What Does the One Big Beautiful Bill Really Mean for the Climate?

The climate world is in an uproar over the One Big Beautiful Bill Act (OBBBA), which Congress passed earlier this month.

The megabill—which has major implications for many aspects of American life—also guts much of America’s climate progress, slashing support for solar, wind, and electric vehicles. This will lead to an estimated cumulative additional 2 gigatons of greenhouse gas emissions by 2035—about 4 months’ worth of current U.S. emissions, or about 4% of current global annual emissions.

But when it comes to long-term global decarbonization, all is not necessarily lost. While America will account for around 5% of global emissions this century, it remains among the world’s primary drivers of energy technology breakthroughs, and the most crucial components for driving breakthrough technologies largely survived the OBBBA fight.

This moment is a critical test of how we think about climate impact and, practically, which choices we make in response. Are we optimizing for immediate metrics—domestic emissions reductions over the next decade—or are we focused on what drives the most impact for global climate outcomes over this century?

The OBBBA represents a significant reduction in America’s federal climate effort—but it also preserves room for hope.

The Partial Repeal of the Inflation Reduction Act

The most visible climate impact of the OBBBA is the accelerated phaseout of wind and solar tax credits, with only projects beginning construction within the next year eligible for full credits. This will slow renewable deployment and increase U.S. emissions through 2035.

But partial repeal of the Inflation Reduction Act was always the most likely scenario—political observers predicted this outcome a year ago. Even for the solar and wind tax credits, the version of the bill negotiated by Senator Lisa Murkowski keeps them on a longer lifeline than originally proposed. These credits could be extended again if Democrats retake the House in 2026, partially campaigning on a message of the tax credit repeals making clean energy more expensive.

Indeed, this pattern of extension and renewal has characterized U.S. renewable energy policy for decades, which means we’re likely overestimating additional emissions from the OBBBA.

“Dense Is Beautiful”

While the OBBBA rejected “small is beautiful” by axing decentralized and utility-scale solar and wind subsidies, it maintains tax credits for all other forms of clean electricity generation. That means support continues for energy-dense sources like geothermal systems and advanced nuclear technologies, a strategic win often overlooked in the headlines.

Crucially, energy storage—key to enabling a higher penetration of variable renewables like wind and solar—will also continue receiving support.

The first wave of successful climate technologies helped slash emissions forecasts by hundreds of gigatons—future clean energy innovation could do the same again. Even if the effects of these new technologies won’t lead to major emissions reductions by 2035, they are likely to deliver emissions reductions well in excess of 2 gigatons. These more nascent technologies also face higher technical and commercial risks than wind and solar, making them—according to the non-partisan Rhodium Group—most dependent on government support to reach commercial viability.

Consider the case of enhanced geothermal. Modeling suggests that the OBBBA will lead to an additional 10GW of geothermal deployment—a doubling of capacity compared to full repeal and even slightly more than under Biden-era policies, equivalent to about a third of global capacity. While this pales next to the 300GW of mature renewables lost, this early buildout will likely produce outsized returns in technological development. If the U.S. doesn’t drive this innovation in enhanced geothermal, it might not happen anywhere else.

Meanwhile, the estimated loss of 140GW of solar capacity in the US by 2035 is less than 2% of forecasted global capacity, unlikely to have much impact on solar’s global trajectory as a mature clean energy source. In that sense, from a long-term global perspective—the one that ultimately matters to evaluate climate action—the most important tax credits were the ones that survived.

The Loan Programs Office Endures

Tax credits for new technologies are only useful as demand signals if earlier barriers can be overcome as well. Under the OBBBA, the Department of Energy’s Loan Programs Office (LPO), survived. This matters enormously: the LPO’s loan authority represents one of the world's largest pools of capital specifically designed to commercialize clean technologies.

Unlike tax credits that primarily benefit established industries with strong lobbying capacity, the LPO focuses on first-of-a-kind commercial projects—exactly the investments most likely to drive technological breakthroughs with global implications. Tesla’s early loan from the LPO helped establish the template for modern electric vehicles and, by many accounts, helped Tesla survive at a critical juncture.

Similar support today for enhanced geothermal projects, advanced nuclear reactors, or critical minerals could catalyze global market transformation and is in line with a new lending authority focused on “Energy Dominance Financing.” While it lacks the explicit climate focus of previous programs, it leaves the door open for financing large-scale clean energy projects—with future decisions by the Administration and Congress, including additional appropriations, shaping the actual potential of the LPO.

The Path Forward for the Climate Movement

At Founders Pledge, we manage a Climate Fund that makes targeted philanthropic grants to build a more robust global climate response. As we see it, the OBBBA represents a federal setback, but for climate activists focused on long-term global impact, the preservation of America’s innovation infrastructure provides a foundation for continued progress. Indeed, most of the political levers that we examined in our report in January—permitting reform to unlock clean energy and innovation policy, in particular—remain available opportunities to make significant climate progress.

The OBBBA's cuts weren’t a death knell to progress. The greater threats to U.S. energy innovation—and they are very real, indeed—come from DOGE cuts to the Department of Energy (DOE), project cancellations at the DOE, and upcoming appropriations battles.

The OBBBA gives the climate community a chance to fight another day—and another battle. Now is the time to double down on defending the innovation pipeline that survived, rather than learning the wrong lesson that we need to change our approach entirely. Climate advocates who recognize this reality and adjust their strategies accordingly will be best positioned to drive meaningful progress in the years ahead.

Johannes Ackva is the climate lead at Founders Pledge and manages the Climate Fund. Hannah Yang is the research communications manager at Founders Pledge and a speculative fiction writer.