The Impact of New Tax Reconciliation Bill on U.S. Energy Landscape

The latest action the United States (U.S.) has taken to unlock its energy dominance, encapsulated in a new tax reconciliation bill, which President Donald J. Trump signed into law, has set the stage for an uptick in domestic energy to drive down costs by inciting new investments across all energy domains, encompassing oil, gas, liquefied natural gas (LNG), renewables, and other low-carbon and clean energy plays. However, fears abound that the legislation will derail the growth of the wind and solar segments, with shortened construction start-up timelines potentially putting such projects at risk.

Overview of the Legislation

After President Trump’s ‘One Big Beautiful Bill Act,’ which is the House of Representatives’ version of the reconciliation package that contains aspects deemed critical offshore energy provisions, crossed the finish line following a close call that enabled it to pass the Senate hurdle with a 51/50 vote, it got the green light to become the law of the land.

While the U.S. has already seen a pivot in its energy ecosystem, especially in the clean energy arena because of the offshore wind woes, the budget reconciliation legislation is poised to make things even more complicated for the clean energy domain, thanks to an imminent end to tax credits for wind and solar power.

Implications for Energy Dominance

With the aim of unleashing American energy dominance, the ‘One Big Beautiful Bill’ is said to deliver on President Trump’s promise to restore U.S. energy supremacy by driving down Americans’ cost of living, boosts American-made sources of supply to ensure energy independence, ends the so-called ‘war on American energy’ by reversing Biden-era policies with a special focus on those related to climate change, and refills the Strategic Petroleum Reserve to strengthen energy security.

This bill also reinstates quarterly onshore oil and gas lease sales, reverses Biden’s EV mandates and CAFE standards to allow families to choose a car that fits their needs and budget, and stops the alleged ‘Green New Scam’ by rescinding billions of taxpayer dollars poured into the handouts to green corporate welfare the White House sees as “radical’ climate activists,” ending subsidizing for “unreliable green energy at taxpayer expense.”

Industry Reactions

Once the legislation cleared its final obstacle, many industry leaders and stakeholders hailed the Senate’s vote and called on the House to swiftly send the bill to President Trump’s desk, including Mike Sommers, President and CEO of American Petroleum Institute (API), who highlighted: “We applaud the Senate for passing the One Big Beautiful Bill to bolster America’s energy advantage and support economic growth.”

Others, like the Sierra Club, expressed concerns over the impact of the tax bill on clean energy. They claim that Trump and Republicans in Congress traded Americans’ health and future for polluter profits with “the most anti-worker, anti-family, and anti-environment piece of legislation in U.S. history.”

Expert Insights on Oil, Gas, and LNG Sectors

Taking into consideration the expected boost in American energy within the oil and gas realm as a result of the tax bill, Offshore Energy got Greg Matlock’s take on the situation. He is a principal at Ernst & Young based in Houston, Texas, and serves as the EY Americas Tax Leader for Oil & Gas and Chemicals and the Metals & Mining sectors.

Greg Matlock emphasized the pro-growth nature of H.R. 1 for natural resources produced in the U.S., including LNG, and the benefits it offers to capital spending in the sector.

Implications for Clean Energy

Given the fears over the bill’s impact on the clean energy ecosystem, Offshore Energy discussed the implications the new U.S. legislation will have on this segment of the energy landscape with Brian Murphy, a partner at Ernst & Young in Boca Raton, Florida, and the EY Americas Power, Utilities and Renewables Tax Leader.

Brian Murphy highlighted the challenges that H.R. 1 may bring to America’s renewable energy revolution, especially in the wind and solar sectors. He pointed out the potential impacts of reduced incentives and uncertainties on energy developers.

Future Outlook

Although there are concerns about the impact of H.R. 1 on the clean energy sector, the overall outlook for renewable energy technologies remains robust through at least 2027. The industry is preparing to navigate the changes brought about by the legislation to ensure continued growth and development.