【By Observer News, Qi Qian】The "Big and Beautiful" tax and spending bill pushed by the Trump administration has finally been finalized, which means that the Republican Party has successfully cut off billions of dollars in federal clean energy subsidies, and clean energy tax incentives will be gradually phased out by the end of 2027.

"This move by the Republicans unexpectedly created a winner: China's artificial intelligence (AI) industry."

On July 4, The Washington Post reported that as China invests heavily to boost its energy capacity to support its ambitions in the leading AI field, U.S. tech companies are struggling to obtain enough power to sustain their high-energy AI data centers. Before this, American companies had strongly urged Congress to retain solar and wind energy tax credit policies in the bill.

A U.S. clean energy developer pointed out that the current leadership in AI depends on who has the most electricity, and the passage of the bill has solidified China's advantage. He said, "My European colleagues generally believe that there is no doubt about who will become the dominant superpower in the next decade."

U.S. aging grid, media

The report stated that currently, solar panels and wind turbines are the fastest-growing sources of electricity in the United States, accounting for 80% of new grid capacity.

However, Republican lawmakers and Trump administration officials insisted on stifling the development of clean energy in the U.S., calling the Biden-era Inflation Reduction Act a "stupid decision of the Biden era." As the impact becomes apparent, models built by U.S. energy economists show that the scale of new electricity added to the grid in the coming years will shrink significantly, while China is accelerating its lead.

"Wind and solar are crucial for short-term energy supply, and the bill could cause many energy projects to be shelved," said Ben King, director of RMB's U.S. energy program. "At the same time, China is expanding its power generation capacity at an astonishing speed."

Data shows that in the first five months of 2025, China's newly installed wind and solar capacity was more than four times the total energy added in the U.S. in 2024. At the same time, China's fossil fuel and nuclear power plants are also rapidly expanding.

As reported by The Financial Times in May, the Rocky Mountain Institute (RMI), based on data from the International Energy Agency, found that China's electricity accounted for nearly 30% of final energy consumption, while the U.S. and the EU have remained around 22% in recent years. This means that China's level of electrification has clearly surpassed that of the U.S. and the EU, and "China may become the first major electrified country in the world."

RMI study shows that China's electrification rate has already surpassed that of the U.S. and the EU, The Financial Times map

The Trump administration plans to accelerate the development of natural gas and nuclear power. However, experts warn that these projects will take years, as the U.S. currently has no new large-scale nuclear power plants, and the construction period exceeds ten years. Moreover, global gas turbine orders are backlogged, resulting in a construction period of up to five years for a single natural gas power plant.

Jason Bordoff, director of the Center on Global Energy Policy at Columbia University, emphasized, "After two decades of stagnant electricity demand, we suddenly face a huge power gap. Other countries are quickly innovating, and if the U.S. cannot expand its grid capacity, companies will have to look elsewhere."

An analysis by the U.S. think tank "Energy Innovation" showed that the Senate version of the "Big and Beautiful" bill would result in a reduction of 34.4 gigawatts of new power generation over the next decade, equivalent to the electricity needs of nearly half of all U.S. households. This version has passed the House of Representatives without any changes. According to the bill, large wind and solar projects not started before June 30, 2026, will not be eligible for key tax credits.

"Energy Innovation" said that thousands of announced but not yet launched projects involve a $50 billion investment plan, and now it is unclear whether these projects can start before the deadline. This not only threatens the development of U.S. AI enterprises but also impacts the power supply for manufacturing and increases residential electricity costs.

This forecast is based on the logic that the cancellation of tax credits will increase development costs, forcing wind and solar operators to raise prices, ultimately endangering project viability; the estimated 344 gigawatts of new energy loss is based on the assumption that solar and wind energy development will decline by 50% by 2035.

The Trump administration dismissed such warnings. Trump once called clean energy tax credits a "scam," accusing wind and solar facilities of ruining the landscape. U.S. Energy Secretary Chris Wright even called renewables "parasites" on the grid, claiming they threaten system stability. The Trump administration maintained that even with advances in battery technology, the intermittent nature of wind and solar power could not meet the continuous electricity needs of AI data centers.

On the other hand, U.S. tech companies and their trade associations warned that canceling clean energy tax credits would weaken the U.S.'s ability to compete with China in the AI field and could lead to soaring electricity prices. Industry groups led by U.S. tech companies, such as the Data Center Alliance and the Clean Energy Buyers Association, have warned legislators that these tax credits are essential for domestic AI development.

Alan Zubaty, CEO of Eolian, a major U.S. clean energy developer, said, "If projects can be started quickly, the U.S. still has a chance to keep data centers within the country rather than moving them to the Middle East." But he admitted that the bill has solidified China's advantage.

"My European colleagues generally believe that there is no doubt about who will become the dominant superpower in AI in the next decade, and it won't be the U.S.," Zubaty said. "The current dominance in AI depends on who has the most electricity. If the U.S. power capacity relies solely on newly built natural gas, coal, and nuclear power plants, it will be unable to meet the growing demand."

U.S. federal regulators noted that to meet the needs of AI and other industries, the U.S. needs to add generating capacity equivalent to the combined totals of California, Texas, and New York by 2035.

Industry officials revealed that countries like Saudi Arabia and Qatar are attracting U.S. AI projects with abundant and cheap renewable energy and natural gas power. Bordoff warned that placing critical AI infrastructure in geopolitically unstable regions "does not align with U.S. national security interests or economic development."

Jason Grumet, CEO of the American Clean Power Association, said that many companies in the U.S. were discouraged by the sudden shift in clean energy policy, so when the government encourages investment in natural gas power plants, companies worry that the next administration might change direction again. He said, "All sectors of the energy industry fear that investments made four years from now might be undermined by new policies. We need a consistent energy policy."

Predictions indicate that new energy generation in the U.S. will decrease significantly in the coming years, The Washington Post map

Before the bill was passed, the U.S. solar industry was already crying out, saying it would suffer a "devastating" blow.

According to a recent report by The New York Times, after the Trump administration imposed tariffs on imported solar panels during its first term, several companies launched or announced plans to build factories in the U.S., reviving this nearly dead manufacturing sector. During the Biden administration, the Inflation Reduction Act provided generous tax credits for the industry, further accelerating its recovery.

But now, with the "Big and Beautiful" bill passing, clean energy tax incentives will be gradually phased out by the end of 2027. U.S. solar manufacturers are worried: the initial signs of revival may come to an abrupt end, and the dominance in solar panel production may completely shift to China.

"This will lead to business closures and many people losing jobs," warned Mike Carr, executive director of the Solar Energy Manufacturers for America, representing 15 companies and 6,100 industry workers. "The entire industry will suffer a devastating blow."

Carr pointed out that canceling the incentives now would undermine the Trump administration's strategy of "reclaiming manufacturing from China." Currently, China not only dominates solar panel production but also controls the lifelines of clean energy technologies such as electric vehicle lithium batteries. He said that going backward would be a tragedy. He said, "We have been telling senators that by 2027, the entire industry will be handed over to China."

This article is an exclusive contribution from Observer News. Reproduction without permission is prohibited.

Original: https://www.toutiao.com/article/7523198943434752558/

Statement: The article represents the views of the author. Please express your opinion by clicking the [top/next] button below.