Impact of the 'One Big Beautiful Bill' on U.S. Energy Prices and Emissions

On July 4, 2025, President Donald Trump signed the One Big Beautiful Bill Act into law, a sweeping piece of legislation that has drawn considerable scrutiny for its implications on energy prices and environmental sustainability in the United States. The nearly 900-page bill, primarily supported by congressional Republicans, significantly alters the landscape of energy subsidies, favoring fossil fuels and biofuels while curtailing financial incentives for renewable energy technologies such as wind and solar power.

Critics argue that the new law will exacerbate the climate crisis by keeping Americans reliant on dirtier energy sources. According to Daniel Cohan, Professor of Civil and Environmental Engineering at Rice University, "This bill favors energy technologies that are already profitable and harm the environment while stifling those that could rapidly cut emissions."

The One Big Beautiful Bill rescinds billions of dollars allocated by the Inflation Reduction Act (IRA) of 2022, which had aimed to bolster domestic manufacturing and deployment of renewable energy projects. Notably, tax incentives for wind and solar energy, which have accounted for over 90% of new electricity generation in recent years, are set to be phased out more rapidly under the new law. This shift comes at a time when renewable energy sources are critical to addressing climate change and meeting growing power demands.

Jesse Jenkins, a professor at Princeton University, predicts that the bill will lead to an estimated reduction of 820 terawatt-hours in wind and solar power generation by 2035 compared to previous policies. This figure represents more energy than all U.S. coal-fired power plants produced in 2023, highlighting the potential regression in clean energy initiatives due to the new legislation.

Furthermore, the bill imposes stringent timelines for renewable energy projects to qualify for tax credits, mandating that construction must begin by mid-2026 or that projects must be operational by the end of 2027. These timelines create significant hurdles for new developments in the renewable sector, particularly in light of recent advancements that have made wind and solar energy more viable than ever.

Electric vehicles (EVs) and energy efficiency improvements are also adversely affected. The Act eliminates tax credits for EVs by September 30, 2025, and removes fines for automobile manufacturers that fail to meet fuel economy standards, likely resulting in a market shift towards less efficient vehicles. Additionally, tax credits for home energy efficiency upgrades will expire at the end of 2025, further discouraging homeowners from investing in cleaner technologies.

In contrast, the bill significantly extends support for fossil fuels and biofuels, allocating tens of billions of dollars to tax credits for biofuels such as ethanol and biodiesel, which are often criticized for their environmental impact. The legislation also opens federal lands and waters for increased oil and gas drilling, while reducing the royalties owed to the government for resource extraction.

As a result of these changes, Jenkins estimates that household energy costs could increase by more than $280 annually by 2035, with the added fossil fuel consumption negating potential emissions reductions of approximately 470 million tons. This represents a notable increase in carbon emissions, counteracting efforts to combat climate change.

Looking ahead, experts warn that the One Big Beautiful Bill could hinder America's clean energy transition, leaving the country lagging behind global leaders such as China, which is rapidly expanding its investments in solar, wind, and electric vehicle technologies. Cohan concludes that the legislation's combination of cuts to clean energy support with bolstered fossil fuel subsidies poses significant threats to both the environment and the financial well-being of American households.

The future implications of this legislation remain uncertain, but it is clear that the path set forth by the One Big Beautiful Bill represents a significant departure from the momentum built by previous clean energy initiatives, potentially reshaping the U.S. energy landscape for years to come.