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It was almost exactly a year ago that the clean energy industry started to grapple seriously with a possible repeal of the Inflation Reduction Act.
Candidate Trump had spent a year on the campaign trail talking about killing the “Green New Scam.” But after President Biden’s disastrous debate performance, the reality of the tight race set in. Suddenly, everyone started gaming out the possibility of IRA repeal — while also hoping the benefits to red districts would insulate the industry from radical change in a tax and spending bill.
That anxiety peaked on July 1 when the Senate unveiled its sweeping budget bill, delivering a significant rollback of federal clean energy incentives that have fueled a surge in new projects and private investment in the last three years.
As the industry now grapples with its new reality, it’s leaning into economic messaging focused on job loss, American competitiveness, and grid reliability. There’s also a widespread acknowledgement that the outcome could have been much worse, and some optimism that the massive near-term energy demands of artificial intelligence will still boost clean energy sources to the top of the market.
Jason Grumet, CEO of the American Clean Power Association, said in a statement on Thursday that the bill was a “step backward” for American energy policy that will limit economic growth. “The combination of surging demand for electric power and economic benefits of renewable energy technologies ensure that clean power will continue to play a significant and growing role in our nation’s energy mix,” he added. “It is time for the brawlers to get out of the way and let the builders get back to work.”
Jobs
Job losses were a central theme to industry lobbying and reactions to the legislation. Even Elon Musk, Tesla CEO and former “first buddy,” expressed alarm over the bill’s potential to “destroy millions of jobs in America.”
The fact that many of those jobs were set to be created or destroyed in Republican-led districts didn’t ultimately sway lawmakers.
Abigail Ross Hopper, who leads the Solar Energy Industries Association, focused on existing jobs in energy manufacturing that stand to be destroyed: “Many of these brand new factories will be forced to shut down and lay off thousands of workers, gutting communities that were finally seeing the kind of industrial revival rural America needs.”
In a statement before the House passed its final version, the North American Building Trades Union, which represents 3 million construction workers, called the bill “the biggest job-killing bill in the history of this country.” The union pointed to the potential loss of 1.75 million construction jobs, around $148 billion in lost annual wages and benefits — “the equivalent of terminating over 1,000 Keystone XL projects.”
The International Brotherhood of Electrical Workers also lamented the loss of “hundreds of thousands of good-paying construction jobs, billions of hours, and hundreds of billions in lost wages and economic benefits to America’s middle class.” The bill is a move to “abandon critical investment in American infrastructure and the energy independence they have been tripping over themselves to take credit for the last few years,” president Kennth W. Cooper said.
American competitiveness
Another key focus was China, and whether America is ceding global dominance in modern energy.
Nonprofit advocacy organization Ceres said the bill is a “significant setback” to the country’s energy, economic, and industrial goals. “By raising taxes on energy producers and users, this legislation puts the U.S. at severe risk of ceding its leadership in the 21st century’s most important industries to China and other countries,” the group’s head of federal policy said in a statement.
The Coalition for Community Solar Access pointed to the 150 GW of new load projected to hit the U.S. grid from advanced manufacturing and AI in the next five years. While the bill kneecaps the cheapest and fastest-to-deploy resources, China deployed 277 gigawatts of solar last year, CCSA said.
The American Council on Renewable Energy called the bill a “missed opportunity” to get ahead of China in clean energy and AI. “China is aggressively investing in clean energy and digital infrastructure because they understand that energy security and economic competitiveness go hand in hand,” president Ray Long said in a statement. “This bill should have matched that urgency.”
Grid reliability
The industry is also warning about the bill’s potential to decrease grid reliability by restricting energy production during a historic demand surge.
Advanced Energy United’s president and CEO Heather O’Neill put it this way: “America didn’t have an energy emergency before, but this legislation goes a long way towards creating one.”
The Federation of American Scientists said Monday that the bill will do the exact opposite of what the U.S. grid needs, and increase energy bills, including for consumers and states that aren’t using clean energy. “Do you want more energy on the grid faster? To provide reliable power to your homes during storms or to support the buildout of AI data centers?” FAS wrote. Clean energy investment and production tax credits made that possible, helping to cover up front costs of building zero-emission energy and thereby lowering consumer energy bills and increasing grid reliability by getting more energy online quicker.
Nonprofit advocacy organization Americans for a Clean Energy Grid took a look-ahead approach, urging lawmakers on both sides of the aisle “to come together now on pragmatic, durable solutions to upgrade and build out the electric grid.” Permitting reform should be a key focus in the next few weeks and months, executive director Christina Hayes said in a statement. “No matter your politics, the reality is clear: demand for electricity is rising,” Hayes said. “Whether that power comes from natural gas, coal, nuclear, wind, or solar, none of it will reach homes, businesses, or data centers without a modern, reliable, and expanded transmission network.”
Worse outcomes were avoided
The final bill signed by President Trump on July 4th removed provisions that would have changed tax policy retroactively, as well as the surprise excise tax on wind and solar. Avoiding those disastrous outcomes was considered a win for the industry.
Lisa Jacobson, President of the Business Council for Sustainable Energy, said the Senate provided a “more workable transition” for some energy businesses but warned that remaining provisions “could still cause uncertainty and increase energy costs.”
Nathaniel Keohane, who leads the Center for Climate and Energy Solutions pointed to another potential bright spot: “The Senate bill would preserve tax credits for newer technologies like advanced nuclear, battery storage, geothermal energy, and carbon capture, as well as advanced manufacturing,” he said in a statement early last week after the Senate passed its bill. “That progress is significant.”
Crux, a clean energy financing marketplace, said that the preservation of tax credit transferability “reflects growing bipartisan recognition that this mechanism is essential to financing America’s energy future.” The interconnected nature of clean energy financing, Crux said, “means that tax credit policy changes make debt capital and other types of financing even more critical for project success.”
While many in the industry tried to balance criticism with bipartisanship, there was plenty of bluntness, too: “It’s hard to think of a bigger self-own,” Princeton’s Jesse Jenkins told The Atlantic. “We’re effectively raising taxes on the country’s main sources of power at a time when electricity prices are already rising.”
