Glass Half Full: Building a Decarbonized U.S. Power Sector

Lily Bermel

July 2026

The Inflation Reduction Act of 2022 (IRA) was built, sold, and attacked as the largest climate investment in U.S. history. It enacted an extensive suite of clean energy tax credits and included hundreds of billions of dollars in grant and loan programs, reestablishing the United States as a climate leader. The One Big Beautiful Bill Act of 2025 (OBBBA) rescinded the vast majority of the IRA’s grant and loan programs and restructured the clean energy tax credit framework by phasing out the wind and solar tax credits and adding restrictions to the others. Many clean energy advocates saw these changes as the death of the IRA and warned of dire consequences for the American energy transition. Indeed, removing and restricting energy tax credits will contribute to higher energy prices, project cancellations, job losses, and less energy added to the grid at a time when power demand is surging.

Policymakers designing the next wave of decarbonization policy need to start with a clear-eyed understanding of how the current environment shapes the energy transition. This commentary provides one for the power sector, the backbone of that transition. It assesses how much the current policy environment preserves the benefits of the prior policy environment, situates those modeled results within the real-world forces shaping delivery, and draws out what the findings imply for future policy priorities and public spending.