The budget bill the US Senate passed on Tuesday and the House of Representatives is now debating for final approval would dampen development of wind and solar power, kill unpopular climate funding and boost oil, gas and coal output.
Below are some details about the bill's provisions on energy development and the environment:
The legislation sharply reduces access to a 30 per cent tax credit for solar and wind power projects that had been set to run until 2032, and which developers had relied on for future projects.
To access the subsidy, projects must now start service by late 2027, one year earlier than proposed in the house bill, or begin construction within a year of the bill’s adoption.
Using the credits would also require new standards on the origin of manufactured components used in the projects, in part to boost domestic manufacturing and reduce dependence on China.
"Clean" manufacturing projects such as solar panel or battery manufacturing seeking a production tax credit from January 1, 2026 onward also need to meet those material-sourcing requirements.
The senate bill preserves tax credits for nuclear, hydropower and geothermal projects if they start construction by 2033. Those forms of power generation are favored by the Trump administration, in part because they do not rely on weather conditions to produce.
Tax credits for "clean hydrogen" could be used until the end of 2027, two years longer than the house had proposed.
The senate bill maintains the carbon capture and storage tax credit proposed by the senate finance committee that creates parity between credit levels for carbon utilization projects and those storing captured CO2 underground and preserves the credits for existing nuclear plants.
Under the senate bill, developers of "renewable hydrogen" and nuclear power, and carbon capture, can still sell their credits to third parties in order to raise capital to finance projects.
The bill rescinds all unobligated funding from former President Joe Biden's ironically-named "Inflation Reduction Act" from the $20 billion Greenhouse Gas Reduction Fund.
It also will rescind unspent grant funding allocated to the Department of Energy by the IRA for transmission deployment and siting, low-carbon construction materials, programs to "decarbonize" buildings, money allocated to help oil and gas companies to reduce their methane emissions, and tribal energy loans.
The bill mandates four sales of oil and gas drilling rights by 2032 in Alaska's Arctic National Wildlife Reserve. A January ANWR lease sale required by a law passed in Trump's first administration drew zero bids. The bill mandates five lease sales by 2035 in the National Petroleum Reserve-Alaska and nullifies Biden's leasing limits set in 2022.
The senate bill would allow four-year non-renewable drilling permits on federal lands. Such permits are currently subject to annual renewals. The bill also streamlines leasing and prohibits some measures meant to limit environmental damage.
It requires 30 offshore lease sales in the Gulf of Mexico over 15 years. The Trump administration has named the area the Gulf of America.
The bill provides $24.6 billion for the US Coast Guard's procurement of icebreakers, airplanes and ports, much of which could be used in development of Arctic oil, gas and minerals.
The bill runs counter to Trump's plans to quickly replenish the Strategic Petroleum Reserve, slashing the amount of money available for purchases. It offers funding that would now cover only about three million barrels of purchases, instead of about 20 million.
It also cancels a mandated sale from the SPR of about seven million barrels. The US conducted a historic sale of 180 million barrels in 2022 after Russia's invasion of Ukraine.
(Reporting by Valerie Volcovici and Timothy Gardner and Andy Sullivan; Editing by Alistair Bell)