How much will the US tax bill hurt clean energy?

Today's newsletter looks at what US Senate tax bill means for clean energy. You can also read and share this story on Bloomberg.com. For unlimited access to climate and energy news, please subscribe.

'From terrible to bad'

By Josh Saul and Jennifer A Dlouhy

The Senate version of President Donald Trump's tax-and-spending bill would soften the blow for wind and solar developers, which had feared a sharp reduction in subsidies that helped spur a renewable power boom in the past few years. But the bill now faces conservatives in the House of Representatives eager to kill those credits.

The measure that passed the Senate Tuesday removes a proposed tax on some projects and would allow renewable developers potentially five more years to qualify for federal incentives created under former President Joe Biden's landmark climate law.

But the bill would still hobble US clean energy development at a time when the demand for electricity is booming. And the House could still tighten restrictions on power developers. When that chamber passed its version of the bill in May, it included an aggressive phase-out of key wind and solar tax incentives.

A key House Republican, Chip Roy of Texas, on Tuesday blasted the eased energy tax credit provisions as "a deal killer."

Representative Chip Roy Photographer: Graeme Sloan/Bloomberg

While the provisions in the Senate bill avoided a worst-case scenario, opponents also say the measures will lead to higher energy prices and a weaker economy.

"It went from terrible to bad," Jason Grumet, head of trade group American Clean Power, said of the Senate-passed legislation. "It's hard to say I'm psyched about a bill that's a step back on energy policy, but it's considerably improved."

Under the Senate bill, solar developers could start construction through mid-2026 and have five years to build and receive the full production tax credits, according to a note from analysts at Roth Capital Partners. "This would be a big win as volumes likely would not drop off a cliff in 2028, as the prior Senate version draft proposed," the note stated.

The Senate-passed measure spiked a previously proposed excise tax on wind and solar projects that use a certain threshold of components made in China. That represents a win for renewable power developers who'd warned the higher cost could prevent some projects from ever getting built.

But the proposed excise tax targeting projects with Chinese-made equipment had support among solar manufacturers, including companies that have built new factories in the US on the promise of domestic-content purchase incentives embedded in the IRA.

"It's a stab in the back to the workers and companies that are building out the factories," Mike Carr, executive director of the Solar Energy Manufacturers for America Coalition, said in an interview. Without the excise tax there's no incentive for domestically made equipment, he said.

The Senate-passed bill would "harm US manufacturers and invite China to flood our market again with dumped solar panels," said Danny O'Brien, president of corporate affairs at manufacturer solar company Qcells. "Industry and government have spent more than a decade reshoring the solar manufacturing industry from China to the US."

The various iterations of Trump's tax and spending package have whipsawed much of the renewable energy industry — and, with it, shares of developers, installers and manufacturers. The addition over the weekend of the proposed tax on some wind and solar projects stunned the industry, prompting shares to slide Monday.

Clean energy trade groups had warned that without changes, Trump's "Big, Beautiful Bill" would have threatened some wind farms and solar arrays already under construction.

— With assistance from Erik Wasson and Janet Freund

Ray of light

10%

This is how much shares in Sunrun Inc. rose on Tuesday as the US Senate bill left clean energy a little room for relief. Enphase Energy Inc. was up about 3% and SolarEdge Technologies Inc. closed up about 7% in New York.

Still a threat

"Despite limited improvements, this legislation undermines the very foundation of America's manufacturing comeback and global energy leadership. If this bill becomes law, families will face higher electric bills, factories will shut down, Americans will lose their jobs, and our electric grid will grow weaker."

Abigail Ross Hopper

President of the Solar Energy Industries Association

The changes weren't enough to satisfy renewable developers who on Tuesday said the Senate-passed bill still poses a major threat to the industry.

EVs will take a hit with the tax bill: BNEF

The US electric vehicle market faces "a double blow" with the US Senate version of the tax bill, according to analysis from BloombergNEF. The bill would accelerate the phaseout of federal electric vehicle tax credits and repeal penalties for noncompliance with fuel economy standards. With all of the political changes this year, BNEF has revised its forecast for cumulative EV sales in the US through 2030. The researcher now expects the total to be 14 million units lower than previously forecast.

Market snapshot

How does heat impact markets? Today British sausage-roll maker Greggs Plc gave a clue. Its shares plunged as much as 16% on Wednesday morning after it said its full-year profit may be lower than last year as high temperatures in June discouraged people from eating out. This was the biggest intraday drop in seven years and touching the lowest level since September 2022. England saw its warmest June on record this year as temperatures peaked on Tuesday.-- Maggie Shiltagh

More from Green

Climate risk models, which are widely used in the insurance industry, can estimate the likelihood that fires or floods will affect a specific place in the US, even down to the address level, and how much damage that would wreak. So far, these models don't typically make detailed projections for extreme heat.

Yet cities, businesses and insurers need financial risks to be outlined more clearly, and some believe a new market for heat insurance — driven in part by artificial intelligence and the need to cool data centers — is around the corner.

Bloomberg Green has outlined some of the new tools and models that are emerging to assess the financial risks of extreme heat, including heat-hazard modeling, climate health cost forecasting and parametric insurance, which can help cities, businesses, and insurers prepare for and mitigate heat-related losses.

Illustration: Derek Abella

Superhot US landfills are spewing out toxic gases and making people sick. One of America's largest repositories of municipal waste, Chiquita Canyon Landfill on the northwest edge of Los Angeles County, is creating awful and mysterious smells for a nearby community of 3,000 people.

The National Oceanic and Atmospheric Administration is proposing cutting about 18% of its workforce and slashing $1.5 billion from its budget, including terminating programs to protect coastal communities and research that supports better forecasts and natural disaster prediction.

The European Commission proposed a binding law on Wednesday to slash emissions by 90% by 2040 as part of its overarching goal to reach climate neutrality by the middle of the century.

Worth a listen

Climate tech is not the hot investor thesis it once was a couple of years ago. After several record breaking years, and billions of dollars being poured into climate startups, venture capital investments are way down. This week on Zero, Akshat Rathi speaks with Mike Schroepfer, who runs Gigascale Capital, a venture firm focusing on climate investments, and used to be Meta's chief technology officer. Schroepfer shares his views on the current investment climate, the danger of funding cuts to US research, and why demand for AI will prompt a new wave of energy innovation. Listen now, and subscribe on Apple, Spotify, or YouTube to get new episodes of Zero every Thursday.