10 ways that Trump’s tax bill would undermine his energy promises
Posted on 16 June 2025 by dana1981
This is a re-post from Yale Climate Connections
President Donald Trump has promised to reduce gas prices, improve energy security, create domestic manufacturing jobs, boost the economy, and ensure that Americans breathe the cleanest air. But by gutting the Inflation Reduction Act, or IRA, Congress’ big new budget bill would undermine all of these objectives – and more.
House Republicans’ top two priorities are to extend the soon-to-expire tax cuts that they passed in 2017, and to minimize the amount that doing so will add to the nation’s over $36 trillion in debt. The massive budget bill they narrowly passed in May is their effort to achieve both.
The Congressional Budget Office estimated that the House bill’s proposed tax cuts would add about $4.5 trillion to the debt over the next decade – more than a 12% increase from today’s levels.
To pay for some of those tax cuts, the House bill would repeal most of the IRA’s climate and clean energy investments. The IRA, passed by Democrats in 2022, committed hundreds of billions of dollars to developing clean energy and fighting climate change.
The Congressional Budget Office estimated that the proposed repeal of climate and clean energy investments would shave $567 billion off the tax bill’s additions to the national debt. But repealing those investments would also come at a cost.
Eight groups have analyzed the specific impacts the tax bill’s IRA repeal would have on Americans. Three – at Princeton, Energy Innovation (a Yale Climate Connections content-sharing partner), and Rhodium Group – evaluated the impacts of the entire bill, while five others – Aurora Energy Research, Resources for the Future, Brattle Group, National Economic Research Associates, and Solar Energy Industries Association – looked specifically at the repeal of the IRA’s clean electricity tax credits.
The results were consistent in finding that Republicans’ proposed IRA repeal would increase household energy bills, imperil a nascent domestic manufacturing boom, raise the risks of power outages, disadvantage artificial intelligence development U.S., and increase pollution at the expense of the health of U.S. residents – all outcomes that undermine Trump’s stated goals.
A number of Republican Senators have expressed discomfort with the handling of clean energy in the House bill and may make significant changes in their version.
A hidden gas tax
Although the rate of inflation in the U.S. has slowed, the cost of living is still high. Average gasoline prices remain about $3 per gallon, about 50 cents higher than they were before the COVID pandemic. On the campaign trail, Trump promised to push gasoline prices down below $2 per gallon.
The House bill would instead raise gasoline prices. If its proposed repeals of electric vehicle tax credits come to fruition, Princeton and Resources for the Future estimate that there would be 7.4 million fewer EVs on American roads by 2030 and 20-40 million fewer by 2035. That would leave more cars guzzling gasoline, with that demand contributing to elevated prices at the pump.
Rhodium Group projected that gasoline prices would rise by three to 15 cents per gallon if the EV tax credits are repealed compared to leaving them in place.
And because fueling up an EV costs about $800 less per year than a new gasoline car on average, tens of millions of Americans would miss out on those savings, too.
Overall, repealing the EV tax credits would raise average U.S. household vehicle fueling costs by an estimated $40 to $200 per year, the modelers found.
And an electricity tax
Trump declared a national energy emergency on his first day in office, citing the “active threat to the American people from high energy prices.” Electricity prices are about 33% higher than pre-pandemic levels. During the previous decade, those rates had been stable, increasing by less than 10%.
If the proposed repeals of clean electricity tax credits are signed into law, the modelers estimate that only about half as many new solar and wind power generation facilities would be built over the next decade.
New U.S. annual electricity capacity additions through 2035 if EPA climate regulations and the IRA are both repealed (Full Repeal scenario on the left) vs. if EPA regulations are repealed but the IRA is preserved (Executive Repeal scenario on the right). (Image credit: Princeton REPEAT / CC BY 4.0)
This slowed deployment would come at exactly the wrong time for American wallets. In the next decade, electricity demand is forecast to rise five to 10 times faster than it has over the past 20 years – the result of rapidly expanding data centers, artificial intelligence, electrification of vehicles and buildings, and increased air conditioning use. Electricity demand would begin to outstrip supply, leading to higher prices.
Total annual U.S. electricity consumption since 1980 (white) and projected forward through 2035 (orange). (Image credit: Princeton REPEAT / CC BY 4.0)
The reports estimate that repealing the IRA’s clean electricity tax credits would result in annual U.S. household electricity bills increasing by $46 to $160 over the next decade. Most analyses agree that states in the windy middle of the country, which currently enjoy low electricity rates thanks to cheap wind energy production, would see the largest cost increases resulting from the tax credit repeal.
Plus a tax on the other kind of gas
With fewer clean electricity deployments, utilities would also have to burn more natural gas, a fossil fuel composed primarily of climate-warming methane, to meet the rising power demand. Rhodium Group estimated that this would make natural gas prices rise by 2-7%, contributing to higher home heating and cooking bills for households with gas appliances (Editor’s note: This sentence was updated June 12, 2025, to correct the name of the organization that performed the estimate.)
Overall, average U.S. household energy costs would increase by a total of between $1,000 and $3,000 over the next 10 years if House Republicans’ budget bill passes. And because it also includes the repeal of the IRA’s incentives to make homes more energy efficient and install rooftop solar and battery systems, fewer Americans would be able to avoid these rising energy costs.
Danger of falling behind China in the artificial intelligence race
At the same time as U.S. power demand is rising fast, natural gas turbines are facing years of delivery backlogs. As a result, many experts have concluded that clean electricity – especially solar panels and batteries, which accounted for over 80% of new U.S. electricity generation capacity added in 2024 – are the only sources that can be deployed quickly enough to meet that rapidly growing demand.
If the clean electricity tax credits are repealed and only half as much new clean power is deployed in the coming years, that would force consumers, including developers of artificial intelligence, or AI, to compete for an increasingly insufficient and expensive power supply.
A January executive order stated, “With the right Government policies, we can solidify our position as the global leader in AI and secure a brighter future for all Americans.”
But leaving AI developers scrambling to find sufficient power sources for their data centers would undermine that goal.
As Robbie Orvis, a senior director for modeling and analysis at Energy Innovation told Grist, “The ironic thing is that what’s in the bill, the net results of it will be completely contradictory to what the [Trump] administration’s stated policy priorities are and will cede a lot of the AI development and the manufacturing to China specifically.”
More frequent power outages
As Trump’s energy emergency declaration noted, “An affordable and reliable domestic supply of energy is a fundamental requirement for the national and economic security of any nation.”
A lack of sufficient power generation would be especially dangerous during the kinds of extreme weather events that are becoming more frequent and severe as a result of climate change. Just look to Texas and California, which have both experienced costly blackouts in recent years, but were able to avoid power outages during spring 2025 and summer 2024 heat waves thanks to their rapid deployments of solar energy and batteries. But if the states aren’t able to keep up with rising power demand, the risks of blackouts would return.
As Brendan Pierpont, Energy Innovation’s Director of Electricity Modeling put it, repealing the IRA’s clean electricity tax credits would threaten many planned clean energy projects and “leave grids unprepared for extreme weather and other unforeseen events, risking blackouts.”
Imperiled American manufacturing
An April executive order stated that “President Trump recognizes that increasing domestic manufacturing is critical to U.S. national security.” That’s exactly what the IRA has been achieving, with hundreds of new clean energy projects announced since the bill was signed into law, representing hundreds of thousands of jobs and hundreds of billions of dollars of investments in communities around the country. As MIT and Rhodium’s Clean Investment Monitor illustrates, the vast majority of those investments have been in batteries, EVs, and solar panels.
Repealing the IRA’s clean electricity and EV tax credits would imperil many of these projects and their associated jobs and economic benefits. Princeton’s analysis concluded that automakers and battery companies might even be forced to reduce output and lay off workers from some of the new U.S. factories that have already been built.
Lost jobs and economic growth
The April executive order also highlighted that domestic manufacturing brings “better-paying American jobs making beautiful American-made cars, appliances, and other goods.”
Southern states and districts represented by Republicans, where most of those new facilities and jobs are located, have the most to lose from these canceled projects and potential layoffs.
More pollution and unhealthier Americans
A February executive order stated that “It shall be the policy of the Federal Government to aggressively combat the critical health challenges facing our citizens,” and Trump has said that he considers it “a top priority to ensure that America has among the very cleanest air and cleanest water on the planet.”
But repealing the IRA would increase the burning of fossil fuels in power plants and cars, generating more air pollution. This would harm public health, leading to thousands of extra premature American deaths over the next decade, according to Energy Innovation’s analysis.
It would also leave U.S. climate pollution just 20-30% below 2005 levels by 2030, falling about halfway short of the country’s prior commitment to reduce emissions 50% by 2030. Total emissions would be an estimated 3 billion tons higher over the next decade than if the IRA were left in place. That’s equivalent to adding an extra six months’ worth of U.S. climate pollution over the next decade – and at a time when emissions need to fall dramatically to meet climate targets.
But those tax cuts
Overall, although repealing the IRA would save the government around $567 billion over the next decade, it would cost about $1 trillion in economic growth, $1,000 or more per household in higher energy costs, and hundreds of thousands of lost domestic manufacturing and construction jobs. It would also result in reduced energy security, a higher risk of blackouts, a disadvantage for domestic artificial intelligence development, 3 billion extra tons of climate pollution, and the loss of thousands of lives.
But don’t forget the bill would cut taxes for the ultrawealthy. That’s likely why Trump is urging Congress to pass it by July 4.
