The One Big Beautiful Bill Act (OBBBA), recently enacted in the United States by the Trump administration, profoundly redefines investment conditions in US energy markets, according to a study published by Wood Mackenzie on 10 July. The report indicates that these new measures significantly reduce fiscal incentives allocated to renewable energy, while simultaneously strengthening support for oil and natural gas. These changes create substantial uncertainty for investments in solar and wind energies, while opening favourable prospects for traditional hydrocarbon players. The consultancy firm estimates that these shifts will have notable short- and medium-term effects across the entire US energy sector.
Renewable energies face uncertainty
The OBBBA restricts access to tax credits for solar and wind projects, setting a deadline for their full commissioning by 31 December 2027. A temporary exception is provided: projects initiated within 12 months following the law’s adoption will benefit from an additional grace period extending to mid-2030. According to Wood Mackenzie, these new constraints will trigger a temporary acceleration of solar projects between 2025 and 2026. However, the report anticipates a significant long-term decline in new installations, estimated at around 17% for solar over ten years, potentially reaching 375 GWac, and a 20% reduction for wind over the same period.
In addition to the OBBBA, a recent executive order further restricts subsidies for energy technologies linked to foreign entities, particularly Chinese. This measure further complicates the profitability of renewable energy projects. Energy storage continues to benefit from the investment tax credit through 2030 but faces strict constraints regarding Chinese-origin cells, Wood Mackenzie specifies.
Fresh momentum for oil and gas
Conversely, the oil and gas sectors directly benefit from the new orientations set by the OBBBA. Key measures include mandatory quarterly sales of oil and gas leases in nine western US states, along with 30 additional lease sales in the Gulf of Mexico over the next 15 years. The law also includes a reduction in onshore royalty rates from 16.67% to 12.5%, as well as the reopening of Alaska’s Arctic National Wildlife Refuge to oil lease auctions.
The Carbon Capture, Utilization and Storage (CCUS) sector also benefits from enhanced fiscal conditions. Tax credits (45Q) are now identical for Enhanced Oil Recovery (EOR) and pure geological sequestration. Operators with existing CCUS-EOR infrastructures will be particularly advantaged, according to Wood Mackenzie’s analysis.
Electric mobility in decline
The elimination of tax credits for purchasing electric vehicles is expected to reduce their US market share in 2030, falling from an initial forecast of 23% down to only 18%. According to Wood Mackenzie’s projections, this decline in electric vehicle demand could result in a 6 to 8% contraction of the global lithium-ion battery market by 2030. Global demand for lithium, nickel, cobalt, and graphite is thus likely to be affected, although certain provisions may benefit domestic US producers.
Consequences at the global scale
David Brown, Director of Energy Transition Research at Wood Mackenzie, highlights in the study that these new measures could delay the energy transition in the United States. “This legislation clearly illustrates the challenges faced by energy investors: managing uncertainty due to frequent political changes while investing in assets with lifespans often exceeding thirty years,” he stated.
