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Trump’s Big “Beautiful” Bill on Climate

Trump in a navy suit displays a signed document. He wears a red tie; people stand nearby, some clapping. Mood appears official and formal. Trump’s Big “Beautiful” Bill on Climate
Trump Signs the One Big Beautiful Bill

It is a tumultuous time for policy in general but especially so in the climate and energy space in the US. US President Donald Trump’s recent orders to halt the concentration of a $6 billion wind farm that was almost completed is emblematic of the administration’s approach to climate. Executive Orders like EO 14154 “Unleashing American Energy” instead shift direction to exploiting natural resources and ensuring energy security. 


The One Big Beautiful Bill Act is in line with this redirection. Though not always directly related, there are three provisions in the bill that affect the global energy transition: loan guarantees for energy projects, energy tax credits, and critical minerals. Combined, these provisions do not merely tweak policy but rather actively discourage renewables, entrench fossil fuels, and risk setting back global net zero goals.


The Fossil Fuel Regime of Loan Guarantees


In its legal insights review of the Bill, American law firm Hunton, describes loan guarantees in the OBBB. The Bill replaces the IRA’s Energy Infrastructure Reinvestment (EIR) program with an Energy Dominance Financing (EDF) framework. Unlike the EIR that focused on sustainability and the reduction of greenhouse gases, the EDF emphasizes ‘energy dominance’ where grid reliability and an advancement in nuclear, hydropower and critical mineral exploration is emphasized.


Under this authority, loans can be guaranteed for projects that repower and repurpose idle energy infrastructure, raise the capacity of existing infrastructure, or support grid reliability and system adequacy. Considering that the EIA shows that 90% of US energy came from fossil fuels and nuclear in 2023, these changes strongly favor an expansion of non-renewables. 


These loan guarantees shift the incentive structure for fossil fuels. Holland & Knight analysts note that fossil fuel projects would not have previously qualified for loans since emissions standards were tighter. Now, however, they can. “Energy security” here functions as a cloak for privileging fossil fuels, when a credible security strategy would diversify supply and lean into the most cost-competitive sources in today’s global markets: renewables.


Changes in Tax Credits


The Act also reshapes the energy tax credits that the IRA brought in three years ago. There is a profound impact to the clean energy transition from these changes. The Sustainable Investment Association, SIF, argues that at least 53% of new clean power generation is at risk in the US over the next decade. The Tax Foundation highlights three major shifts stemming from the Bill. 


Firstly, it repeals tax credits related to consumers including those for electric vehicles and residential clean energy. Secondly, the Bill applies restrictions on solar and wind projects: they are now ineligible for the clean investment and production tax credits unless operational by December 2027 or begin construction within 12 months of the Bill’s passing. Lastly, the Bill maintains credits for stable sources like nuclear, hydropower, geothermal and storage as well as an extended eligibility for low-emissions transportation fuels production to 2029. 


The Tax Foundation argues that removing consumer tax credits is good from an equity standpoint since most of these credits went to wealthy consumers who would have bought EVs and energy efficient home technology even without an incentive. This defense, however, is shortsighted. Tax credits were expected to push adoption beyond just wealthy early adopters. A Princeton University ZERO Lab finds that these changes in credits could reduce EV adoption by 40% by 2030 as compared to if there were no changes in policy.


At the same time, restrictions on solar and wind power punish smaller, community-scale projects while favoring large corporations that have the capital to invest in nuclear or hydropower. The outcome is less diversity, more concentration of power, and diminished opportunities for distributed clean energy.


Contradictory Directions: Critical Minerals


The Bill’s approach to critical minerals highlights contradictions. Analysts Gracelin Baskaran and Meredith Schwartz at the CSIS, note that the OBBB has introduced a phasedown for the tax credits for critical mineral production. The credit will drop down to 75% in 2031 and eventually 25% by 2033, encouraging a short-term rush towards mineral extraction, but a long term disincentive to domestic supply. The Bill excludes certain foreign entities from accessing these credits while simultaneously adopting a militarized, defensive approach. It allocates $2 billion to the Department of Defense for the National Defense Stockpile of critical minerals and $5 billion through the Industrial Base Fund to bolster supply chains under the banner of national security.


Yet, these supply-side measures are undercut by the repeal of the EV and consumer credits described above, which removes the demand driver that made minerals like lithium and cobalt strategically valuable. It is incoherent to both choke demand and subsidize supply. It will not deliver a resilient minerals ecosystem, but instead cede ground to other foreign players who will be looking to strengthen their footing in the global critical mineral supply chain.


Active Harms: Costs, Pollution, and Strategic Retreat


The administration would argue that fossil fuels are a reliable source of energy that shield consumers from global price swings since they are produced within the US. Under scrutiny, however, this view collapses. The Center for American Progress (CAP) estimates that the Bill will raise electricity costs by $110 per household annually precisely because it excludes cheaper, cleaner renewables. A July 2025 Reuters report confirms the trend: nearly 90% of renewables are now cheaper than fossil fuels worldwide. By doubling down on carbon-intensive infrastructure, the Bill locks Americans into higher costs and missed opportunities.


The human costs are equally stark. CAP projects 930 additional deaths annually by 2035 from local air pollution as a result of the Bill. These harms fall disproportionately on underprivileged communities who already live closest to fossil fuel facilities. The equity implications are clear: the Bill erodes consumer access to clean technologies and magnifies environmental injustice.


Impacts on the Energy Transition


Taken together, the OBBB slows down the US energy transition with the effect of potentially slowing down the global transition, too. By locking in fossil fuel loan guarantees, weakening consumer and community access to clean technologies, and creating contradictory incentives in critical minerals, the Bill abandons renewables just as they are reaching global cost competitiveness. 


As the US deprioritizes renewables, it imposes costs on the global energy transition. When it adopts demand-side changes like the ending of the EV credits, it signals global EV manufacturers to slow down. This in turn slows down price declines that other smaller countries were relying on. With supply-side changes such as the changes to its mineral policy, it limits the country’s ability to influence transition technologies since lower production means a decline in technology availability and potential innovation.


The final result of the OBBB seems to be an unequal, carbon-intensive US. While households face higher costs and disadvantaged communities bear greater pollution burdens, the U.S. risks ceding leadership in clean energy industries to competitors abroad. The Bill sought to secure a narrative of “energy dominance” but may instead lead to vulnerabilities both internally and abroad.



Edited by Tatenda Dlali


Adil Ashraf writes on climate issues for Political Pandora’s Climate Department. He is a Local Government Budget Analyst in Maryland, where he contributes to budget development and performance management. He holds a Master of Public Administration from Syracuse University with a concentration in Public Policy Data Analysis.


Originally from Pakistan, Adil is deeply passionate about sustainability and equitable transitions. His experience spans fundraising for climate initiatives as well as working on sustainability projects across both the public and private sector.



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References:




  • Jenkins, Jesse. “Potential Impacts of Electric Vehicle Tax Credit Repeal on US Vehicle Market and Manufacturing.” Zenodo, REPEAT Project, 18 Mar. 2025, zenodo.org/records/15047921.








Keywords: US Energy, Climate Policy, Fossil Fuels, Wind Farm, Clean Energy, Tax Credits, Energy Security, Net Zero, Critical Minerals, Loan Guarantees, Energy Transition, Solar Power, EV Credits, Nuclear Power, Air Pollution, Energy Costs, Grid Reliability, Carbon Emissions, Renewable Energy, Energy Bill

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