For renewable energy, the version of the reconciliation bill passed yesterday by the Senate avoided a punitive excise tax but will still make deploying wind and solar systems much more expensive. Clean energy tax credits are scheduled to phase out at the end of 2027, “despite letters, statements, and expressions of concern from a handful of Republican senators,” as Chris Moyer, who leads climate and energy policy firm Echo Communications Advisors, put it.
This rapid phase-out of credits for both investment in and production of wind and solar is ominous for the development of the renewable energy sector. And at a moment when the U.S. is desperate for more power to fuel its artificial intelligence ambitions, it risks crippling those as well.
Renewables are a mature technology, cheap and fast to deploy, and they’re leading U.S. generating capacity additions by a big margin. Their loss is likely to be AI’s loss as well.
As Wired described, it’s “particularly ironic” that the Trump administration, with its big, bold AI dreams and declarations, is so overtly hostile to a source of energy that can readily assist in making them come true.
But there are mixed messages coming from Washington, D.C.
Just last Friday — the day that the full Senate draft of the budget bill came out, sending the clean energy industry into a weekend-long panic over surprise additions like the excise tax — Reuters reported that the Trump administration is planning a series of executive orders to boost energy supply to power AI. These would include provisions to make it easier for new generation capacity to connect to the grid, and to make federal land available for data center construction.
The administration has been bullish in its support of geothermal and nuclear (and, less reassuringly, coal) to power AI; so far, the budget bill is not meddling with incentives for nuclear, geothermal, and carbon capture. But those technologies are far from being ready to be deployed quickly and at scale, regardless of how many executive orders Trump signs to accelerate their development.
And while there’s still the option of gas generation to power AI, that sector is plagued with supply chain shortages that are making it no less difficult to scale.
The version of the budget bill passed by the Senate is just the latest of a series of “bewildering contradictions” in Trump’s energy agenda. The Trump administration wants more grid reliability for AI data centers, but then fires the people working to improve the grid. It rolls back environmental regulations to ease infrastructure development, but simultaneously pauses IRA disbursements, stalling projects. It wants energy abundance, but it undermines its most abundant source of new energy.
(Last month Latitude Media’s editor Lisa Martine Jenkins sat with Tanya Das, the director of AI and energy technology policy at the Bipartisan Policy Center, and Nic Gladd, a partner in Wilson Sonsini’s energy and climate solutions practice, at the Transition-AI event to discuss this policy mismatch.)
In an opinion article on the Washington Post, Matt Eggers, managing director at climate tech VC firm Prelude Ventures, describes the Senate budget bill’s approach as “demanding more pizza factories while cutting supplies of dough, cheese and tomatoes.”
“The energy tax provisions are not ideological trophies; they are practical tools that underpin U.S. technological leadership,” he writes. “Stripping them would choke off capital, stall construction and concede the AI century to countries that understand energy arithmetic,” China chief among them.
A version of this story was published in the AI-Energy Nexus newsletter on July 2. Subscribe to get pieces like this — plus expert analysis, original reporting, and curated resources — in your inbox every Wednesday.
