Big, beautiful bill: US pulls back on solar, wind, EVs as China races ahead

Indian Express

2 days ago

US President Donald Trump has signed the Congress-approved 'One Big Beautiful Bill' Act (OBBBA), which marks a sharp break from his predecessor Joe Biden's Inflation Reduction Act (IRA) that drove billions into clean energy investments – from solar and wind to electric vehicles (EVs). Instead, the OBBBA accelerates the phaseout of federal incentives for these clean technologies, slashes royalty rates for domestic fossil fuel drilling, and expands oil and gas leasing through new provisions.
The US House of Representatives passed the bill on July 3 without altering the Senate-approved version received earlier this week. While the final text modestly tones down the House's more aggressive cuts in support for hydrogen production and batteries, it still rolls back key benefits for solar and wind energy, as well as for both commercial and passenger EVs.
Experts warn the legislation could drive up household energy bills over the next decade, slow the deployment of clean technologies on the US power grid, and – most importantly – cement China's dominance in the global clean energy race.
The provisions of the OBBBA legislation signed by Trump are likely to push household energy bills by 2-7 per cent – an increase of $95-250 – in 2035, according to the New York-headquartered Rhodium Group. 'Most of this increase is driven by fewer electric vehicles on the road, leading to higher motor gasoline consumption and prices,' the think tank said in a note on July 2.
Prior to the OBBBA, provisions under the IRA provided tax credits for purchase of new commercial and passenger EVs through 2032. Now, the benefits will end on September 30 later this year. To be eligible for clean electricity tax credits, wind and solar projects will now have to come online by the end of 2027. While the Senate also considered a new excise tax on upcoming wind and solar facilities with inadequate domestic content, the provision was removed from the final draft.
'Given that we expect far fewer EVs on the road and a meaningful reduction in clean energy deployment on the grid, there are also still considerable questions around the viability of new clean energy manufacturing in the US… lower levels of domestic demand for batteries, solar panels, wind turbines, and electric vehicles could threaten the economic case for a number of manufacturing facilities that have been announced or, in some cases, that are already operating,' Rhodium said.
As expected, the oil and gas industry – long a key backer of Trump's presidential campaigns – welcomed the OBBBA's push to expand fossil fuel production. But critics argue that US shale remains costlier than renewables, and that leaning on fossil fuels to meet rising electricity demand is both economically and practically unviable.
In a statement on the legislation, David Widawsky, director of the World Resources Institute (WRI), US, said, 'Fossil fuels alone won't meet the skyrocketing energy demand from manufacturing, AI, electrification, and increasingly frequent and intense heat waves that prompt more AC usage. But America can create a more flexible, agile, and resilient power system with renewables and grid upgrades. Clean energy sources are better positioned to come online quickly to meet growing electricity needs and spur economic growth.'
The final OBBBA text, while broadly scaling back clean energy support, is still less severe than the House version originally sent to the Senate. It gives clean hydrogen projects until end-2027 to qualify for tax credits – two years more than earlier proposed – and retains incentives for carbon capture, nuclear power, and clean fuels. Energy storage systems tied to solar or wind can also access full investment benefits through 2032, avoiding a sharper phaseout of benefits.
Across the Pacific, China has ramped up thermal power to meet rising industrial demand – but a steady pivot to clean technologies remains central to its energy strategy. For instance, in 2024, while it started construction to add around 100 GW of coal power capacity, it added a whopping 420 GW of solar and wind. In comparison, the US added less than 55 GW in 2024, according to the International Energy Agency (IEA).
Moreover, Rhodium estimates that China's push to electrify its vehicle fleet, particularly in trucking, is already displacing around 1 million barrels of oil per day – roughly equivalent to Oman's daily output. The perceived American retreat from solar, wind, and EVs will further strengthen Chinese dominance in these sectors.