J. Scott Applewhite/AP Photo
Congress Tax Cuts
Senate Majority Leader John Thune, (R-SD), center, joined from left by, Sen. John Barrasso, (R-WY, the GOP whip, Finance Committee Chairman Mike Crapo, (R-ID), and Budget Committee Chairman Lindsey Graham, (R-SC), speaks to reporters after passage of the Donald Trump's reconciliation bill, which would devastate the green industrial sector, on July 1, 2025.
The Senate version of the Big Beautiful Bill passed on Tuesday. It now heads to the House, where odds are strong it will get through by the end of the week. As we at the Prospect have been covering in detail, Trump’s mega-bill would deal a devastating blow against the green industries that will obviously drive the global economy for the rest of this century.
Fortunately, a couple of truly mind-bendingly awful provisions were taken out. While accelerated depreciation, a business tax break that solar and wind have had access to since 1986, ends in this bill, a tax on solar and wind production was removed, while tax credits for those technologies will now expire within 12 months of enactment rather than in September. (These aren’t just Biden-era subsidies, by the way, some of them have been around since the 1970s.) Essentially, solar and wind projects would have to be under construction in the next 12 months to qualify for tax credits, and those projects would also have to be in service by the end of 2027.
That’s going to be a difficult task. You might expect a sizable boom in the next 12 months, as companies race to get in under the wire before the tax credits expire. But with everyone competing to do so, a run on manpower and components will surely follow. Prices will likely go up, nullifying some of the benefit of the tax credits. In the end, fewer projects than expected are likely to get completed in the next year, and after that the well will go very dry.
Plus, other provisions remain. There are huge new subsidies for coal, for example. Coal leases on federal lands will be expanded by a minimum of four million acres, while the royalty rate would be cut from 12.5 percent to 8 percent. Metallurgical coal (used for steel production) will now be included as a “critical mineral” eligible for tax credits through 2030. Unbelievably, this coal doesn’t even have to be used domestically to get the subsidy. This makes sense for coal producers, who already export the vast majority of this kind of coal, but it means Republicans are literally subsidizing dirty, cheap steel production in India and China.
That’s on top of the other harmful provisions for energy in the bill, from the withdrawal of electric vehicle consumer tax credits to a counterproductive boost to biofuels.
I have just one question: Have Chinese Communist infiltrators taken control of Republicans in a conspiracy to destroy America?
RECALL THAT BACK IN 2022, President Biden and the Democrats put together a trillion-dollar climate policy package that created a thriving domestic green industrial sector. Battery manufacturing and installation exploded; in just two years America became nearly self-sufficient in solar panel production.
It’s critical to understand that this wasn’t just some tree-hugging environmentalist agenda (though it would greatly decrease environmental destruction), it was also about hard-nosed economic realities. Photovoltaic solar electricity is the cheapest form of energy in history in much of the U.S., and it keeps getting cheaper. Batteries have also plummeted in price, and turn out to have highly useful properties for all kinds of generation. Combining some non-solar production (like nuclear or geothermal) with batteries greatly reduces the amount of solar required to fully decarbonize the grid.
These two technologies unlock all manner of crazy innovation possibilities. Green steel, concrete, aluminum, industrial heat, new agricultural technologies, and so on, powered by cheap renewable power—all are in the prototype or initial rollout stage. It’s an economic revolution on par with what happened in the late 1700s.
There were some problems with Biden’s program, particularly with reach technologies like green hydrogen. But that was no reason to abandon the effort to get them over the hump and into commercial deployment. Instead, Republicans are strangling these industries in the crib; hundreds of billions of dollars in investment may end up totally wasted.
Now, China is already far ahead of any other country when it comes to green industry. It installed 277 gigawatts of utility-scale solar last year alone; America has installed 121 gigawatts total. That gap is scheduled to grow exponentially this year. China has also built 41 gigawatts of offshore wind, America has built a measly 174 megawatts (that is, about 0.4 percent as much). The electric vehicle share of the Chinese new car market is soaring past 50 percent; last year America’s was 10 percent. China’s high-speed rail network, built basically from scratch in a decade and a half, makes American transport look like the ancient and decrepit relic it in fact is.
But at least America was competing. We were behind the curve but starting to catch up, and the experience under Biden—America’s grid-scale battery capacity increased almost fourfold between 2021 and 2024—proves that deployment can accelerate rapidly. What’s more, about three-quarters of this investment was going into Republican congressional districts in an explicit attempt to counter the deindustrialization that Trump is constantly complaining about. And, of course, we were part of the way to doing our fair share to combat climate change, which is causing horrendous weather disasters around the country on a weekly basis.
If Xi Jinping were to draft an American energy policy law, it’s hard to see how he would have done it differently.
Now the Republican Party has taken that progress and looks likely to throw it in the garbage. As yet, it is unclear what exactly the Senate bill would do, as its latest details have not yet been analyzed. But in broad strokes it is similar to the House version of the bill, which repeals almost the entire Inflation Reduction Act. The effect on green energy and industry will be catastrophic. One recent report looking at the Senate bill (before the changes to the tax on solar and wind) estimated a loss of 300GW in new power generation, $960 billion in gross domestic product, and 770,000 jobs.
That’s why you see the U.S. Chamber of Commerce, and none other than Elon Musk, alas, speaking out against the bill. (Great work electing Trump, Mr. Musk. Truly your genius is beyond comparison.)
Almost every American will be gravely harmed by this bill. As data center construction is driving up electricity demand, Republicans would strangle the only possible candidate to rapidly expand generation. Just by removing the production and investment tax credits for clean energy, electricity prices are expected to rise as much as 29 percent in some states. And rolling brownouts or blackouts will become much more common.
A nascent industrial complex employing hundreds of thousands of people will be gravely harmed if not destroyed entirely, and the auto industry’s effort to compete with Chinese manufacturers will be severely set back, likely permanently. For this reason, practically every major industrial union, none of which are particularly liberal, has come out strongly against this legislation using language that is increasingly apocalyptic.
China, however, couldn’t ask for a better gift. Their largest competitor was finally taking steps to grab a share of the cutting-edge industries of the future, but now they’ve decided to give up unilaterally. Soon China will be swimming in dirt-cheap green power, giving it vast economic influence akin to today’s petrostates. Republicans are even literally subsidizing China’s dirty steel industry with the coal used to produce it, so they can squeeze out a few more years of easy profits before transitioning to green tech. If Xi Jinping were to draft an American energy policy law, it’s hard to see how he would have done it differently.
So either Republicans are part of a vast conspiracy to ensure Chinese dominance over the foreseeable future, or they are blinkered, pig-ignorant philistines who could not care less about the welfare of their own constituents or American power in the world. Neither possibility would surprise me.
