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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 how it 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.”
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On Neil Jacobs’ confirmation hearing, OBBBA costs, and Saudi Aramco
Current conditions: Temperatures are climbing toward 100 degrees Fahrenheit in central and eastern Texas, complicating recovery efforts after the floods • More than 10,000 people have been evacuated in southwestern China due to flooding from the remnants of Typhoon Danas • Mebane, North Carolina, has less than two days of drinking water left after its water treatment plant sustained damage from Tropical Storm Chantal.
Neil Jacobs, President Trump’s nominee to head the National Oceanic and Atmospheric Administration, fielded questions from the Senate Commerce, Science, and Transportation Committee on Wednesday about how to prevent future catastrophes like the Texas floods, Politico reports. “If confirmed, I want to ensure that staffing weather service offices is a top priority,” Jacobs said, even as the administration has cut more than 2,000 staff positions this year. Jacobs also told senators that he supports the president’s 2026 budget, which would further cut $2.2 billion from NOAA, including funding for the maintenance of weather models that accurately forecast the Texas storms. During the hearing, Jacobs acknowledged that humans have an “influence” on the climate, and said he’d direct NOAA to embrace “new technologies” and partner with industry “to advance global observing systems.”
Jacobs previously served as the acting NOAA administrator from 2019 through the end of Trump’s first term, and is perhaps best remembered for his role in the “Sharpiegate” press conference, in which he modified a map of Hurricane Dorian’s storm track to match Trump’s mistaken claim that it would hit southern Alabama. The NOAA Science Council subsequently investigated Jacobs and found he had violated the organization’s scientific integrity policy.
The Republican budget reconciliation bill could increase household energy costs by $170 per year by 2035 and $353 per year by 2040, according to a new analysis by Evergreen Action, a climate policy group. “Biden-era provisions, now cut by the GOP spending plan, were making it more affordable for families to install solar panels to lower utility bills,” the report found. The law also cut building energy efficiency credits that had helped Americans reduce their bills by an estimated $1,250 per year. Instead, the One Big Beautiful Bill Act will increase wholesale electricity prices almost 75% by 2035, as well as eliminate 760,000 jobs by the end of the decade. Separately, an analysis by the nonpartisan think tank Center for American Progress found that the OBBBA could increase average electricity costs by $110 per household as soon as next year, and up to $200 annually in some states.
EIA
Saudi Arabia’s state-owned oil company Saudi Aramco is in talks with Commonwealth LNG in Louisiana to buy liquified natural gas, Reuters reports. The discussion is reportedly for 2 million tons per year of the facility’s 9.4 million-ton annual export capacity, which would help “cement Aramco’s push into the global LNG market as it accelerates efforts to diversify beyond crude oil exports” and be the “strongest signal yet that Aramco intends to take a material position in the U.S. LNG sector,” OilPrice.com notes. LNG demand is expected to grow 50% globally by 2030, but as my colleague Emily Pontecorvo has reported, President Trump’s tariffs could make it harder for LNG projects still in early development, like Commonwealth, to succeed. “For the moment, U.S. LNG is still interesting,” Anne-Sophie Corbeau, a research scholar focused on natural gas at Columbia University’s Center on Global Energy Policy, told Emily. “But if costs increase too much, maybe people will start to wonder.”
Ford confirmed this week that its $3 billion electric vehicle battery plant in Michigan will still qualify for federal tax credits due to eleventh-hour tweaks to the bill’s language, The New York Times reports. Though Ford had said it would build its factory regardless of what happened to the credits, the company’s executive chairman had previously called them “crucial” to the construction of the facility and the employment of the 1,700 people expected to work there. Ford’s battery plant is located in Michigan’s Calhoun County, which Trump won by a margin of 56%. The last-minute tweaks to save the credits to the benefit of Ford “suggest that at least some Republican lawmakers were aware that cuts in the bill would strike their constituents the hardest,” the Times writes.
Italy and Spain are on track to shutter their last remaining mainland coal power plants in the next several months, marking “a major milestone in Europe’s transition to a predominantly renewables-based power system by 2035,” Beyond Fossil Fuels reported Wednesday. To date, 15 European countries now have coal-free grids following Ireland’s move away from coal in 2025.
Italy is set to complete its transition from coal by the end of the summer with the closure of its last two plants, in keeping with the government’s 2017 phase-out target of 2025. Two coal plants in Sardinia will remain operational until 2028 due to complications with an undersea grid connection cable. In Spain, the nation’s largest coal plant will be entirely converted to fossil gas by the end of the year, while two smaller plants are also on track to shut down in the immediate future. Once they do, Spain’s only coal-power plant will be in the Balearic Islands, with an expected phase-out date of 2030.
“Climate change makes this a battle with a ratchet. There are some things you just can’t come back from. The ratchet has clicked, and there is no return. So it is urgent — it is time for us all to wake up and fight.” — Senator Sheldon Whitehouse of Rhode Island in his 300th climate speech on the Senate floor Wednesday night.
Some of the Loan Programs Office’s signature programs are hollowed-out shells.
With a stroke of President Trump’s Sharpie, the One Big Beautiful Bill Act is now law, stripping the Department of Energy’s Loan Programs Office of much of its lending power. The law rescinds unobligated credit subsidies for a number of the office’s key programs, including portions of the $3.6 billion allocated to the Loan Guarantee Program, $5 billion for the Energy Infrastructure Reinvestment Program, $3 billion for the Advanced Technology Vehicle Manufacturing Program, and $75 million for the Tribal Energy Loan Guarantee Program.
Just three years ago, the Inflation Reduction Act supercharged LPO, originally established in 2005 to help stand up innovative new clean energy technologies that weren’t yet considered bankable for the private sector, expanding its lending authority to roughly $400 billion. While OBBBA leaves much of the office’s theoretical lending authority intact, eliminating credit subsidies means that it no longer really has the tools to make use of those dollars.
Credit subsidies represent the expected cost to the government of providing a loan or a loan guarantee — including the possibility of a default — and thus how much money Congress must set aside to cover these potential losses. So by axing these subsidies, Congress is effectively limiting the amount of lending that the LPO can undertake, given that many third-party lenders would be reluctant to finance riskier, more novel, or larger projects in the absence of federal credit support.
“The LPO is statutorily allowed to take loans on its books to finance these projects in these categories, but it has no credit subsidy by which to take the risk required to do so,” Advait Arun, senior associate of energy finance at the Center for Public Enterprise and a Heatmap contributor, told me.
The particular programs that have been eliminated support new and improved energy technologies, clean energy infrastructure, fuel efficient vehicles, and help native communities access energy project financing. The long-running Loan Guarantee Program and the advanced vehicles program in particular are behind some of the best known LPO efforts, supporting companies such as Tesla, Ford, and NextEra Energy, and projects such as Georgia’s Vogtle nuclear reactors, the Thacker Pass lithium mine, and Shepherd’s Flat, one of the world’s largest wind farms.
The Loan Guarantees Program is “the big Kahuna,” Arun told me. “This is the longest-standing program of the LPO. So to see this defunded is like, you’re decapitating the LPO’s crown jewel.”
The program only has about $11 million left over in credit subsidies, consisting of funding that it received prior to the IRA’s appropriations. That won’t be enough to make any meaningful loans, Arun said, and is more likely to be used to “keep a skeleton crew online” for any remaining administrative tasks.
Then there’s the Energy Infrastructure Reinvestment Program, which the IRA stood up with a whopping $250 billion in lending authority to transition and transform existing fossil fuel infrastructure for clean energy purposes. Now, OBBBA has axed the program’s remaining $5 billion in credit subsidies and replaced it with $1 billion in new subsidies for projects that “retool, repower, repurpose, or replace” existing energy infrastructure, with a focus on expanding capacity and output as opposed to decarbonizing the economy. It also refashioned the program as the predictably-named “Energy Dominance Financing” initiative.
The new-old program — which the law extended through 2028 — no longer requires LPO-funded infrastructure to reduce or sequester emissions, broadening the office’s lending authority to include support for fossil fuel and critical minerals projects. It also adds language encouraging the LPO to “support or enable the provision of known or forecastable electric supply,” which Arun fears is a “backend way of penalizing the addition of renewable energy” on previously developed land.
“Under the Trump administration’s direction, [the LPO] can use that term, ‘known and forecastable,’ to actually just say, well, guess what? Renewables are not known or forecastable because they are intermittent due to the weather,” Arun told me. So while government and private industry were once excited about, say, turning sites originally developed for coal mining or coal ash disposal into solar and battery facilities, those days are probably over.
Carbon capture in particular stands to suffer from this reprogramming, Arun said, explaining that while the Biden LPO saw potential in adding carbon capture to natural gas and coal plants, its current incarnation will no longer allocate funding in any meaningful amount “because reducing emissions is no longer part of the LPO’s mandate.” Some policymakers and clean energy developers had also hoped that excess renewable energy would make it economically feasible to power the production of hydrogen fuel with renewable energy. But with this law — and really each passing day under Trump — a mass buildout of solar and wind seems less and less likely, making it doubtful that green hydrogen will move down the cost curve.
As bleak as this looks, it’s better than it could have been. There was no guarantee that Trump would keep the LPO around at all. Even in this denuded state, the office can still fund the expansion of existing nuclear projects, and perhaps even the buildout of transmission lines or battery projects on brownfield sites, Arun said, depending on how LPO’s leadership ends up interpreting what it means to “increase the capacity output of operating infrastructure.”
But in many ways, what happened with the LPO looks like another instance of the Trump administration picking winners and losers: Yes to clean, firm energy and fossil fuels, no to solar, wind, and electric vehicles.
Take the Advanced Technology Vehicle Manufacturing Program, for example. OBBBA nixed both its credit subsidies and its tens of billions of dollars in lending authority. That’s hardly a surprise, given that the Bush administration created the program in 2007 explicitly to support the domestic development and manufacture of fuel-efficient vehicles and components. But it means that unlike the LPO programs for which lending authority still stands, even if Congress wanted to, it could not redesign the advanced vehicles program to serve a more Trump-aligned purpose. Safer, I suppose, to cut off any opening for funding EVs and hybrids.
The latest LPO rescissions add to the growing list of reasons the private sector has to be wary of the consistently inconsistent landscape for federal funding, Arun told me. He worries that slashing the LPO’s authority at the same time as there’s so much uncertainty around tax credit eligibility will lead some companies to forgo federal funding opportunities altogether.
“We’ll see if private developers even want to play around with the LPO,” Arun told me, “given the uncertainty around the rest of the federal landscape here.”
Electric vehicle batteries are more efficient at lower speeds — which, with electricity prices rising, could make us finally slow down.
The contours of a 30-year-old TV commercial linger in my head. The spot, whose production value matched that of local access programming, aired on the Armed Forces Network in the 1990s when the Air Force had stationed my father overseas. In the lo-fi video, two identical military green vehicles are given the same amount of fuel and the same course to drive. The truck traveling 10 miles per hour faster takes the lead, then sputters to a stop when it runs out of gas. The slower one eventually zips by, a mechanical tortoise triumphant over the hare. The message was clear: slow down and save energy.
That a car uses a lot more energy to go fast is nothing new. Anyone who remembers the 55 miles per hour national speed limit of the 1970s and 80s put in place to counter oil shortages knows this logic all too well. But in the time of electric vehicles, when driving too fast slashes a car’s range and burns through increasingly expensive electricity, the speed penalty is front and center again. And maybe that’s not a bad thing.
You certainly can notice the cost of lead-footedness in a gasoline-powered car. It’s simpler today, when lots of vehicles have digital displays that show the miles per gallon you’re getting, than in the old days when you had to do the math yourself. An EV puts the hard efficiency math right in front of you. Battery life is often displayed in terms of estimated miles of range remaining, and those miles evaporate before your eyes if you climb a mountain or accelerate like a drag racer.
This is no academic concern, like trying to boost one’s fuel efficiency through hypermiling techniques such as gentle acceleration, downhill coasting, and killing the AC. In six years of owning a Tesla Model 3, I’ve pushed its range limits trying to reach far-flung national parks and other destinations where fast chargers are scarce. I’ve found myself in numerous situations where I’ve set the cruise control at exactly the speed limit or slightly below to make sure the car would reach the one and only charging depot in the vicinity. For particularly close calls, I’ve puttered white-knuckled with one eye on Tesla’s in-car energy app — and felt my stomach drop when I found myself underperforming its expectations.
Fortunately, slow works. Three years ago I managed a comfortable round-trip from what was then the closest Tesla Supercharger to Crater Lake National Park by driving there down a 55-mile-per-hour two-lane highway; at freeway speed, my little battery probably wouldn’t have made it. Today, my fully charged Model 3 might make it something like 130 to 140 miles at interstate speed, depending on elevation. Go a little slower and it comes close to matching the 200 miles of supposed range.
Fear is the speed-killer, sure. The chance of being stranded with a dead battery is enough for any driver to be scared straight into observing the posted limit. But having all that data at the ready had already started to affect my driving habits even when there was no danger of stranding myself. It’s hard to watch the range drop when you slam the accelerator without thinking of the Interstellar meme about how much this little maneuver is going to cost us. With the price of electricity at the fast charger rising, I’m much more conscious of wasting a few kilowatt-hours by being in a hurry.
The difference is stunningly clear in the kind of controlled range tests that car sites and EV influencers have been conducting. For example, the State of Charge YouTube channel recently drove the Cadillac Escalade IQ, the fully electric version of the status SUV that is officially rated at 465 miles of range. Driven at exactly 70 miles per hour until it ran out of juice, the big EV exceeded that estimate by traveling 481 miles. With the speedometer held at 60 miles per hour, however, the vehicle went 607 miles — more than 100 miles more.
Granted, the Caddy’s comically large 205 kilowatt-hour battery — more than three times as big as the one in my little Tesla — does the lion’s share of the work in allowing it to go so very many miles. A peek into State of Charge’s data, though, makes it clear what 10 miles per hour can do. Dropping from 70 miles per hour to 60 caused the car’s miles per kilowatt-hour figure to rise from 2.1 to 2.6 or 2.7.
That’s not to say EV ownership turns every driver into an energy-obsessed hypermiler. One blessing of the huge batteries that go into Cadillac EVs and Rivians is freeing their drivers from some of the mental burden of range calculations. With driving ranges reaching well above 300 miles, you’re going to make it to the next plug even if you drive like a maniac.
Even so, the increased awareness of the cost of electricity might make some of us reconsider the casual speeding we all do just to take a few minutes off the trip. That’s a good thing for public safety: Big EV batteries make these vehicles heavier than other cars, on average, and thus potentially more dangerous in auto accidents. And slowing down will be especially relevant as electricity prices outpace inflation. Consumer electricity prices are up nearly 5% over last year and are poised to get worse: The budget reconciliation bill signed by President Trump last week won’t help, as one projection sees it leading to an increase in annual energy bills of up to $290 by 2035.
To be honest, the biggest problem of slowing down a little isn’t really the extra time it takes to get someplace. It’s trying to conserve in a world where 5 to 10 miles per hour over the speed limit is the expectation. I once had to cross 140 miles of wind-swept New Mexico expanse from Albuquerque to Gallup on a single charge, a task that required driving 55 miles per hour in a 65 zone of the interstate, holding on tight as semi trucks flew past me in revved aggravation. We made it. But if you really want to make your electrons go farther, then be prepared to become the target of road rage by the hasty and the aggrieved.