The recent passage of the “One Big Beautiful Bill” (OBBB) in the fiscal year 2025 budget reconciliation legislation, signed into law by President Trump, is set to have significant implications for the US energy sector and economy. According to experts, this legislation is estimated to lead to an increase in national average household energy bills and total industrial energy expenditures by 2035. The OBBB is projected to cut the development of new clean power generating capacity by more than half and puts over $500 billion of clean energy and transportation investments at risk.
Congress worked through contentious debates to finalize the OBBB, which includes various policy changes affecting energy, Medicaid, food aid programs, and tax provisions. The law is expected to add trillions to the national debt over the next decade. Notably, the legislation maintains and modifies several energy-related tax credits, impacting clean energy deployment and investment in the country.
The final law introduces changes to the energy sector, leading to increased energy expenditures for both households and industries. It is estimated that household energy bills will rise by 2-4% in 2035, with significant regional variations across states. Industrial energy expenditures are also expected to increase by 3-4% under the new law, driven by higher prices and consumption.
Furthermore, the OBBB will result in a reduced deployment of clean energy technologies, affecting the grid and transportation sector. The law’s impact on clean energy tax credits and regulations is projected to significantly alter the composition of the grid by 2035. The early termination of electric vehicle tax credits will lead to a substantial decrease in the number of EVs on the road, impacting the light-duty vehicle stock.
There are concerns about the potential risk to clean energy investments due to policy changes introduced by the OBBB. A significant portion of clean energy investments, including wind, solar, and storage facilities, could face challenges in meeting construction deadlines and material sourcing requirements, potentially leading to project cancellations.
Experts warn that these changes could result in higher greenhouse gas emissions, with the final law expected to lead to an increase in emissions compared to the baseline scenario. The power sector is particularly affected, with notable emissions increases projected across various sectors under the new legislation.
Looking ahead, the executive branch will play a crucial role in implementing the law, with various aspects requiring guidance from the Department of the Treasury. There are concerns that the administration may seek to further advance its policy agenda through administrative actions, potentially impacting investments and energy bill impacts.
Overall, the passage of the “One Big Beautiful Bill” is set to reshape the energy landscape in the US, with implications for clean energy deployment, investments, and greenhouse gas emissions. Stakeholders will need to closely monitor the implementation of the law and its effects on the energy sector and economy.
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