Senate Passes Bill Reducing Clean Energy Support and Boosting Oil Gas
The Senate’s passage of a major energy bill is reshaping U.S. energy policy, tilting support toward fossil fuels and reducing incentives for clean energy projects like wind, solar, and hydrogen.
Fossil fuel advocates praised the bill. “This historic legislation will help usher in a new era of energy dominance by unlocking opportunities for investment...” said Mike Sommers of the American Petroleum Institute.
The bill introduces expanded tax credits for carbon capture at $85 per ton, applies to oil recovery and storage, and includes support for coal and natural gas. It provides billions in benefits to oil and gas developers, including for drilling costs.
On the clean energy side, the bill removed an excise tax on wind and solar and allowed tax credits for projects that start construction by mid-2026.
However, these industries face tighter restrictions on sourcing components, especially avoiding materials from foreign entities of concern like China.
Energy storage projects, often tied to solar, also face challenges under new rules, potentially affecting cost and feasibility. Critics say the new timeline doesn’t give enough time for utility-scale projects to qualify for full credits.
Hydrogen energy received partial relief with the 45V credit extended through 2028, though it remains uncertain if this will benefit green hydrogen due to rising renewable costs. Most hydrogen produced in the U.S. still comes from fossil fuels.
The bill also eliminates popular tax incentives for energy-efficient upgrades to homes and buildings. Critics argue this move could raise energy bills and stress power grids, especially during heatwaves or high demand.
Renewable groups worry the legislation will delay progress. “This thing is a travesty... doubling down on coal, let alone oil and gas,” said Mike Williams of the Center for American Progress.
While nuclear and geothermal projects retain longer timelines to claim credits, most clean energy sectors now face reduced support as the U.S. debates its energy future. The bill’s fate now moves to the House.