around extending the 2017 tax cuts, it has called for a “commonsense manufacturing strategy” which includes “making way for exemptions for critical inputs.” That runs against the Trump administration’s preference for big, obvious tariffs.
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On Trump’s Gulf trip, budget negotiations, and a uranium mine
Current conditions: Highs in Dallas, San Antonio, and Austin could break 100 degrees Fahrenheit on Wednesday afternoon, with ERCOT anticipating demand could approach August 2023’s all-time high of 85,500 megawatts • Governor Tim Walz has called in the National Guard to respond to three fires in northern Minnesota that have burned 20,000 acres and are still 0% contained• The coldest place in the world right now is the South Pole of Antarctica, which could drop to -70 degrees tomorrow.
Win McNamee/Getty Images
The White House on Tuesday announced a $600 billion investment commitment from Saudi Arabia during President Trump’s trip to the Gulf. In exchange, the U.S. offered Riyadh “the largest defense cooperation agreement” Washington has ever made, with an arms package worth nearly $142 billion, Reuters reports. The deals announced so far by the White House total just $283 billion, although the administration told The New York Times that more would be forthcoming.
Among the known commitments in the health and tech sectors, the U.S. also reached a number of energy deals with Saudi Arabia’s state-owned oil company, Aramco, which agreed to a $3.4 billion expansion of the Motive refinery in Texas “to integrate chemicals production,” OilPrice.com reports. Aramco additionally signed “a memorandum of understanding with [the U.S. utility] Sempra to receive about 6.2 million tons per year of LNG.” (Aramco is responsible for over 4% of the planet’s CO2 emissions, according to the think tank InfluenceMap, and would be the fourth largest polluter after China, the U.S., and India, if it were its own country.) Additionally, Saudi company DataVolt committed to invest $20 billion in AI data centers and energy infrastructure in the U.S.
Senate Republicans are reportedly putting the brakes on the House Ways and Means Committee’s proposal to overhaul the nation’s clean energy tax credits and effectively kill the Inflation Reduction Act. “[S]ome Senate Republicans say abruptly cutting off credits and changing key provisions that help fund projects more quickly could stifle investments in energy technologies needed to meet growing power demand, and lead to job losses for manufacturing and electricity projects in their states and districts,” Politico reports. North Dakota’s Republican Senator John Hoeven, for one, characterized the Ways and Means’ plan as a “starting point,” with “some change” expected before agreement is reached.
As my colleague Emily Pontecorvo reported earlier this week, the House proposal “appears to amount to a back-door full repeal” of the IRA, including cutting the EV tax credit, moving up the phase-out of tech-neutral clean power, and eliminating credits for energy efficiency, heat pumps, and solar. But as she noted then, “there’s a lot that could change before we get to a final budget” — especially if Republican senators follow through on their words.
The Interior Department plans to expedite permitting for a uranium mine in Utah, conducting an environmental assessment that typically takes a year in just 14 days, The New York Times reports. Interior Secretary Doug Burgum said the fast-track addressed the “alarming energy emergency because of the prior administration’s Climate Extremist policies.” Notably, Burgum also recently issued a stop-work order on Equinor’s fully permitted Empire Wind offshore wind project, claiming the project’s permitting process had been rushed under former President Joe Biden. That process took nearly four years, according to BloomberNEF.
Critics of the Velvet-Wood project in San Juan County, Utah, said the Interior Department is leaving no opportunity for public comment, and that there are concerns about radioactive waste from the mining activities. Uranium is a fuel in nuclear power plants, and its extraction falls under President Trump’s recent executive order to address the so-called “national energy emergency.”
Clean energy investment saw a second quarterly decline at the start of 2025, but nevertheless accounted for 4.7% of total private investment in structures, equipment, and durable consumer goods in the first quarter of the year, a new report by the Rhodium Group’s Clean Investment Monitor found. Among some of its other notable findings:
You can read the full report here.
A Dutch environmental group is suing oil giant Shell, arguing that the company is in violation of a court order to make an “appropriate contribution” to the goals of the Paris Climate Agreement, France 24 reports. Amsterdam-based Milieudefensie previously won an historic precedent against Royal Dutch Shell in 2021, with the court ruling the company had to cut its carbon emissions by 45% of 2019 levels by 2030 because its investments in oil and gas were “endangering human rights and lives.” Shell appealed the decision, moved its headquarters to London, and dropped “Royal Dutch” from its name; subsequently, a Dutch appeals court sided with Shell and reversed the 45% emissions reduction target, while still insisting the company had a responsibility to lower its emissions, Inside Climate News reports.
Now, Milieudefensie is suing, claiming Shell is in breach of its obligation to reduce emissions due to its “continued investment in new oil and gas fields and its inadequate climate policy for the period 2030 to 2050.” Sjoukje van Oosterhout, a lead researcher on the Shell case for Milieudefensie, said in a press conference, “The impact of this case could really be enormous. Science is clear, crystal clear, and the ruling of the appeals court was also clear. Every new field is one too many. That’s why we have this case today.”
AstraZeneca
UK regulators this week approved the use of AstraZeneca’s new medical inhaler, which uses a propellant with 99.9% lower global warming potential than those currently in use. The U.S. Environmental Protection Agency has estimated that the discharge and leakage of planet-warming hydrofluoroalkane propellants from inhalers was responsible for 2.5 million metric tons of CO2 equivalents in 2020, or about the same emissions as 550,000 passenger vehicles driven for one year.
Tuesday’s encouraging inflation data concealed an ominous warning sign.
The Trump administration’s policy of increased natural gas exports abroad, plus increased industrial and artificial intelligence investment at home, plus cuts to green energy tax credits could add up to more energy price volatility for Americans.
On Monday, the House Ways and Means Committee unveiled its plan for deep cuts to the Inflation Reduction Act, including early expiration dates and restrictions on the core clean energy tax credits that would effectively gut America’s signature climate law.
But Tuesday’s good news about inflation also contained a troubling omen for electricity prices.
Overall, prices are rising at their slowest rate in years. The Bureau of Labor Statistics reported that overall prices have risen 2.3% in the past year, the slowest annual increase since February 2021. But electricity prices were up 0.8% just in the past month, and were up 3.6% over last year.
This is likely due in part to rising natural gas prices, as natural gas provides the better part of American electricity generation.
The benchmark Henry Hub spot price for natural gas was $3.26 per million British thermal unit last week,according to the latest Energy Information Administration data — around twice the price of a year ago. And there’s reason to think prices for both gas and electricity will continue to rise, or at least be vulnerable to spikes, explained Skanda Amaranth, the executive director of Employ America.
European demand for liquified natural gas has been high recently, which helps pull the American natural gas price closer to a global price, as Europe is a major buyer of U.S. LNG.
During the early years of the shale boom in the 2010s, before the United States had built much natural gas export capacity (the first LNG shipment from the continental United States left Louisiana in early 2016, believe it or not), American natural gas consumers benefited from “true natural gas abundance,” Amarnath told me. “We had this abundance of natural gas and no way for it to get out.”
Those days are now over. The Trump administration has been promoting LNG exports from day one to a gas-hungry global economy. “We’re not the only country that wants natural gas, and LNG always pays a premium,” Amarnath said.
In March, Western European gas imports hit their highest level since 2017, according to Bloomberg. And there’s reason to expect LNG exports will continue at that pace, or even pick up. One of the Trump administration’s first energy policy actions was to reverse the Biden-era pause on permitting new LNG terminals, and Secretary of Energy Chris Wright has issued a number of approvals and permits for new LNG export terminals since.
The EIA last week bumped up its forecast for natural gas prices for this year and next, citing both higher domestic natural gas demand and higher exports than initially expected. And those are in addition to all the structural factors in the United States pulling on electricity demand — and therefore natural gas demand — including the rise in data center development and the boom in new manufacturing.
But we’re in the era of “drill, baby, drill,” right? So all that new demand will be met with more supply? Not so fast.
Increased production of oil overseas — pushed for by Trump — is playing havoc with the economics of America’s oil and gas companies, which are starting tolevel off or even decrease production. The threat of an economic slowdown induced by Trump’s tariffs also influenced some of those decisions, though that fear may have eased with the U.S.-China trade deal announced on Monday.
While it’s the price of oil that largely determines investment decisions for these companies, a consequence can be fluctuations in natural gas production. That’s because much of America’s natural gas comes out of oil wells, so when oil wells go unexploited, natural gas stays in the ground, too.
“A drop in crude oil prices over the past three months has reduced our expectations for U.S. crude oil production growth, and we now expect less associated natural gas production than we did in January,” the EIA wrote last week.
“Together, these factors mean we expect natural gas prices will be higher in order to incentivize production and keep markets balanced.”
At the same time, Republicans in Congress and the Trump administration look to choke off policy support for a boom in renewables investment with their planned dismantling of the Inflation Reduction Act. This means a less diversified grid that will be more reliant on natural gas, Amarnath explained.
When natural gas prices spike, “it’s very useful to have non-gas sources of supply,” Amarnath told me. The alternative fuel can be anything as long as it’s not fossil. It can be solar, it can be wind, it can be nuclear — all three of which would be hammered by the IRA cuts.
What these sources of power do — besides reduce greenhouse gas emissions — is diversify the grid, so that America’s electricity consumers are “not held hostage to what Asian or European LNG buyers want to pay,” Amarnath said.
“The less you rely on a fuel source for electricity, the more stable you are from a price spike. And we’re more at risk now.”
It’s not early phase-out. These 3 changes could overhaul the law’s clean electricity supports.
On Monday, the Republican-led House Ways and Means Committee released the first draft of its rewrite of America’s clean energy tax credits.
The proposal might look, at first, like a cautious paring back of the tax credits. But the proposal amounts to a backdoor repeal of the policies, according to energy system and tax analysts.
“The bill is written to come across as reasonable, but the devil is in the details,” Robbie Orvis, a senior analyst at Energy Innovation, a nonpartisan energy and climate think tank, told me. “It may not be literally the worst text we envisioned seeing, but it’s probably close.”
The proposal would strangle new energy development so quickly that it could raise power costs by as much as 7% over the next decade, according to the Rhodium Group, an energy and policy analysis firm.
Senate Republicans have already indicated that the proposal is unworkable. But to understand why, it’s worth diving into the specific requirements that render the proposal so destructive.
The clean energy tax credits are one of the centerpieces of American energy policy. They’re meant to spur companies to deploy new forms of energy technology, such as nuclear fusion or advanced geothermal wells, and simultaneously to cut carbon pollution from the American power grid.
The U.S. government has long used the tax code to encourage the build-out of wind turbines or solar panels. But when Democrats passed the Inflation Reduction Act in 2022, they rewrote a pair of key tax credits so that any technology that generates clean electricity would receive financial support.
Under the law as enacted, these clean electricity tax credits provide 10 years of support to any electricity project — no matter howit generates power — for the foreseeable future. But the new Republican proposal would begin phasing down the value of the credit starting in 2029, and end the program entirely in 2032.
That might sound like a slow and even reasonable phase-out. But a series of smaller changes to the law’s text introduce significant uncertainty about which projects would continue to qualify for the tax credit in the interim. Taken together, these new requirements would kill most, if not all, of the tax credits’ value.
Here are three reasons why the Republican proposal would prove so devastating to the American clean electricity industry.
The new Ways and Means proposal begins to phase out the clean energy tax credits immediately. The proposal cuts the value of the tax credit by 20% per year starting in 2029, and ends the credit entirely in 2032.
But the GOP proposal changes a key phrase that helps financiers invest confidently in a given project.
Under the law as it stands today, developers can’t claim a tax credit until a project is “placed in service” — meaning that it is generating electricity and selling it to the grid. But a project qualifies for a tax credit in the year that construction on that project begins.
For example, imagine a utility that begins building a new geothermal power plant this year, but doesn’t finish construction and connect it to the grid until 2029. Under current law, that company could qualify for the value of the credit as it stands today, but it wouldn’t begin to get money back on its taxes until 2029.
But the GOP proposal would change this language. Under the House Republican text, projects only qualify for a tax credit when they are “placed in service,” regardless of when construction begins. This means that the new geothermal power plant in the earlier example could only get tax credits as set at the 2029 value — regardless of when construction begins.
What’s more, if work on the project were delayed, say by a natural disaster or unexpected equipment shortage, and the power plant’s completion date was pushed into the following year, then the project would only qualify for credits as set at the 2030 value.
In other words, companies and utilities would have no certainty about a tax credit’s value until a project is completed and placed in service. Any postponement or slowdown at any part of the process — even if for a reason totally outside of a developer’s control — could reduce a tax credit’s value.
This makes the tax credits far less dependable than they are today. Generally, companies have more ability to plan around when construction on a power plant begins than they do over when it is placed in service.
This change will significantly raise financing costs for new energy projects of all types because it means that companies won’t be able to finalize their capital stack until a project is completed and turned on. The most complicated and adventurous projects — such as new geothermal, nuclear, or fusion power plants — could face the highest cost inflation.
The Inflation Reduction Act as it stands today attaches a “foreign entity of concern” rule to its $7,500 tax credit for electric vehicle buyers.
In order to qualify for that EV tax credit, automakers had to cut the percentage of Chinese-processed minerals and battery components that appear in their electric models every year. This phased in gradually over time — the idea being that while China dominates the EV and battery supply chain today, the requirement would provide a consistent spur to reshore production.
Somewhat ironically, the GOP proposal ditches the EV tax credit and its accompanying foreign sourcing rules. But it applies a strict version of the foreign entity of concern rule to every other tax credit in the law, including the clean electricity tax credits.
Under the House proposal, no project can qualify for the tax credits unless it receives no “material support” from a Chinese-linked entity. The language defines “material support” aggressively and expansively — it means any “any component, subcomponent, or applicable critical mineral” that is “extracted, processed, recycled, manufactured, or assembled.”
This provision, in other words, would essentially disqualify the use of any Chinese-made part, subcomponent, or metal in the construction of a clean electricity project, although the rule includes a partial and narrow carve-out for some components that are bought from a third-party. Even a mistakenly Chinese-sourced bolt could result in a project losing millions of dollars of tax credits.
Technically, the law also disqualifies the use of goods from other “foreign entities of concern” as defined under U.S. law, which include Russia, Iran, and North Korea. But China is the United States’ third largest trading partner, and it is the only manufacturer of the type of goods that matter to the law.
Solar projects would face immediate challenges under the new rule. China and its domestic companies command more than 80% of the market share for all stages of the solar panel manufacturing process, according to the International Energy Agency.
But then again, the proposal would be an issue for virtually all energy projects. Copper wiring, steel frames, grams of key metals — even geothermal plants rely on individual Chinese-made industrial components, according to Seaver Wang, an analyst at the Breakthrough Institute. These parts also intermingle on the global market, meaning that companies can’t be certain where a given part was made or where it comes from.
These new and stricter rules would kick in two years after the reconciliation bill passes, which likely means 2027.
This provision by itself would be unworkable. But it is made even worse by being coupled to the tax credit’s change to a “placed in service” standard. That’s because projects that are already under construction today might not meet these new foreign entity rules, essentially stripping them of tax credits that companies had already been banking on.
These projects have assumed that they will qualify for the tax credits’ full value, no matter when their power plant is completed, because they have already begun construction. But the GOP proposal would change this retroactively, possibly threatening the financial viability of energy projects that grid managers have been assuming will come online in the next few years.
In some ways, these two changes taken together are “worse than repeal,” Mike O’Boyle, an Energy Innovation analyst, told me. “A number of projects under construction now will lose eligibility."
It is also made worse by the House GOP plan to phase out the tax credits. If companies could plan on the tax credits remaining on the books long-term then the foreign entity rules might spur the creation of a larger domestic — or at least non-Chinese — supply chain for some clean energy inputs. But because the credits will phase out by 2032 regardless, fewer projects will qualify, and it won’t be worth it for companies to invest in alternative supply chains.
Finally, the House Republican proposal would end companies’ ability to sell the value of tax credits to other firms. The IRA had made it easier for utilities and developers to transfer the value of tax credits to other companies — essentially allowing companies with a lot of tax liability, such as banks, to acquire the rights to renewable developers’ credits.
The GOP proposal ends that right for every tax credit, even those that Republicans have historically looked on more favorably, such as the tax credit that rewards companies for capturing carbon dioxide from the atmosphere.
This change — coupled with the foreign entity and placed-in-service rules — will have an impact today on power markets by further gumming up the pipeline of new energy projects planned across the country, according to Advait Arun, an analyst at the Center for Public Enterprise.
The end to transferability “functionally imposes higher marginal tax rates on all of these projects,” Arun told me. “The prices that developers will get for their tax credits on the tax equity market today will be a lot lower than normal.”
That could significantly raise the cost of any new energy projects that get planned. And that will lead in the medium term to a further slowdown in the growth of electricity supply, just as turbine shortages have made it more difficult than ever to build a new natural gas power plant.
While many of these changes may seem academic, they will hit energy consumers faster than legislators might realize. Natural gas prices in the U.S. have been unusually high in 2025. A slowdown in the growth of non-fossil energy will further stress natural gas supplies, raising power prices.
Taken together, Orvis told me, these changes to the IRA “will increase the price of the vast majority of new capacity coming online next year,” Orvis said. “It’s an immediate price hike for new energy, and you can’t replace that with new gas.”