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Here are three big changes the White House is proposing.
The White House proposed a major overhaul to the country’s guidelines for analyzing regulations and government spending on Thursday. The changes to an incredibly dense, wonky set of documents known as “Circular A-4” and “Circular A-94” would affect how government agencies, like the Environmental Protection Agency, measure the costs and benefits of decisions that have big implications for climate change, like power plant regulations, clean car rules, and highway expansion projects.
It’s hard to overstate the magnitude of the makeover. More than anything, the changes represent a shift in philosophy. The proposed guidelines would change the way the government views and takes into account inequity, not just within the United States but also how U.S. actions affect people in other nations and future generations.
The current documents were also sorely outdated. The government hasn’t updated its instructions for regulatory analysis in 20 years, and the guidance for public investment is more than 30 years old. In the years since, academic thinking on how to conduct cost-benefit analysis has changed, financial markets have changed, and the philosophy of the White House has changed, said Noah Kaufman, a senior research scholar at Columbia University who previously served as a senior economist at the Biden administration’s Council of Economic Advisors.
“There's a lot of disagreement about a lot of what's in here, but pretty much everyone kind of agreed that they needed to be redone,” he said.
The proposal will go through a public comment period before being finalized by the federal Office of Information and Regulatory Affairs.
Cost-benefit analysis is but one consideration in government decision making, and often not the most important one, so Kaufman cautions against reading too much into the changes. Perhaps most significant to him is the overall vibe shift between the old guidance and what the White House released on Thursday. He said the old version reads like it’s written by people who are trying to convince you that there’s a very limited role for the government to play. “The people who worked on this document are far more interested in a more proactive role for how government programs and regulations can help address market failures.”
Here are three big changes the White House is proposing.
The proposed guidance makes a big adjustment to an incredibly complicated, confusing, but consequential number called the discount rate. The discount rate determines how much government analysts weigh distant, future benefits of a policy versus its cost today. A higher discount rate downplays future gains, making it much harder to justify the expense of flood protection infrastructure or rules that limit carbon emissions from power plants.
While the old instructions called for a discount rate between 3% and 7%, the new proposal suggests a dramatically lower rate of 1.7%. This means that when regulators look at the cost to society of putting more carbon in the atmosphere — and they take into account all of the potential future lost lives, reduced crop yields, and damages caused by rising seas — it would look a lot more expensive than it does under the current guidelines. To get a sense of how much more, the Obama administration used a discount rate of 3%, and estimated that the cost of every ton of carbon spewed into the atmosphere was about $51 per ton. The nonprofit research group Resources for the Future estimates that with a 2% discount rate, that number would jump to $185.
The new guidelines encourage agencies to take the global impact of decisions — such as potential lives lost to extreme weather outside the U.S. — into account when conducting a cost-benefit analysis. This is a big deal, according to Paul Kelleher, an associate professor at the University of Wisconsin-Madison who studies the ethics of public policy.
“This probably is an acknowledgement that when Americans emit carbon dioxide, it doesn’t only harm Americans,” Kelleher said. It also incentivizes American policymakers to approach international climate negotiations from a more cooperative standpoint, rather than only being interested in what happens within American borders, he said.
It’s an important, if admittedly wonky, way for the Biden administration to acknowledge the United States’ role in global climate change — suddenly, the lives of billions of people around the world are added to the accounting sheets of government agencies. That means a proposal to, for example, limit tailpipe emissions would appear to have larger financial benefits.
Today, the benefits of a proposed policy are weighed against how much the potential beneficiaries would be willing to pay for it. The problem is the government assumes a dollar means the same thing to everyone. But the value of a dollar to a grocery store clerk is a lot higher than the value of a dollar to, say, Elon Musk.
Under the current system, “climate damages in the poorest parts of the world will be registered as not as serious as climate damages that are much less serious in richer parts, where people’s willingness to pay can be quite high because their ability to pay is higher,” Kelleher said.
The new guidelines allows agencies to use an approach known as “equity-weighting,” or to account for the differential impacts of a given regulation or investment. “Now, instead of just counting up the dollars that people are willing to pay to avoid damages, you try to account for the real effect on wellbeing,” said Kelleher.
Take, for example, a new rule to reduce pollution from power plants, which low-income communities are disproportionately affected by. Under the new system, the financial benefits of such a regulation would appear much higher than they currently do, because more weight would be given to the health rewards and other gains the community would see from that regulation. And because the new guidelines allow analysts to look beyond U.S. borders, the practice of equity-weighting could also account for the disproportionate harms that a poorer country like Bangladesh would face from a warmer planet, significantly raising the cost of emissions.
If this approach is finalized, “it would be a titanic shift in the federal cost-benefit analysis framework,” Kelleher said.
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When the Senate returns from recess next week, it will have Trump’s “One Big, Beautiful Bill” to contend with. There’s no doubt the chamber will try to make changes to the omnibus plan to extend and expand Trump’s tax cuts that passed the House last week. The president even told reporters over the weekend that senators should “make the changes they want to make,” and that some of the changes “maybe are something I’d agree with, to be honest.”
Whether those changes include salvaging the nation’s clean energy tax credits will likely depend on a small group of Republican senators who have criticized the House’s near-total gutting of the subsidies and how much they are willing to fight to undo it.
The bill that passed the House would outright eliminate consumer tax credits for electric vehicles, rooftop solar, and both energy efficiency renovations and new energy-efficient homes. It would also kill the clean hydrogen tax credit at the end of this year and give most zero-carbon power plants, including wind, solar, and geothermal, an end-of-year deadline to start construction, among many other damaging provisions.
To date, at least eight Senate Republicans have spoken out against at least some of these changes, but none of them have tied their vote to the issue. The pressure to stick with your party is “enormous” when your vote is the difference between a bill’s success or failure, Josh Freed, the senior vice president for climate and energy at Third Way, told me. “As we saw in the House, the biggest question is whether any Republican Senator, when push comes to shove, has any willingness to try to stop this bill in order to defend energy tax credits.”
Pay attention to what they say over the next few weeks — and when they say it. It’s one thing to speak out when everything’s still up in the air. It’s quite another to keep talking when votes are on the line.
When the budget fight was first heating up in April, four senators led by Lisa Murkowski of Alaska sent a letter to Majority Leader John Thune warning that repealing the tax credits “would create uncertainty, jeopardizing capital allocation, long-term project planning, and job creation in the energy sector and across our broader economy.” The three co-authors were Thom Tillis of North Carolina, Susan Collins of Maine, and Jerry Moran of Kansas.
Last week, after the House modified its proposal to phase out the tax credits more aggressively, Murkowski told Politico the Senate was “obviously going to be looking at” the provisions “as well as the final product, and kind of seeing where we start our conversation.” The moderate Republican has a history of supporting environmental policy, and has already broken with her party on at least one vote this year. In February, she was the only Republican who voted in favor of a Democrat-led effort to reinstate 5,500 federal public lands employees that had been fired by the Department of Government Efficiency. (The legislation failed.) Murkowski has also gone her own way to support more efficient energy codes, loans for electric vehicle manufacturers, and the impeachment of President Trump over the January 6 insurrection. But she did not vote for the Inflation Reduction Act in 2022, and if you look at her overall voting record, these occasions of deviating from the party line have been rare.
Tillis, who is a member of the Finance Committee and will therefore be directly involved in writing the tax credit portion of the bill, has made more specific comments. He said he would push to wind down the tax credits more slowly to give businesses more time to prepare. “We have a lot of work that we need to do on the timeline and scope of the production and investment tax credits,” he told Politico in the same article.
While Tillis does not have the same kind of track record as Murkowski, he’s up for re-election next year, and his state has a lot to lose. Some 34 clean energy projects worth $20 billion in investment and tied to more than 17,000 jobs came to North Carolina because of the tax credits, according to the advocacy group Climate Power. Toyota invested in an EV battery manufacturing plant and just started production last month. Several EV charger manufacturers are setting up shop in the state. Siemens Energy is building a factory to make large power transformers, equipment that is essential to expanding the grid and is currently in very tight supply.
Susan Collins is also running again next year. While the Inflation Reduction Act hasn’t spurred much manufacturing in Maine, it has driven a clean energy boom. The Maine Climate Labor Council, a coalition of unions, estimates there are 145 utility-scale clean energy projects that are either operating or in development that could be eligible for the tax credits. The state has also made a big energy efficiency push in recent years, with the tax credits supporting the expansion of efficiency jobs.
Although Collins did not ultimately vote for the Inflation Reduction Act, she was the only Republican to vote against an amendment proposed by Senator Mike Lee of Utah that would have cut funding for the law’s energy efficiency rebate programs.
When it became clear that the House was considering changes that would effectively repeal the clean energy tax credits in the IRA, Senators Kevin Cramer and John Hoeven of North Dakota, and Shelley Moore Capito of West Virginia chimed in to voice their concerns. Cramer criticized new deadlines the House proposed for ending the tax credits, telling Politico that “it’s too short for truly new technologies. We’ll have to change that. I don’t think it’s fair to treat an emerging technology the same as a 30-year-old technology.”
After the bill passed the House, Jon Husted of Ohio decided it was time to speak up. “You have companies that have already made investments, made commitments,” he told the outlet NOTUS. “Supply chains have been built around them, and we need to phase that out more slowly. I think that they deserve to have at least five years of that credit.” Like Tillis, Husted has an election coming up — and 35 clean energy projects in his state to protect.
The D.C. insiders I spoke to mentioned a few other powerful senators who could play a role in the debate who’ve been mum on the IRA so far. Thune, of South Dakota, has a history of being friendly toward tax credits for wind energy, and was honored by the American Council on Renewable Energy for his support for renewable energy in 2019. Lindsey Graham, chair of the Budget Committee, has also long been a sometimes-ally for climate action in the Senate. His home state of South Carolina has been one of the biggest beneficiaries of the tax credits, with some 43 projects and 22,000 jobs at risk.
Then there are the potential spoilers. Republicans can only afford to lose three votes on the bill in order to send it back to the House and ultimately to the President’s desk, and the party has already split into a number of factions looking for various tweaks. Some, like Josh Hawley of Missouri, oppose the legislation’s deep cuts to Medicaid. Meanwhile, fiscal conservatives like Ron Johnson of Wisconsin have said they will push to reduce spending even more.
In the House, defenders of the tax credits ultimately cared more about raising the limit on the state and local tax deduction than fighting for clean energy subsidies. We could see a similar dynamic play out in the Senate, where Murkowski and Collins have also expressed concern about cuts to Medicaid. The Senate also can’t afford to change the bill so much that it will lose support in the House, so any changes will have to be surgical. The calculation will be, “What is the smallest thing that the authors of the bill can give these folks to fall back into line so that it is relatively easy to both pass the Senate and then get back through the House?” Freed explained.
Cramer, for his part, is not coming to the rescue for wind and solar, but he may be able to revive support for other forms of clean energy. The North Dakota Senator wrote a letter to Republican leaders in early May railing against the “indefinite entitlement” given to energy sources that depend on the wind and sun, and arguing that the tax credits should prioritize electricity generators on the basis of “reliability,” so as to encourage “geothermal, hydropower, coal and natural gas with carbon capture, and nuclear without excluding wind and solar.”
Capito has barely made a fuss about the energy credits, but she and Cramer will be the ones to watch to see how the Senate deals with the bill’s provision to repeal the Environmental Protection Agency’s greenhouse gas limits for vehicles, as both sit on the Environment and Public Works Committee, of which Capito is the chair. The repeal may not be allowed under the Senate’s rules for budget reconciliation, as it doesn’t have a direct effect on the federal budget. The Senate Parliamentarian hasn’t yet weighed in, but a negative ruling did not stop the two Republicans from leading the fight to revoke waivers granted to California that allowed it to set pollution limits on cars and trucks.
In the end, if any of these Senators wants to take a stand for big changes to the tax credits, they are going to need at least three colleagues to stick it out with them. A more likely outcome, Freed told me, is for them to attempt some smaller adjustments.
“Hopefully they can make it better, but they’re also under enormous pressure to not deviate too significantly from what the House wrote,” he said. “We just need to go in clear-eyed that it's going to be difficult.”
Current conditions: Southern Spain will endure multiple days over 100 degrees Fahrenheit this week • Nearly 4 inches of rain could fall in parts of southwestern China on Tuesday • It will be almost 90 degrees in New Orleans again today after high temperatures triggered widespread brownouts in the region over the weekend.
President Trump signed four executive orders Friday designed to accelerate the build-out of nuclear power in the U.S. The orders specifically call on the Nuclear Regulatory Commission to speed up its approval of new reactors; relax radiation exposure limits; explore using federal lands and military bases as potential reactor sites; and grow the nation’s nuclear energy capacity from approximately 100 gigawatts in 2024 to 400 gigawatts by 2050. The orders also describe putting 10 new large reactors into construction no later than 2030 with the support of the Department of Energy’s Loan Programs Office — including having at least one operational reactor at a domestic military base no later than September 2028. “Mark this day on your calendar,” Interior Secretary Doug Burgum said at the signing on Friday, per The New York Times. “This is going to turn the clock back on over 50 years of overregulation.”
At the same time, the administration’s ambitious goals come against a backdrop of reduced “personnel and funding for the NRC and the Department of Energy, along with weakening the NRC’s independence and global credibility,” Jennifer T. Gordon, the director of the Nuclear Energy Policy Initiative at the Atlantic Council’s Global Energy Center, writes — all of which will “make it challenging to realize the full potential of the U.S. nuclear energy industry.”
EPA
The Environmental Protection Agency is poised to propose that greenhouse gases emitted from fossil fuel-burning power plants “do not contribute significantly to dangerous pollution” or climate change, The New York Times reported Saturday, based on a review of an internal draft of the document. The EPA’s rationale in the proposal is that the emissions from the sector are small enough that their elimination would have no impact on public health — although according to the agency’s own accounting in 2022, the power sector is the second biggest source of greenhouse gas emissions in the country, behind only transportation.
The move by the EPA, while in keeping with the Trump administration’s deregulatory ambitions, also serves to justify its pending proposal to “repeal all greenhouse gas emissions standards for fossil fuel-fired power plants,” including coal-powered units. Previously, the agency had argued that Biden-era restrictions on coal- and gas-fired plants could prevent up to 1,200 deaths and 1,900 cases of asthma per year.
BYD
BYD announced steep discounts on 22 of its electric and plug-in hybrid models between now and the end of June, with some price cuts as big as 34%, Bloomberg reports. The company’s cheapest car, the Seagull hatchback, is down to just $7,780, while the Seal hybrid sedan saw the steepest discount of more than $7,000, to a mere $14,270. Shares of BYD closed down 8.6% after the announcement.
BYD’s cuts aim to boost customer demand, with Citi analysts anticipating the discounts could increase dealership foot traffic by 30% to 40% week on week. But the analysts also appeared skeptical that the move by BYD would be hugely beneficial to the company in its price war with rival EV automaker, noting “competition remains relatively mild.”
South Africa has proposed a liquified natural gas trade package with the United States, following a contentious meeting between President Cyril Ramaphosa and President Trump last week, Reuters reports. The deal would see South Africa import 75 to 100 petajoules of LNG annually from the U.S. over a 10-year period. Though South Africa currently does not have an LNG import terminal, the government plans to build one at the Port of Richards Bay, with the first phase going online by 2027, in order to lessen its reliance on the dwindling supply via pipeline from Mozambique. The U.S. will reportedly also help South Africa explore fracking opportunities within South Africa; the Karoo region of the country is believed to hold shale reserves, though drilling has been held off due to concerns about contaminating the water supply.
The trade package additionally includes an agreement for South Africa to avoid paying a duty on imports of cars, steel, and aluminum. According to Minister in the Presidency Khumbudzo Ntshavheni, who shared details of the deal, it will amount to $900 million to $1.2 billion in trade per year.
President Trump on Friday urged the United Kingdom to “stop with the costly and unsightly windmills and incentivize modernized drilling in the North Sea, where large amounts of oil lay waiting to be taken,” the Associated Press reports. Trump specifically cited Aberdeen as a potential hub for the “century of drilling left” — the same Scottish city where his Trump International Golf Links golf course is located, and where he unsuccessfully opposed the building of 11 offshore turbines before he became president. Despite Trump’s frequent complaints that turbines are eyesores, the BBC reported this weekend that wind farms have become an “unusual” and “surprisingly popular” tourist attraction in the UK.
Four former Volkswagen executives were found guilty of fraud in Germany on Monday for their role in the 2015 “dieselgate” emissions test cheating scandal.
The founder of Galvanize Climate Solutions and a 2020 presidential candidate does some math on how smart climate policy could help the U.S. in a trade war.
We’re now four months into a worldwide trade war, and the economic data confirms it’s Americans who are paying the price. A growing body of surveys and forecasts indicate that inflation will be a persistent, wallet-draining reality for U.S. households. Voters now expect inflation to hit 7.3% next year, and as of March, the Organisation for Economic Co-operation and Development projects that tariffs and trade tensions could help drive U.S. inflation up by 0.3 percentage points in 2025.
But there are solutions for whipping inflation. One is unleashing an abundance of clean energy.
Clean energy can have a powerful deflationary ripple effect, lowering prices across the economy. Solar has for years been the cheapest form of new energy around the world, and recent research from Goldman Sachs shows that prices of clean technologies like large-scale solar power and battery storage are falling. These lower costs are helping to keep electricity prices more stable, even as demand rises due to the growing number of data centers, the return of U.S. manufacturing, and the electrification of transport and heating.
As a thought experiment, my team gathered data on the U.S. energy market to estimate the potential deflationary effect that accelerating clean energy development could have on the American economy. At the end of our analysis, we found that accelerating renewable energy development nationwide could reduce inflation by 0.58 percentage points — meaning that if inflation were running at 4%, widespread clean energy would bring it down to 3.42%. This would save the average American family approximately $441 each year, or nearly three months’ worth of electricity bills.
While our model doesn’t completely capture all of America’s regional complexities regarding energy policy or resource availability, it shows what’s possible. Call it the “Clean Energy Dividend” — a measurable financial return Americans receive when renewable deployment expands.
These numbers are based on something that’s already happening in Texas, where building new clean energy projects is relatively easy. Since 2019, Texas has expanded its solar capacity by 729% and wind power by 49%, faster than any other state in the nation. These developments have added approximately 39,000 gigawatt-hours of solar, 41,000 gigawatt-hours of wind to the Texas grid. In that same time, Texas has also added 9,300 megawatts of battery capacity — a 8,941% increase.
To match Texas’ success, the rest of America would need to significantly ramp up its clean energy production. According to our analysis, the other 49 states combined would need to produce nearly 73% more renewable electricity than currently planned for 2025. That means that instead of adding 66,300 gigawatt-hours of clean power to the grid this year as projected, they’d need to add 114,700 gigawatt-hours. It’s an ambitious target, but one that would help keep costs down for consumers and businesses.
The deflationary impact would hit in two ways: from direct reductions in electricity bills and from lower costs for goods and services.
First, on direct reductions: The Electric Reliability Council of Texas market, otherwise known as ERCOT, is projected to experience a 12% decrease in wholesale electricity prices from 2024 to 2025; the rest of the United States, meanwhile, is expected to see a 3% increase in retail electricity prices during the same period. This creates a 15% gap between Texas and the national average.
The average American household uses about 10,791 kilowatt-hours of electricity annually, which currently costs approximately $1,779 per year. With a projected 3% national increase, this would rise to $1,828 in 2025. If prices fell by 12% as in Texas, however, the cost would decrease to $1,571, resulting in a direct savings of about $258 per household.
Second, beyond direct savings: Our analysis found that electricity costs constitute about 2.4% of all business expenses in the economy. When businesses pay less for electricity, they typically pass about 70% of those savings to consumers through lower prices. This translates to an additional $183 in annual savings per household on everyday goods and services.
Combining these figures, the total benefit per household would be $441 annually. In terms of inflation, the direct effect on electricity bills contributes 0.34%, and the indirect effect through price decreases on other goods contributes 0.24%. Together, they account for a 0.58% reduction in inflation.
Far more than the U.S. would like to admit, its economy remains highly susceptible to oil shocks. Nearly every economic recession in the U.S. since the 1940s has been preceded by a large increase in the price of fossil fuels. Similarly, all but three oil shocks have been followed by a recession. And while the price of oil is low now, this doesn’t guarantee it will be in the future. When energy costs rise sharply — whether from conflicts, production cuts, or supply chain disruptions — the effects cascade through every sector of our economy.
Renewable energy serves as a powerful buffer against these inflationary pressures. That said, expanding renewable energy faces challenges. Some communities oppose projects such as wind and solar farms due to concerns about land use, aesthetics, and environmental impacts, leading to delays or cancellations. At the national level, the Trump administration is doing everything it can to hinder investment and slow the growth of renewable energy infrastructure. These obstacles can impede progress toward a more stable and affordable energy future — even in Texas.
There, Republican lawmakers have introduced a wave of legislation aimed at imposing new fees and regulatory hurdles on renewable energy projects, restricting further development, and mandating costly backup power requirements. These measures could raise wholesale electricity prices by 14%, according to an analysis by Aurora Energy Research. Just as the rest of America should be emulating Texas’ success, Texas is busy unraveling it to resemble the rest of America.
Still, there are several factors that can speed renewable deployment nationwide: streamlining permitting processes, developing competitive electricity markets, ensuring sufficient transmission infrastructure, and passing supportive regulatory frameworks. While geography will always affect which resources are viable, every region has significant untapped potential — from geothermal in the West to solar in the South.
No matter where you stand on decarbonization and the fight against climate change, we should pay attention to any idea that can fight inflation, put money back in Americans pockets, create jobs, make our energy more secure, and help the environment all at once. The Clean Energy Dividend may not solve everything—but it’s about as close to a win-win-win as we’re going to find.