The clean energy sector is facing a major reckoning after President Trump signed the One Big Beautiful Bill Act (OBBBA) into law on July 4. A new analysis from Princeton University warns that the sweeping legislation will drive up energy costs for the average American household and reduce grid capacity at a time of rising demand. According to Princeton’s ZERO Lab (short for “Zero-carbon Energy systems Research and Optimization Laboratory”), the new law “repeals nearly all of the tax credits enacted by the IRA [Inflation Reduction Act] to support clean electricity, fuels, vehicles and manufacturing.” It also rescinds unspent funding for clean energy and climate programs initially outlined in the IRA of 2022 and the Infrastructure Investment and Jobs Act (IIJA) of 2021.
One of the key impacts outlined by the ZERO Lab is a projected increase in U.S. household energy costs: by 2030, the average household could pay roughly $165 more per year, representing a 7.5 percent hike from the current annual cost of around $2,200. By 2035, that number is expected to climb to $280 annually, or a 13 percent increase.
These higher costs stem from a sharp drop in capital investment in clean fuels, which is estimated to fall by $500 billion through 2035, and a corresponding decline in power generation and grid capacity. The report warns that by 2035, the act will slash clean electricity generation by over 820 terawatt-hours—more than the entire output of either coal or nuclear power in the U.S. today.
The “Big Beautiful Bill” includes a long list of tax credit repeals and funding cuts that affect individuals, businesses, and the broader energy industry. These include, but are not limited to:
- Clean hydrogen production credit
- Clean electricity production and investment credits
- Clean Air Act funding (amended in 1990)
- Personal and commercial clean vehicle credit
- Residential clean energy credit
- Low-carbon transportation materials grants
- Environmental and climate data collection funding
- Greenhouse gas corporate reporting funding
According to the Clean Air Council, Philadelphia’s oldest environmental nonprofit founded in 1967, the “Big Beautiful Bill” will “kneecap our growing clean energy sector, raise energy costs, eliminate roughly 770,000 jobs by 2030, and dramatically increase pollution at a time when energy demand and the cost of living are on the rise.”
Before Trump withdrew the U.S. from the Paris Climate Agreement at the start of his second term, the country had aimed to reduce emissions by 40 percent by 2030. Now, with the new law, that target has collapsed. A new climate impact analysis from U.K.-based publication Carbon Brief projects just a 3 percent reduction in U.S. greenhouse gas emissions by the end of the decade. Meanwhile, China is racing ahead. “China wants to be the world’s first electro-state,” said Jesse Jenkins, a Princeton engineering professor, in an X post. He noted that the country now attracts about 75 percent of all global investment in clean tech manufacturing.
“While the bill removes the proposed excise tax on solar projects, a win for the industry, the overall package delivers a severe blow to America’s energy future,” Chris Hopper, CEO and co-founder of Aurora Solar, a solar energy software company, told Observer.
Hopper warned that the legislation “will make energy more expensive for everyone, and more than that, it will most likely create an energy shortage at a time when electricity demand is rising.” One major driver of that demand is A.I. As A.I. adoption accelerates, so does the construction of energy-hungry data centers powering the technology.
“Solar is one of the quickest ways to add capacity to the grid, and if we think fossil gas and nuclear alone can fill that demand, we’re going to be waiting for years—seriously limiting our potential to lead in A.I. and other critical technologies,” said Hopper.