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Bill cuts solar and wind tax credits, keeps nuclear and

geothermal

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Energy Innovation projects 300 GW capacity fall due to

bill

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Oil and gas industry praises bill for advancing energy

dominance

agenda

By Timothy Gardner, Valerie Volcovici

WASHINGTON, July 3 (Reuters) - Advocates of clean energy

on Thursday decried the final passage of President Donald

Trump's tax cut bill by the House of Representatives as a

reversal of course on the energy transition, while fossil-fuel

interests rejoiced.

Trump's fellow Republicans in the House passed the bill

218-214 and it now heads to the president's desk. Trump is

expected to sign it on Friday.

The legislation sharply cuts access to a 30% tax credit for

solar and wind power projects that had been set to run until

2032 and which developers had relied on.

Research firm Energy Innovation projected that the bill

would result in a fall of 300 gigawatts of U.S. electricity

capacity, as demand soars for the first time in two decades,

driven by growth in data centers and artificial intelligence.

Meanwhile, demand for power from data centers is estimated at

upward of 100 GW, according to nonprofit group American Clean

Power.

The bill's passage "is a dramatic swing in federal policy,

disrupting the good-faith investments of American companies that

are powering our economy and creating hundreds of thousands of

jobs," said Jason Grumet, ACP's president.

Jefferies global investment bank said in a research note to

clients that the phaseout of the wind and solar subsidies will

lead to a "medium-term rush" to claim credits, which could speed

the roll-out of projects for a couple of years. After that

period, investors will need to reassess such projects without

them.

It said nuclear and geothermal power, energy sources that

the Trump administration favors for dependable electricity

generation, received better access to credits in the

legislation. Battery storage projects will also retain the full

tax credit through 2033 and phase out fully by 2036.

The "longer runway" for those baseload resources to use the

tax credits won praise from the Data Center Coalition, whose

members include Amazon ( AMZN ) and Microsoft ( MSFT ).

Mike Sommers, the president and CEO of the American

Petroleum Institute, the top oil and gas lobbying organization,

said Congress had advanced Trump's "energy dominance agenda" of

maximizing oil and gas output.

Production of oil and gas had already hit a record during

the administration of former President Joe Biden.

"We applaud Congress for unleashing our nation's oil and

natural gas resources, and we look forward to President Trump

signing this bill into law," Sommers said in a release.

COAL GETS A BREAK

Some tax credits favored by the oil industry, like those for

hydrogen and carbon capture, were preserved in the bill.

The bill also mandates sales of oil and gas drilling rights

in federal lands and in waters off Alaska and the Gulf of

Mexico, which Trump has renamed the Gulf of America.

It allows coal used in steel making a new production tax

break of 2.5% of costs that could be worth hundreds of millions

of dollars for the industry. It also reduced royalty rates that

coal companies have to pay when mining on public lands.

Rich Nolan, the president and CEO of the National Mining

Association lobbying group, said the bill supports "today's

mining industry which stands ready to create additional jobs and

revenues for our economy."

Daniel Francis, a director with Generate Capital, said the

focus for wind and solar industries will shift to states and

communities.

"Ultimately the impact of the bill will be to move decisions

down the federal chain from Congress to states, counties and

cities," he said. "Because economies run on power, because

voters care about their power bills, and there is no

alternative."