How Trump's 'Big Beautiful' Budget Bill Helps China Win the Clean Tech Race

Newsweek

22-05-2025

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Clean energy industry analysts and trade groups said Thursday that the budget reconciliation bill narrowly approved Thursday by the Republican-led House of Representatives would raise emissions and energy prices while giving China an edge in the growing clean technology market.
Business leaders in solar, wind, battery and EV manufacturing had hoped that the boom in clean energy investments in Republican districts would translate into political support for tax credits that benefit renewable energy and clean tech. But in the final hours of negotiations, the bill's text grew even worse for clean energy interests, phasing out most of the tax credits even earlier than proposed in the bill's earlier draft.
"It's a significant shock," Chirag Lala, director of energy at the Center for Public Enterprise, told Newsweek. CPE is a nonprofit that works with state and local governments on energy development and investment. The tax credits played an important role in reducing risk for investors, he explained, and have triggered hundreds of billions of dollars of investments in new projects.
"If we were hoping to be a big player in the manufacturing or development of key industries—nuclear, geothermal, batteries, electric vehicles—this is a huge set back," he said.
China has invested heavily in its capacity to manufacture solar panels, EVs and batteries and dominates the global market for most of those products. The U.S. has argued that China has also used unfair trade practices. Many U.S. businesses viewed the clean energy support in the 2022 Inflation Reduction Act (IRA) and the Bipartisan Infrastructure Law as the country's best chance to catch up with China.
The Kayenta Solar Plant in Arizona, one of the many clean energy projects made possible with federal financing.
The Kayenta Solar Plant in Arizona, one of the many clean energy projects made possible with federal financing."Gutting the incentives of the IRA will likely mean a number of projects are abandoned and many new ones won't start," University of Texas at Austin public affairs professor Joshua Busby told Newsweek via email. "While the rest of the world moves on to clean energy and looks to China for inputs, the U.S. will be left behind."
Busby, who formerly served as a senior climate adviser to the U.S. Department of Defense, argues that removing incentives for clean energy would undermine U.S. national security. Not only are clean tech products like batteries becoming important for military applications, but the revenue from the clean energy industry is also an important source of economic power.
"Clean energy is one of a handful of sectors that will be large sources of growth and revenue this century," Busby said. "Countries that have large healthy economies have the tax base to fund their militaries."
Shortly after the House vote Thursday morning, trade groups representing renewable energy and clean tech manufacturers responded with statements that echoed Busby's concerns about the U.S. ability to compete with China.
"A vote for this bill was a vote to close U.S. factories and concede manufacturing jobs of the most important energy resource of the 21st century to China," Mike Carr, executive director of the Solar Energy Manufacturers for America, said in a statement.
Ray Long, CEO of the American Council on Renewable Energy, said "recklessly disrupting" tax incentives will undermine projects that are ready to come online in the U.S.
"It would be a boon to Chinese manufacturers and a tremendous step backward for American jobs, competitiveness in manufacturing and AI, economic security, and energy security," Long said.
Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association, emphasized solar's growing importance in meeting growing energy demand. Energy analysts project a coming surge in demand for electricity driven by the boom in data centers for AI, and the combination of solar and battery energy storage made up the bulk of new electricity capacity added to the grid last year.
"If this bill becomes law, America will effectively surrender the AI race to China and communities nationwide will face blackouts," Hopper said in a statement.
Energy policy analysts raced to assess the impact the House bill would have. The Rapid Energy Policy Evaluation and Analysis Toolkit (REPEAT) is a joint effort including researchers from Princeton University, Dartmouth College and Binghamton University.
The REPEAT researchers noted that the House bill would not only scrap the clean energy tax credits, it would also rescind all unobligated funding for clean energy and climate programs under the IRA and the Infrastructure Law. They estimate that would:
Increase U.S. greenhouse gas emissions by roughly 0.5 billion metric tons per year in 2030 and more than 1 billion metric tons per year in 2035.
Raise U.S. household and business energy expenditures by $25 billion annually in 2030 and over $50 billion in 2035.
Increase average U.S. household energy costs by roughly $100 to $160 dollars per year in 2030.
Additionally, REPEAT found, the bill would put at risk $522 billion in announced but pending investments in U.S. clean energy reduce annual sales of electric vehicles by roughly 40 percent by 2030. The net effect, the researchers found, would "end America's battery manufacturing boom."