Cuts to Climate, Energy Funding in House Bill Would Mean Higher Costs, Fewer Jobs, Poorer Health

To help offset the cost of its nearly $4 trillion in regressive tax cuts, the House Republican reconciliation bill includes $546 billion in cuts to tax credits and other programs designed to promote clean energy. Those cuts — $336 billion in clean energy tax credits, $199 billion for efforts to adopt less polluting vehicles, and over $11 billion in funding for climate-related programs enacted in the 2022 Inflation Reduction Act (IRA) — would raise households’ energy costs, undermine economic opportunity in struggling communities, and hasten climate change. People with low incomes and people of color, who are already most burdened by pollution, disinvestment, and climate impacts, would be disproportionately harmed.^[1]

Rolling Back Climate and Energy Progress Would Hurt Families and Communities

Collectively, the policies in the House bill would:

• Raise energy costs for households, businesses, and schools. By terminating clean energy tax credits prematurely, the bill would reduce the supply of solar and wind energy, resulting in higher electricity prices. The bill’s funding cuts for energy efficiency and clean energy programs would also increase electricity prices, while its cuts to electric vehicle funding and termination of vehicle regulations would result in higher demand for gasoline, increasing its price.^[2]

  As a result, energy costs would rise for both households and businesses. One estimate^[3] projects that households would face a 7 percent increase by 2026; another estimate,^[4] looking at a broader range of household energy costs (including gasoline), projects an increase of $95-$290 in 2035 (2 to 7 percent). For businesses, one estimate shows industrial electricity rates rising by 7-12 percent in 2035.^[5]

  The bill’s cuts would be particularly harmful for public schools. Energy is their largest expense after teacher salaries, and many schools are relying on clean energy tax credits, grants, and energy efficiency funding to lower their energy costs.^[6]

• Threaten economic opportunity, especially in vulnerable communities. Clean energy tax credits have spurred new investment and created new economic opportunities across the country. Following the IRA’s passage, three-quarters of private-sector investments in clean energy were made in counties where household incomes are below the national median, and clean energy investment doubled in what the IRA terms “energy communities” (those connected to fossil fuel industries or polluted by industrial activity), which are predominantly in rural areas.^[7]

  The bill’s cuts threaten these investments; the bill could result in a roughly two-thirds decline in clean energy installations through 2035. This could cost 330,000 jobs in the solar industry alone by 2028 — more than eight times the number of U.S. coal miners.^[8]

• Increase air and climate pollution, making people sicker. Exposure to air pollution from fossil-fuel-powered vehicles and power plants has severe health consequences, especially for children, people with disabilities, and older adults.^[9] Funding and programs enacted through the IRA could help reduce air pollution by more than 36 percent by 2030.^[10]

  The House bill would increase exposure to dangerous pollutants by eliminating clean energy incentives, ramping up fossil fuels, rolling back emissions regulations, and cutting air pollution reduction programs. It also would speed up climate change, the impacts of which increasingly threaten lives and livelihoods across the country.

  The health consequences of pollution may be especially severe among people who rely on Medicaid. Medicaid beneficiaries have been shown, for example, to experience increased asthma hospitalization from exposure to air pollution, making the massive Medicaid cuts also in the House bill — which would take away coverage from 7.8 million people, according to Congressional Budget Office estimates — even more damaging.^[11]

What’s in the House Bill

The major climate- and energy-related provisions of the House bill are briefly summarized below.

Elimination of clean energy and electric vehicle tax credits. The House bill cuts tax credits for clean energy and clean vehicles through harsh restrictions and early terminations.^[12] The bill would make most clean energy credits practically impossible to use by requiring most projects to begin construction within 60 days after the bill is enacted and be completed by the end of 2028 to qualify. (Under current law, projects generally have until at least 2032 to begin construction.) The bill also disallows credits for projects that use materials from — or have project owners with relationships to — certain foreign countries, including China.^[13]

Together, these rules would make it extremely difficult for new projects to claim tax credits, given the bill’s shortened timelines and supply chain complexities in the clean energy industry. By making compliance nearly impossible, these restrictive rules also effectively shut down the IRA’s novel direct pay program, which allows tax-exempt entities such as schools, houses of worship, and local governments to claim the tax credits.

The bill terminates tax credits for energy efficiency and clean energy improvements for households after December 2025. It also cuts funding for clean vehicle adoption by ending tax credits for electric vehicle purchases and charging infrastructure after December 2025 and ending implementation of stronger fuel economy standards for certain vehicles. These changes will make it harder for individuals to afford clean, cost-efficient upgrades in their homes and cars.

Cuts to clean energy and energy efficiency programs. The bill cuts grants, loans, and administrative funding for wind and solar installations, energy waste reduction, improvements to the electric grid, and energy upgrades in affordable housing. These cuts would make installing clean energy more expensive. They also would make it harder for households to use less energy, exacerbating energy burdens — that is, the share of household income spent on energy bills — especially for rural and low-income households.^[14]

Elimination of environmental justice programs and cuts to pollution reduction funding. The bill cuts the remaining IRA funding for these programs, which would increase respiratory and cardiovascular disease and further increase energy costs in disadvantaged communities. The bill also cuts funding for data collection on disproportionate environmental harms and climate impacts and the cumulative impacts of pollution, which would make it harder to identify and avoid harms to communities historically overburdened by pollution.

Cuts to transportation health and safety programs. The bill repeals DOT regulations setting average fuel economy standards for certain passenger cars, vans, and trucks meant to reduce fuel costs for families and businesses and decrease dangerous greenhouse gas emissions and harmful air pollution, as well as the funding for the Department of Transportation to undertake environmental reviews for transportation projects. It also cuts funding for alternative fuel development, which would slow the transition to clean transportation and further increase gasoline prices by increasing demand for gasoline.

In addition, the bill cuts funding for Neighborhood Access and Equity grants (for transportation access improvements in underserved areas), which would exacerbate disinvestment and transportation pollution — especially in Black communities harmed by past highway construction.

Cuts to forest and coastal resiliency efforts. The bill cuts funding for forest conservation and efforts to make coastal areas more climate resilient. These changes would leave people and the environment more vulnerable to dangerous climate impacts, including wildfires and rising sea levels.

Policies favoring fossil fuels. The bill makes it easier to extract, transport, and use fossil fuels by requiring oil, gas, and coal leasing on public lands, contrary to the priorities of the majority of voters in most of the affected states.^[15] The bill also expedites the construction of natural gas export terminals, which would drive up costs for U.S. consumers by increasing global demand for natural gas.^[16] And it allows corporations to pay for expedited environmental reviews, which would likely speed development of projects harmful to human health and the environment.