Trump Shouldn't Let Big Beautiful Bill Boost China's Clean Energy Edge

Forbes

6 days ago

President Trump signed the One Big Beautiful Bil (OBBB) into law on July 4th, significantly changing ... More the American energy landscape as it rolls back measures from the Inflation Reduction Act. (Photo by Brendan SMIALOWSKI / POOL / AFP) (Photo by BRENDAN SMIALOWSKI/POOL/AFP via Getty Images)
On July Fourth, President Donald Trump signed the 'One Big, Beautiful Bill' into law, introducing significant changes that will dramatically reshape America's energy landscape. The newly minted OBBB Act leaves businesses and policymakers trying to determine its potential impact on jobs, investment, and the nation's position in the global energy race.
The OBBB, especially 'Title 5-Ending Green New Deal Spending, Promoting America-first Energy, and Other Reforms,' introduces significant reductions to clean energy tax credits, and reduces the eligibility timeline for credits and accessibility to them, while extending these for fossil fuels such as the coal used in steelmaking.
The Biden-era Inflation Reduction Act overemphasized renewable energy over oil and gas. Both of these are energy sources that the U.S. has a significant opportunity to leverage for growth and security. It makes sense to play to America's strengths. However, some experts warn that the OBBB risks creating an overcorrection. Zigzagging in the race for energy dominance may wind up costing the U.S. the geo-economic race against China.
Charting a course that allows the country to excel on all energy fronts might work better in the medium and long term. While insisting on renewables instead of hydrocarbons, and even vilifying fossil fuels and nuclear, was questionable for a country rich in oil and gas, continued American presence in the renewable energy sector is critical to the future of the U.S. and America's ability to compete with foreign powers, especially China.
What's New in the OBBB?
The sweeping, nearly 1,000-page OBBB brings significant changes to IRA provisions that prioritized clean energy investments and manufacturing in the U.S. over other options. The OBBB sets a placed-in-service deadline for wind and solar projects, making any project that started a year after the IRA became law ineligible for tax unless it is placed in service before the end of 2027. This will create additional risks for projects grappling with supply chain delays and complex permitting and construction timelines. Many developers may decide to turn down new projects rather than trying to race against the regulatory clock.
On the other hand, metallurgical coal, which is used in steelmaking, will now qualify for tax credits. Besides this being contradictory to the OBBB's goal of making needed budget cuts, it also works against innovation, providing credits to coal at the expense of developing a green steel industry. The U.S. was an early leader in this field, but now Europe leads globally, and China is working to catch up quickly through low-carbon policies, R&D, and incentives for innovation.
China continues to pursue green measures across its economy while the OBBB puts the United States ... More behind in the field.
The OBBB also tightens Foreign Entity of Concern rules with more clear and explicit designations. As we explained earlier, the IRA's rather broad treatment of this issue tended to deter investment in companies 'with even a tiny stake of Chinese ownership, or doing business in Russia' and to discourage U.S. partners in resource-rich areas such as Central Asia. The new definitions per the OBBB will limit tax credit eligibility for producers using inputs coming mainly from Chinese companies.
Although this aims to reduce supply chain dependence on China and prevent Chinese companies from benefiting from subsidies, the complexity and uncertainty around how to actually apply these provisions for clean energy projects means these rules can backfire, reducing domestic clean energy production and innovation and sharpening the competitive edge of Chinese alternatives, helping Beijing to become even more dominant in the global market.
Can the OBBB Help American Manufacturing?
Policy uncertainty has chilling effects on investment, and as far as the OBBB, this is already happening. According to E2, since January 2025, over $14 billion in clean energy projects and more than 10,000 announced jobs had been cancelled before the Senate even passed the bill. The proposed timeline for building and operationalizing wind and solar projects is significantly affected by the new law, which creates obstacles for manufacturers in the clean energy space and, consequently, for proposed new projects, no matter how innovative. Speeding up America's slow and overly bureaucratic review process is admirable, but deadlines need to be realistic.
Lawmakers were able to secure a one-year extension of existing wind and solar tax breaks. However, renewable energy industry leaders and advocates argue that this short-term extension is insufficient to encourage the kind of long-term, large-scale investments needed for projects like billion-dollar battery plants or large solar farms.
For the U.S. to truly revive domestic manufacturing and lead in global energy, it must encourage the industries of the future (without breaking the bank), quickly innovate in sectors like steel, and scale up solar and battery production alongside a renewed focus on America's existing core competencies in oil, gas, and nuclear. This is not a zero-sum game. It is vital to an 'all of the above' energy strategy.
The Trump Administration has already indicated an appetite for 'energy abundance', encouraging LNG exports, grid modernization, and nuclear energy development. An energy policy prioritizing abundant, affordable, cutting-edge energy must keep renewable advancements on the table, even though they are not yet suitable to fully replace other forms of generation. China is forging ahead aggressively, aiming to dominate the clean energy space of tomorrow, and seeking to push the U.S. down the global energy sector totem pole.
President Trump's energy priorities surround taking advantage of the United States' advantageous ... More position in the oil and gas sectors, but renewable development is necessary to remain competitive and pursue energy dominance.
While the OBBB is focused on rolling back IRA measures that put the green transition ahead of America's advantages and interests in the energy space, its provisions risk making the U.S. less competitive as China and other powers strive to advance renewables and their associated technologies.
The Trump Administration is seeking to ensure a modern workforce and achieving energy dominance in the long term, so it needs to start investing in the future, which will include the energy industries the president has already prioritized, as well as those currently dominated by China. Exceling on all fronts will serve America's interests better than abandoning certain key arenas to the key geo-economic competition of the 21st century.