The bill has sent alarm bells blaring across the renewable energy industry, with companies bracing for the worst-case scenario.
US President Donald Trump’s return to power meant the world’s largest economy would divert its focus away from renewable energy and reprioritise oil resources. The Trump administration proposes passing a bill that imposes a new excise tax on wind and solar projects containing certain Chinese components.
The bill has sent alarm bells blaring across the renewable energy industry, with companies bracing for the worst-case scenario. The tax on Chinese import components was a late addition to the bill and has startled the industry. This move is a major hurdle to the clean energy sector, as China is a dominant player in the solar supply chain, and companies will find it difficult to find the required and adequate equipment, including wafers, from other countries.
This One Big, Beautiful Bill also aims to roll back renewable energy tax credits more rapidly than the Senate’s version. Should this bill pass, it would mean wind and solar projects would have to begin all their operations by 2027 in order to be eligible for incentives. This goes against the expectation that the Senate’s bill would ease the phase-out, but is instead rushing it.
If passed without revisions, this bill could derail billions of dollars of investments, hampering energy development just as power demands are through the roof. It could also result in household energy bills surging. According to the American Clean Power Association (ACP), this excise tax would cause costs of American clean energy companies to spike from $4 billion to $7 billion over the next decade. Rhodium Group estimates that the cost of building wind and solar will rise approximately 10-20%.
Bloomberg reported that Ben King, an associate director at Rhodium’s Energy & Climate practice, said that this is the first time such a policy is being implemented and therefore, uncertainty around it is heightened, and can result in hesitancy in investments. This increased cost will prove to be a strain on some solar and wind companies, which could have otherwise been economically competitive with some natural gas firms.
As per ACP’s estimations, this bill could also block 300 gigawatts (GW) of wind and solar energy from being brought online over the next 15 years. Jason Grumet, ACP’s chief executive officer, contextualised that by equating 300GW to the output of 300 nuclear reactors, describing it as a ‘dramatic interruption’ when power demands are constantly increasing. It is also important to note that if this energy output is blocked, it cannot be substituted by natural gas because of a shortage of turbines, and bringing nuclear plants online would take too many years.
The newly released draft elicited much ire from the non-industry observers as well, particularly Trump’s former best friend, tech billionaire Elon Musk. A vocal opponent of the One Big, Beautiful Bill, Musk had a public fallout with Trump earlier this month after he criticised the bill, underscoring how it would hurt electric vehicle sales. Labour unions have also vehemently opposed the excise tax, highlighting the potential job losses.
Trump’s election campaign heavily centred around his promises to relax drilling and fracking licenses and increase crude oil production. The government has since made consistent efforts to tilt federal policies towards fossil fuels over renewables. Attempts have been made to scrap $3.7 billion in loan support for low and zero-emission power projects, and the construction of an offshore wind farm has also been halted for weeks.
However, even Republicans must think twice before imposing these excise taxes, as investments in the renewables sector due to clean energy incentives under the Inflation Reduction Act have soared, particularly in Red states. Although it is important to note that if passed, the One Big Beautiful Bill will prove to be a huge setback for renewable energy initiatives and efforts to decarbonise.
