The energy capital of the world could face challenges if the One Big Beautiful Bill Act passes the House of Representatives Wednesday.
The One Big Beautiful Bill Act is an extension of the Tax and Jobs Cuts Act (TJCA) of 2017. TJCA was a law passed during the Trump Administration’s first term and it lowered tax rates for people and businesses, increased child tax credit, and basically revamped federal tax code entirely for the first time since 1986.
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The One Big Beautiful Bill Act proposes to renew how much money is deducted from your taxes, increase the amount of money you can earn before paying federal income tax, and introduce new tax breaks.
However, the bill also plans to remove billions of dollars in clean energy credits and deductions. Director of Center for Tax and Budget Policy at Rice University’s Baker Institute, John Diamond, explains “a bunch of credits on production and investment for wind, solar, hydrogen, and other clean energy sources” that were enacted in the Inflation Reduction Act could be impacted.
“These credits and deductions are currently allowed for projects that span into the mid-2030s, but this bill would remove them, taking away between $350 to $500 billion in benefits,” said Diamond.
Overview of One Big Beautiful Bill Act
“The bill extends a number of provisions from the 2017 Tax Cut and Jobs Act,” said Diamond, “That includes rate reductions, an increase in the child credit, a larger standard deduction, and other tax breaks that were temporary and set to expire.”
When asked about the bill’s potential impact on Houston, Diamond said, “Houston is the energy capital of the world and leads in wind and solar energy production. The repeal of these credits will have a particular impact on the Houston area more so than other areas.”
On the likelihood of renewable energy projects starting in Houston, he said, “I think you would see fewer. There may be projects that were planned, where the financials were dependent on getting this credit. So we’ve been planning them or just started them, thinking, ‘I’m gonna get this credit for clean energy production.’ And then all of a sudden you don’t.”
Impact on Consumers
Diamond also noted that the bill removes tax credits for consumers, including the $7,500 electric car credit and credits for energy-efficient home improvements. “For example, if you were to install a geothermal AC unit in your house, which costs about $20,000, you would currently get a 30% tax credit — about $6,000. That would no longer be available,” Diamond explained.
He warned that the bill is “definitely not a positive impact” on the clean energy industry and will “slow down investment and activity.” However, he added, “I don’t think it’ll grind to a halt. It will just, at the margin, make some projects not profitable.”
Finally, Diamond pointed out that removing these credits could also lead to higher energy prices. “Sometimes those credits feed through to lower prices.” To learn more about the broader impacts the bill could have on the nation, click here to read Diamond’s paper analyzing how the One Big Beautiful Bill Act may influence the nation’s GDP, consumption, investment, wages, employment, and debt.
The bill is currently awaiting a final vote in the House of Representatives before it can move to the Oval Office to be signed into law.
