President Donald Trump’s One Big Beautiful Bill Act has dramatically shifted the United States’ energy policy by ending federal support for solar and wind power while fostering a favorable environment for oil, gas, and coal production. The House of Representatives passed the bill on Thursday, following a narrow approval by the Senate on Tuesday, meeting a White House-imposed deadline.
Trump has consistently emphasized his energy priorities, stating that the U.S. will rely on oil, gas, coal, and nuclear power to meet its energy needs. Last weekend, he criticized wind and solar power, remarking, “I don’t want windmills destroying our place,” during a Fox News interview aired on June 29. This legislative move aligns with his administration’s focus on fossil fuels, as it delivers on many of the oil and gas sector’s top priorities while ending tax credits crucial to the growth of renewable energy industries.
Oil, Gas, and Coal: The Beneficiaries
The new law opens up federal lands and waters for oil and gas drilling, reversing curbs enacted by the Biden administration. It mandates 30 lease sales in the Gulf of Mexico over 15 years and more than 30 annually on lands across nine states, including access to Alaska. Additionally, the law reduces the royalties producers pay the government for extracting oil and gas on federal lands, encouraging increased output.
Mike Sommers, president of the American Petroleum Institute, stated, “This bill will be the most transformational legislation that we’ve seen in decades in terms of access to both federal lands and federal waters.” The law also incentivizes oil companies to use a carbon capture tax credit designed to support technology that captures carbon emissions and stores them underground. Under the new bill, producers receive an increased tax benefit for injecting these emissions into wells to extract more oil.
The legislation extends the hydrogen tax credit to 2028, a move welcomed by major oil companies like Chevron and Exxon, which are investing in hydrogen fuel projects. “I have a number of members who plan on investing significantly in hydrogen, and so the extension to the end of 2028 was a welcome priority that was fulfilled,” Sommers added.
The coal industry also benefits significantly, with the law mandating at least 4 million additional acres of federal land for mining. It reduces the royalties coal companies pay for mining on federal land and allows the use of an advanced manufacturing tax credit for mining metallurgical coal used in steel production.
Renewable Energy: The Losers
The legislation phases out clean electricity investment and production tax credits for wind and solar power, which have been instrumental in the renewable energy sector’s growth. These credits have existed since 2005 and 1992, respectively, and were extended by the Inflation Reduction Act until at least 2032. However, solar and wind farms entering service after 2027 will no longer be eligible for these credits, except for projects starting construction within 12 months of the bill becoming law.
Abigail Ross Hopper, CEO of the Solar Energy Industries Association, expressed concern, saying, “Despite limited improvements, this legislation undermines the very foundation of America’s manufacturing comeback and global energy leadership.” A related tax credit for using U.S.-made components in solar and wind farms will also end for projects entering service after 2027, with a carveout for projects starting construction within a year of the law’s enactment.
Michael Carr, executive director of the Solar Energy Manufacturers Association, warned of potential factory closures, stating, “If nothing changes, factories start to close. Factories that are on the drawing board that probably penciled [favorably] two weeks ago, maybe don’t pencil now. We’ll see investment slow down in the sector going forward.”
Implications and Future Outlook
This legislative shift represents a significant pivot in U.S. energy policy, prioritizing fossil fuels over renewables. The move is likely to impact the renewable energy sector, potentially slowing down investment and growth. Meanwhile, the fossil fuel industry is poised to expand its operations on federal lands and waters, benefiting from reduced royalties and increased tax incentives.
The broader implications of this policy change will unfold over the coming years, as the U.S. navigates its energy needs and environmental commitments. The international community and environmental advocates will be closely watching how these changes affect the country’s carbon footprint and global leadership in renewable energy development.
As the energy landscape continues to evolve, stakeholders from both the fossil fuel and renewable sectors will need to adapt to the new regulatory environment. The long-term effects on the U.S. economy, job market, and environmental sustainability remain to be seen.
