Energy Innovation Policy & Technology on “Big, Beautiful Bill”

Roger Caiazza

I suspect that variations of my local newspaper’s article about regional impacts of the passage of the “Big, Beautiful Bill” (BBB) have been published across the country recently.  My local article said that it would increase energy prices and that piqued my interest.  My paper said that New Yorkers could see their annual energy bills increase by an average of $300 because of “steep cuts to clean energy subsidies”.  I said to myself, “This I have to see”.

The claim is from Energy Innovation Policy and Technology, “a nonpartisan group”.  In my opinion, the “nonpartisan” descriptor suggests that it is unbiased or impartial and objective.  In fact the definition of a nonpartisan individual or organization says it “does not take sides in political debates, endorse parties, or promote a particular political agenda”.  Perplexity AI says that Energy Innovation Policy and Technology claims that they are recognized for their commitment to providing objective, science-based research and policy analysis to decision-makers, with the goal of accelerating the transition to a clean energy future and reducing greenhouse gas emissions at the speed and scale required for a safe climate”.  In my opinion, that description is inconsistent with not taking sides on the clean energy political agenda.

The basis of the the Energy Innovation Policy and Technology claim is their analysis: Assessing Impacts Of “One Big Beautiful Bill Act” On U.S. Energy Costs, Jobs, Health, Emissions.  The accompanying report  includes state-specific summaries of the alleged impacts.  I reviewed the New York report methodology that represents all their work.  Note that this report was prepared in early June, so it refers to the original House One Big Beautiful Bill Act (OBBBA).  There may be some differences in the details, but the analysis approach would be the same for the passed legislation.

The analysis claims that there will be less electricity supply because of OBBBA “changes would dramatically slow deployment of new electricity generating capacity”.  The report projects that there will be nearly 1GW less of distributed solar capacity, 11GW of wind capacity, mostly offshore, and 0.8 less energy storage capacity in NY.  The report suggests that a backlog in gas turbine delivery means that nothing can solve the growing load problem other than renewables.  In New York, at least, there is a lot of unused fossil-fired capacity that could take up the slack until new generators are built.

The section on Higher Energy Spending states:

Reduced clean energy investment will increase fuel and operating expenses in New York. Wind and solar have no fuel costs and lower operation and maintenance (O&M) costs than fossil-fueled power plants, which means they put downward pressure on overall power generation prices compared to non-renewable generation sources. Repealing federal energy tax credits would hamper deployment of low-cost clean electricity and increase the share of electricity coming from fossil fuel power plants, thus increasing electricity generation prices. Higher demand for fossil fuels raises prices for those fuels which, in turn, makes electricity generation using those fuels even costlier.

It is astounding that any organization can stay in business much less get quoted when they publish this nonsensical argument that lower fuel and operating expenses make wind and solar cheaper.  Those savings are dwarfed by the additional costs necessary to provide reliable energy when and where needed from intermittent and diffuse wind and solar resources. 

Simultaneously, repealing other incentives and existing standards, including U.S. Environmental Protection Agency and National Highway Traffic Safety Administration standards on vehicle tailpipe emissions and fuel economy would further increase energy spending.  Repealing these rules would hold back zero-emission vehicle (ZEV) sales in New York, with ZEV sales in 2030 falling from 53 percent in the Current Policies scenario to only 32 percent in the House OBBBA scenario. Internal combustion engine vehicles are more expensive to operate than ZEVs, which increases annual fuel expenditures for vehicles.

This is another instance of selective choice of parameters giving a misleading result.  Zero emission vehicles (ZEVs) cost more, lose their value quicker, and require homeowner investment to increase charging capacity and speed.  This offsets fuel savings.

We find that new leasing provisions in the House OBBBA would increase domestic production of oil and gas, lowering prices for these fuels. We also model the impact of lower royalty rates for domestic drilling, which act as lower taxes on domestically produced fuels. While greater production and lower royalty rates decrease prices, they are more than offset by price increases from higher demand for fossil fuels. More internal combustion engine vehicles on the road increases demand for gasoline and diesel, while greater reliance on natural gas in the power sector increases natural gas prices.

Just when you think the convoluted logic cannot twist itself more to get the preconceived answer you read this.  The question is which factor is impacted more by the legislation- greater fossil fuel production or higher demand for fossil fuels?  There just are not that many ZEVs that losing that incentive is going to meaningfully increase fossil fuel demand.

Some fuels see greater price increases than others; in New York in 2035, we find a $0.27 per gallon increase in gasoline (approximately 9.4 percent), 5.7 and 2.3-percent increases in residential electricity and natural gas prices, respectively, and 17- and 5.5-percent increases in electricity and natural gas prices for industrial producers, respectively. We find the average New York household will spend $80 more on annual vehicle fuel alone in 2030 and $190 annually in 2035.

I am somewhat optimistic that if their prediction that cutting subsidies to wind and solar producers means that they won’t get built then New York will reassess their net-zero transition plan.  Part of the plan is a carbon tax that would most assuredly have increased fuel costs much more than these claims.

I conclude that the claims of added energy costs due to the BBB are based on selected metrics and biased interpretations of energy systems.  I have no doubts that the BBB will result in lower energy costs.

Roger Caiazza blogs on New York energy and environmental issues at Pragmatic Environmentalist of New York.  This represents his opinion and not the opinion of any of his previous employers or any other company with which he has been associated.