Trump's tax bill vs. the climate

Congress has now passed Trump's sweeping tax and spending bill. This is a special edition newsletter about how it will upend the clean energy transition, pulling together reporting from across Bloomberg. For unlimited access to climate and energy news, please subscribe.

The Trump effect

President Donald Trump secured a sweeping shift in US domestic policy as the House passed a $3.4 trillion fiscal package that cuts taxes, curtails spending on safety-net programs and reversed much of former President Joe Biden's efforts to move the country toward a clean energy economy.

The 218-214 vote in the House Thursday sends the legislation to Trump, in time for a July 4 deadline he set. House leaders had to keep earlier procedural votes open for hours to convince a small band of holdouts to support the legislation.

The president leveraged his sway over the Republican party through threats of primary challenges, White House lobbying sessions and golf-course socializing to overcome resistance from both conservative hardliners and swing-state GOP moderates.

In the end, only two Republicans, Thomas Massie of Kentucky and Brian Fitzpatrick of Pennsylvania, joined with Democrats to oppose the bill. Here's how it's reshaping climate policy.

US House Speaker Mike Johnson with Republicans at the Capitol on Thursday. Photographer: Kent Nishimura/Bloomberg

Renewable energy gets hit but avoids worst case

Clean energy industries are hit by the Republican plan, which rolls back many provisions of former President Joe Biden's landmark climate law.

Under the 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 measure that passed the Senate Tuesday avoided a worst-case scenario for the renewables sector, after a proposed tax on some clean-energy projects was dropped.

"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."

Electric vehicle sales slow down

Tesla Inc., General Motors Co. and other electric vehicle makers are hit by elimination of a consumer tax credit of up to $7,500 for the purchase of electric vehicles, which will be phased out later this year.

The White House has said Biden's initiative "promised much but delivered nothing." However, the tax credits helped fuel an EV market far more robust and affordable than drivers enjoyed before the rebates kicked in two and a half years ago. Repealing them, along with a flurry of other anti-EV policies put in place or being pursued by the Trump administration, is likely to put a serious dent in sales.

US adoption is set to trail the global average through 2040 and will knock the nation out of the top three EV markets, according to a recent BloombergNEF report. Last year's version of the report had the country boasting higher-than-average sales starting in 2029.

Still, Elaine Buckberg, a former General Motors economist now at Harvard University's Salata Institute for Climate and Sustainability, estimates that even with federal tax cuts disappearing, some 37% of new cars bought in 2030 will be electric. That's down from a forecast of 48% if the current incentives remained. The factors propping up some of the demand are fairly straightforward: Electric cars are far better and cheaper than they used to be, and there are many more models to choose from.

Home electrification incentives disappear

Tax credits for energy efficiency home improvements and residential installation of solar or other clean energy upgrades are eliminated at the end of the year.

The bill terminates a 30% tax credit on the five-figure cost of installing rooftop solar and home battery storage systems, along with a $2,000 tax credit for buying heat pumps, after Dec. 31.

"Everyone who is considering solar will try to get in this year," said Martyna Kowalczyk, chief executive officer of Solartime, a family-owned Dallas solar installer. "And next year will be a drought."

Please subscribe to keep up with our latest coverage of the bill and its impact on clean energy after it's signed into law.

EVs in the slow lane

37%

The percentage of new cars bought in 2030 that will be electric, according to a Harvard forecast. That's down from 48% if federal incentives had remained in place.

Red state warning signs

"If Congress moves forward with killing these tax policies, we're going to see more cancellations, more jobs lost, and that's just the start."

Bob Keefe

E2 Executive Director

More than half of the canceled, delayed or closed factories and electricity projects so far this year have been in Republican districts, according to a recent E2 report.