The Megabill And The Green Economy

0:07President Trump's so-called Big, beautiful bill, which was passed last week, will have major implications for most Americans. And today we want to talk about how much this will cost you when it comes to climate and energy. Well, there's the effect this will have on climate change as well as the rising costs of electricity. Some estimates suggest electricity bills in states like Texas could be$777 more a year by 2035. The Senate version of the legislation repeals the clean energy tax credits from the IRA, the Inflation Reduction Act, for all solar and wind projects that don't start construction within a year after the bill's passage or that aren't completely operational by 2028.

0:51But these projects can often take longer than that, and they're a fast-growing segment of our country's energy grid. Roughly 93 percent of the electricity capacity added to the grid this year will come from a combination of wind, solar and battery storage. That's according to the Federal Energy Information Administration. The White House also announced an executive order on Monday that would end subsidies for wind and solar projects. So what does the future of clean energy in the U.S. look like under President Trump? And what does this mean for our climate goals and our pocketbooks? We get into it after the break.

1:30I'm Naila Boudou, in for Jen White. You're listening to the 1A Podcast, and we'll be back with our guests in just a moment.

1:41Joining us in studio for this conversation is Robbie Orvis. He's the Senior Director of Modeling and Analysis at Energy Innovation. That's a nonpartisan climate policy think tank that provides policy modeling, analysis, and design insights to decision makers. Hi, Robbie. Hi there. Also with us is J.L. Holtzman, a senior reporter at Heatmap News. J.L., it's great to have you back. Thanks for having me. And Katie Fehrenbacher, a reporter focused on climate tech for Axios Pro. Katie, welcome. Hi, good to be here. We also want to hear from you listening. If you work in the clean energy sector or the green economy, we want to know how the changes in this bill could affect the work you do.

2:20And we're taking your questions about what this bill means for our energy grid, why this matters for all of us. You can email us, 1a at wamu.org. And we should note we did reach out to the White House for a statement. They did not get back to us in time for this conversation. JL, can you just start overall, can we start with the big picture here, what this bill overall will do for clean energy in the United States? So it's really important to just say clean energy itself is a basket of different technologies, energy forms that you and I have heard bandied about. But in this case, we're referencing solar, wind, energy in terms of the impacts of this legislation, because those are the energy sources that were targeted here.

3:09So under the Biden administration, there was a law that was passed, the Inflation Reduction Act, a climate law, the nation's first climate law. And it provided ample tax credits for building new solar and wind energy facilities across this country through over a decade. What this legislation that was recently signed into law does is that it says now all those developers, all those companies that were building residential solar generation, building large solar farms for powering URI's homes or data centers or factories for whatever, those projects must now begin construction within a year of this bill becoming law.

3:54and be placed in service, quote unquote, what that means is provide electrons to the grid before the end of 2027 or by the start of 2028. What that means is now, all of a sudden, this tax regime that our future energy grid was relying on to budget out, to pencil out, to be affordably built, suddenly had the rug pulled out from under it. And then, after this law was enacted, the president, President Trump, earlier this week, did an executive order that said not only will this be pulled out, but in addition, as the government implements the timetable that companies do have to claim these credits, they're going to go through with implementing that law, this new law, this repeal, in a way to make it even harder for companies that were expecting those credits to access them.

4:48What that means is that projects being built today will just cost more to build. I don't necessarily think that there will be canceled projects left and right. People have already been striking business deals for years since the Inflation Reduction Act was passed and put into law. So, but it is, yeah, it sounds like, JL, there's a lot of questions. And can I just ask, Katie, can I just ask you in terms of, JL said that this was sudden. Was this expected by the industry, such significant cuts? I think it has been expected, you know, for several months. I think right before the bill was passed, the most extreme version was unexpected.

5:32It had the excise tax in it and had a much more extreme ramp down of the tax credits. And so I think that took everyone by surprise. I think that the industry in general had kind of, you know, been expecting something like this for several months. But, I mean, I agree it's a extreme. It happened, you know, pretty quickly, relatively. I mean, these projects, you know, take, you know, 18 months, you know, two years kind of in development. So some of the projects that, you know, are in development, it's a quick, you know, it's a quick occurrence. Robbie, your think tank has been running projections since President Trump was elected on what repealing clean energy tax credits would mean for the green economy and climate change.

6:16Can we just take a step back and just explain generally what these tax credits are and what role they play and what JL and Katie have been talking about? Yeah, it's a great question. So these tax credits provide incentives for developers. There's an investment tax credit, which provides a percentage of the upfront cost to developers. and there's also a production tax credit. So for every unit of electricity produced, the developer or the plant owner gets a tax credit for that. The tax credits are potentially very significant. They can basically have the cost of these projects. And so there's bonuses and other things that you have to stack to be able to meet that.

6:57But what we've seen in the wake of these tax credits is an enormous growth in the announced projects projects and planned projects coming online, which is expected. I mean, it took a while for guidance to be issued for that. But that's why there's this huge shift now we're seeing towards wind and solar and battery storage. These tax credits are playing a really large role there in encouraging developers to build those projects, even when they're not necessarily needed to maintain reliability and keep the lights on. These projects now, a lot of them pencil and make sense economically just based on the economics with the tax credits.

7:34And so what implications could repealing these credits have when we're talking about the clean energy economy overall when it comes to wind and solar? Yeah. So we see in our modeling a lot of project cancellations, and that's happening for a couple of different reasons. So yes, some wind and solar and battery storage will continue to be built because that's basically the only thing that can be built right now, there's a huge backlog for new gas turbines. And people are saying they can't deliver more than what's been contracted in the next seven years. And we have this huge growth in demand coming primarily from data centers, but also from load growth, fastest load growth overall we've seen in basically 20 years.

8:18So there will be solar and wind and battery storage projects that get built. And there's two important things here. One is this bill now basically doubles the cost of doing that. So if there's a utility that needs to build something, and that something has to basically be wind, solar, or storage, because that's what can be built on this timeframe to keep the lights on, that's now twice as expensive, more or less. And those will be passed directly to you and me and industry who are paying for the higher cost and the prices. The other thing here is there are parts of the US where there's kind of these free markets, more or less for electricity.

8:55And if you are a solar plant developer, if you think you can make enough money just by building your solar plant and participating in that market, then you can do that. You can build that plant. Even if you don't, it's not something that's strictly needed to keep the lights on. But that's based totally on the project costs, right? And so if you make things a lot less economic, a lot of those projects are going to fall out because they just can't they can't make it work. So what we expect to see is a big drop in the amount of capacity coming online at a time when energy demand is growing the fastest it's grown in 20 years.

9:31And as a result, as you already mentioned, we see a huge increase in energy prices, electricity prices in particular, across the U.S. with large variation across states, depending on if those states have a lot of data centers coming online and what other resources there are. JL, we just heard Robbie talking about energy consumption. What are projections for how much energy consumption we will need in the U.S. as we're thinking about just the next five to ten years? We're continuing to use a lot more energy due to the rapid rise of artificial intelligence in the United States. That is a substantial reason why solar and wind energy has been sought after so fast, is because we can build that much faster, as Robert was saying.

10:21In terms of projections, the rapid rise in energy demand that we're looking at right now, I mean, the amount of solar and wind capacity that we expected to come online that may no longer exist right now. We're losing somewhere on the order of maybe like 150 data centers worth of power over the next 10 years alone, maybe even 300 gigawatts. It's a number that you and I probably can't even fathom in terms of electricity generation that's just falling by the wayside, but the demand isn't going away for that amount of energy. All right, let's head to a quick break here. We'll be back with more of the conversation in just a moment.

11:06Stay with us.

11:12Let's get back to the conversation with this message from one of you who writes, I started a wind and solar program at my local community college two months ago. I'm definitely not pleased with the bill, but I also believe that I'm on the right path and that the nation will correct this nonsense in the next couple of elections. We're better than this. You can join the conversation by emailing us 1a at wamu.org. Rambi, what about that comment that there may be a party change in the next couple elections? What do you think about that in terms of the business picture of all of this? Well, first of all, I love to hear stories like that.

11:50But, you know, I think there's a broader context here that we have to think about given what just happened in Congress, right? So if you're a developer, it can take a long time to identify a site for a project, go out and find financing for that, get the required permits, and then actually start getting steel on the ground and building that plant. And that can take years. It depends on the different technologies. So even if there's a situation where you get Congress and presidency aligned with restoring these tax credits, for example, if you're a developer, given what you've just seen, that Congress can come in and just rip the floor out from under you and all of the financing that you've secured is now completely up in the air, I'm not sure you can bank on programs like these and tax credits like these, even when they're passed by Congress.

12:45of being around long enough for you to develop your project. And so there's a little bit of a, somewhat of like an existential risk here that with what Congress has just done, those tax credits, like, they'll be great to have. But if you're developing a project, I'm not sure you can price those in and reliably count on those being available. And that risk is going to have to be included in future project costs somehow. So it's entirely possible we see a future administration and Congress restore tax credits. But whether or not the industry will respond the same way it has in the past, I think, is an open question.

13:23We got this message from Keith who writes, I work for NextCamp, the nation's largest community solar provider. We are disappointed by the bill because it will slow the development of solar at a time when demand is increasing and solar is the fastest, most efficient form of energy to build. This bill will also hurt growing employment opportunities in clean energy. Katie, I know you've been talking to lots of different business leaders about this. What are they saying to Robbie's point and to the point Keith just made? I mean, I think when you look at community solar, like the company that was mentioned, sectors like that are going to be hit even harder than the really large utility-scale solar projects that are already kind of mature and low-cost.

14:08Rooftop solar and community solar are going to be the types of solar that are going to hit even more hard than the kind of big utility scale projects. And, you know, I completely agree with what Robbie was saying. I think in terms of uncertainty, you know, the business environment and the business community does not like uncertainty. And so I think this just adds so much volatility, you know, to the sector. JL, on Monday, we talked about this just before the break, that the White House announced an executive order that would end subsidies for wind and solar projects. How does that build on what was already in the bill that was just passed by Congress?

14:45This is where uncertainty becomes magnified tenfold. So in order to get the legislation passed at the last second, a number of far-right Republicans in the House of Representatives, heatmap.news, my news outlet, was first to report, thanks to assistance from Eric Garcia of The Independent, that Republican holdouts were asking for an executive order of some kind, an executive interjection, to further limit how many projects could receive the tax credits for the time period still allowed under the new legislation, the so-called Big Beautiful Bill. What this will mean is that over the next 12, 18 months, as the government is implementing this legislation, regulators, the Treasury Department most prominently, will use rules, regulations, red tape, to make it even harder to qualify.

15:40One way that I expect this to occur in my conversations with lobbyists and business leaders who expect the same is that there's a foreign sourcing requirement in the legislation, what's known as a FIAC definition, a foreign entity of concern. Its intent is to limit how many companies can access the credit who use any materials from any country that is labeled a foreign entity of concern. People understand this to be China. But the definition of a foreign entity of concern is so broad in the Trump administration's viewpoint, oftentimes now in the view of Republicans in Congress, that this could mean anything from taking something from a Chinese company to taking something from a company that has even a remote stake from a Chinese person in high ranking government or in high ranking business.

16:30And so people are really skittish about relying on supply chains that for solar and wind still run through China quite often or Chinese-related entities. That's one way that I personally expect this executive order that landed Monday to really throw a wrench into whatever calm people hoped would still occur over the next 12 to 18 months in the sector after this law was passed. I want to play a clip of President Trump speaking about wind energy at a cabinet meeting on Tuesday. Let's take a listen. Wind is a very expensive form of energy. It's very bad for your beautiful surroundings, the plains and the valleys and the birds dying all over the place.

17:11You know, the whole thing is a disaster. They're almost exclusively made in China. Not that I have anything against China because I don't have a great relationship with President Xi. But I asked him, how many wind farms do you have? He makes them, but they don't have a lot of wind farms, I'll tell you. Very, very few. And wind is tremendously expensive. Katie, can I just ask you to fact check what the president said there? Well, wind and solar are now the cheapest sources of power for most of the world. So that is not accurate. Okay. And as we talk about the idea of being a disaster in terms of when he's saying how many wind farms, like in wind production in China, Robbie, can you weigh in on that?

17:58Like when we look at the global picture of other countries developing wind, what the trajectory has been in terms of how many other countries are building for wind and solar? I mean, wind and solar are on the rise. They're the things being added most globally. And China has been adding solar and wind at a really fast clip. So that's also just not true. There's lots of wind deployed and lots of wind that's expected to be deployed in China. We've also heard the president say that clean energy is unreliable. How legitimate is that argument, Robbie? Look, the people who run the grid around the country, the different operators, they do these assessments.

18:40They look at how reliable these different sources are to meet demand. And what they find, depending on when you look, is that they plan around how reliable these resources are. And what they found, I was just looking this morning at some of the major utility operators, PJM, which is where we are, they find offshore wind, for example, is roughly on par with how reliable natural gas is. One thing we've seen over the past few years with some of the extreme weather events is some of those dispatchable fossil resources that folks like to say are our most reliable resources, they have not performed when there's been these terrible weather events.

19:19The coal piles froze or the natural gas pipelines got shut off so that people could have heating in their homes, right? So reliability is a very loaded term, but the main thing is that the grid operators, they're planning for this load growth and they're planning for how reliable these different resources are. And if you look at what they put out, they're not out there saying these things aren't reliable. They're saying, oh, we know how reliable they are and we're planning around that. JL, how do these policies help coal, oil, and gas industries? So recently, the Energy Department released a report in which it claimed that the likelihood of blackouts, it sided with what many folks in the energy policy space have been saying about this legislation, that the risk of blackouts is increasing and that we do need more energy on the grid.

20:07However, the Trump administration has pointed to the issue of coal plant retirements as a leading cause, as well as the current pace of building out nuclear power, which is not moving at the pace that they would like, as well as developers of nuclear energy. At this point, getting rid of future sources of energy generation while energy demand is increasing will, I think for anyone who's any layperson, it has to mean we have to build something. And the Trump administration has taken steps to provide regulation and provide funding, provide actions, interventions to help keep coal providing power as well as gas-fueled power.

20:51And so at this point, this legislation, by kneecapping the solar and wind industry, does in effect provide more demand, on paper at least, for these fossil sources. It's worth saying, though, as was noted previously, that there is a gas turbine shortage. And I would also say, as someone who's covered the coal industry for years, that building coal is incredibly expensive and relies on unreliable supply chains as well, some of which also run through China. So that problem is also not addressed. We got a question from Robert. Katie, I'm hoping you can answer this. Can you explain what subsidies are received by the fossil fuel industry and whether they were also affected by the recent bill passed by Congress?

21:39I mean, the subsidies for the fossil fuel industry are a little bit indirect and nuanced. I mean, there's some estimates that say subsidies are in the trillions of dollars from the U.S. But in terms of specifically the bill, Robbie, I'll probably kick that over to you in terms of looking at the fossil fuel incentives directly. Right. So there is one fossil fuel incentive directly, which is that the bill adds something called metallurgical coal, which is a type of coal used for mainly iron and steel production in a small subset of the U.S.'s iron and steel facilities. So the production of that coal now gets a tax credit.

22:25Most of that, 80 % of that coal is exported. And so a fair amount of it goes to China and India. So in terms of that is one type of fossil fuel subsidy that actually was in this bill directly. But yeah, Katie's, I agree with Katie. A lot of the incentives are indirect, although the bill does include language around leasing and permitting and other things that give preferential treatment to fossil fuel resources. And so that was one thing we tried to capture in some of the analysis we did. Coal, oil, and gas are the largest contributors to climate change. They account for more than 75 percent of global greenhouse gas emissions, nearly 90 percent of all carbon dioxide emissions.

23:11That's according to the U.N. We are going to be talking about the climate effects of these policies soon. But let's get to some of the consumer questions that some of you have been asking. Cheryl asks, we installed solar panels in fall 2024. And while it was a huge investment, we knew it was good for the planet and the tax incentives made sense. We are thrilled with the free monthly electric for the past three months. We are retired. We knew we'd need to carry over these credits for the course of four years or so. Can you tell me how this new bill affects us? We were only able to claim 2 ,200 of the 9 ,000 so far.

23:45Robbie, do we know how this will affect consumers? So for folks, and it looks like also probably for big developers, likely if you already installed something, you'll continue to get those credits. That said, to the earlier conversation on the executive order from this week, there is still some uncertainty around what the Treasury Department will do with the implementation of these credits. I think the general consensus is, look, we're not going to go back. And if people and developers have financed and started stuff and built stuff, we're not going to— They're still going to get those. They're still going to get those.

24:21But it's not guaranteed. We have to wait and see what the final Treasury guidance says on this topic. JL, for consumers who maybe want to buy an electric vehicle, what should they know about whether or not they'll qualify for a credit? Is that something people should be looking at now? Yeah, if you want to claim that credit, you should just go get a car now because you don't have much time. The 30D tax credit, what was known as the clean vehicle tax credit, was essentially phased out. Robbie, what was the time frame on that exactly? I was covering the wind and solar sector. This is like three months-ish, Max?

25:00I think most of these things got bumped to 180 days after bill passage, more or less. So 180 days from last week, essentially. Right. Okay. So go buy your EV if you want to claim the credit. Okay. Can I ask what the U.S. divestment from clean energy means for the rest of the world? For the rest of the world? I mean, in overall terms, I mean, there's expected to be a greenhouse grass emission jump, you know, about 190 million metric tons per year in 2030 and 470 million tons in 2035. And so that's significant. So that affects the rest of the world. I mean, in some kind of argument, you know, the rest of the world, other places like China or in Europe that are being more aggressive around clean energy actually, you know, could have an advantage.

25:52So from the rest of the world's perspective and a business perspective, you know, they can jump at the opportunity to take advantage with the U.S. retreating. We will continue this conversation after the break in just a moment.

26:10Let's get back to the conversation with this message we got from David, who writes, the need for more electricity in the next decade is driven by data centers and AI. Why is this need there? Do we simply accept this as a given when clean energy and global warming are the context in which we live? Katie, can I just ask that question about energy consumption overall? Yes, I love that question. I mean, what the tech companies would say to their customers is that, you know, AI is going to create all these benefits and create all this value and that, you know, it's worth it. And I really think that it is up to the tech companies to prove that, you know, this vision of the AI utopia future actually is adding value to consumers' lives.

26:55And I think that, you know, they really need to kind of prove that, you know, this is worth it. I mean, I think we don't know yet. I think we're kind of waiting to see whether AI, it's not just AI that the data centers are powering, you know, it's all these other features that we use in our lives. But I think it's really up to the tech companies to kind of prove this to us. And it is a real concern, you know, these data centers. Katie, we've also seen, as you mentioned, big tech has invested very much in wind and solar. Do we have any sense of if that will change given what's happened in Congress?