The ＂Big and Beautiful＂ Bill Shakes Up the Global Energy Landscape

Recently, U.S. President Trump signed the "Big and Beautiful" tax and spending bill, significantly reshaping American energy policy. This shift not only affects the pace of America's energy transition but may also trigger a major global realignment of energy structures.

The "Big and Beautiful" bill repeals multiple tax incentives from the Inflation Reduction Act for clean energy sources such as wind and solar power, as well as energy efficiency projects, making it extremely difficult for the new energy industry to advance. Energy analysis firm Energy Innovation points out that wind and solar paired with battery storage is currently the fastest and lowest-cost method for expanding electricity generation in the United States. Over the past year, over 80% of newly added U.S. power capacity came from solar-plus-storage projects, most of which were deployed in "red states" like Texas, Oklahoma, and Kansas. If this trend is artificially disrupted, the consequences will extend beyond rising electricity prices—America’s industrial foundation could also be undermined. Against the backdrop of emerging industries such as AI, big data, and semiconductors relying heavily on clean and stable power, any blow to green energy equates to restricting future industrial chains.

John Gimigliano of KPMG stated: “Renewable energy companies are the biggest losers. The hundreds of billions of dollars in subsidies under the Biden era are expected to vanish.” Under the new rules, clean energy projects must either become operational by 2027 or begin construction within 12 months of the bill’s enactment to qualify for remaining tax credits. After the 12-month window for launching new renewable projects closes, developers will no longer be eligible for specific tax credits. U.S. factories producing renewable energy equipment such as solar panels are expected to see a short-term surge in orders as developers rush to start projects before the deadline. However, afterward, they will face severe customer loss. Moreover, without tax credits, financing these renewable energy projects will become a serious challenge.

Due to the premature termination of green subsidies leading to a sharp reduction in wind and solar investments, the Solar Energy Industries Association warns of nearly 300,000 job losses. Hensley, Senior Vice President for Market Analysis at the American Clean Power Association, said the changes in tax measures will increase industry burdens by $4 to $7 billion. Such policies, moving against the global trend of energy transition, will not only weaken U.S. competitiveness in the clean energy sector but could also cause the country to fall completely behind in future energy transformation, resulting in higher greenhouse gas emissions and air pollution.

However, the latest version of the bill made a small concession to renewables by removing a provision that would have imposed devastating new taxes on wind and solar energy. The bill raises the cap on state and local tax deductions—a clause long sought by lawmakers in high-tax states like New York. Additionally, it extends the deadline for hydrogen projects to qualify for a maximum tax credit of $3 per kilogram from January 1, 2026, to January 1, 2028—adding two extra years, an unexpected boon for the hydrogen industry.

Gene Su, Senior Attorney at the Center for Biological Diversity, pointed out that eliminating tax incentives for clean energy means all this new energy demand will shift to the fossil fuel industry, leading to increased greenhouse gas emissions and air pollution. Furthermore, utility companies are incentivized to build more expensive fossil fuel plants to boost profits, driving up electricity prices in the process.

While the "Big and Beautiful" bill rolls back clean energy development policies, it retains certain provisions from the Biden administration’s Inflation Reduction Act that benefit fossil fuel companies, including billions of dollars in subsidies, oil drilling leases in the Gulf of Mexico, new tax credits for coal used in steel production, and the cancellation of a program designed to help natural gas and oil companies reduce waste and methane emissions.

The bill mandates restarting auctions for new oil and gas leases on public lands and federal waters in Alaska, the Gulf of Mexico, and western states, while restoring lower royalty rates—an undeniable "lifeline" for the U.S. oil and gas industry. Industry professionals enthusiastically hailed the legislation as a "home run." Spurred by this policy, major U.S. oil and gas companies are preparing aggressively to expand operations in newly leased areas.

However, considering the current global supply and demand situation, the global oil and gas market is generally in a state of overcapacity. The U.S. itself is an energy exporter and the world’s largest liquefied natural gas exporter. Excessive increases in oil and gas production could lead to falling global oil prices, which would not serve U.S. interests. Therefore, although U.S. oil and gas extraction may experience a short-term boom, in the long run, global supply-demand equilibrium in the oil and gas markets will ultimately constrain its growth.

As a global leader in technology and energy, the implementation of the "Big and Beautiful" bill will push the global energy industry into a period of transformation. For foreign new energy enterprises, this bill will inevitably raise market entry barriers and intensify cost pressures in the short term. Yet from another perspective, the domestic supply chain gaps, surging demand for commercial energy storage, and growing pains of traditional energy transitions created by the bill also offer opportunities for technically advanced and globally oriented new energy companies to break through and gain ground.