Budget Bill Undermines Trump’s Energy Dominance Agenda

The oil rock revolution launched a new era of energy independence – but there is hunting. At the bottom of all cracking platforms there is a specialized part of the drilling consisting of the so -called “super materials” consisting of tungsten and artificial diamonds, most of which come from China. Amid the escalating trade war, the Chinese Ministry of Commerce recently started adding these products to their licensing list, showing the crane of Beijing in this supply chain. However, the US oil and gas industry continues to take advantage of generous tax exemptions that keep the production of profitable rocks.

The fact is that US supply chains are still deeply intertwined with China, even in fossil fuel sectors traditionally seen as safe. Political makers may talk about “getting rid of the process of disposal”, but the full separation is not only far, it is unreasonable in the short term. However, Washington is now preparing to impose a much more bases book in the rest of the energy sector, including conservative favorites such as nuclear weapons and terrestrial ends, which can suffocate local, cold innovation, and the strength needed for the era of artificial intelligence (AI).

The oil rock revolution launched a new era of energy independence – but there is hunting. At the bottom of all cracking platforms there is a specialized part of the drilling consisting of the so -called “super materials” consisting of tungsten and artificial diamonds, most of which come from China. Amid the escalating trade war, the Chinese Ministry of Commerce recently started adding these products to their licensing list, showing the crane of Beijing in this supply chain. However, the US oil and gas industry continues to take advantage of generous tax exemptions that keep the production of profitable rocks.

The fact is that US supply chains are still deeply intertwined with China, even in fossil fuel sectors traditionally seen as safe. Political makers may talk about “getting rid of the process of disposal”, but the full separation is not only far, it is unreasonable in the short term. However, Washington is now preparing to impose a much more bases book in the rest of the energy sector, including conservative favorites such as nuclear weapons and terrestrial ends, which can suffocate local, cold innovation, and the strength needed for the era of artificial intelligence (AI).

Today One of the executive orders issued by the Trump administration was an advertisement “to launch American energy at reasonable and reliable prices.” This alleged energy hegemony agenda is not in any way-it reflects the widely shared partisan goals to reduce prices and meet the tremendous demand for energy from the strategic sectors.

But the copy of the budget settlement bill (also known as the “beautiful, beautiful draft law”) approved by the Senate – now with the House of Representatives – threatens to undermine this agenda. While the Senate Bill is improving in the version that was passed at home by slowing the gradual disposal of clean energy credits and manufacturing it, it also provides a sweeping set of new restrictions from foreign sources.

These restrictions replace the standard of “foreign foreign entity”, which raises the targeting of the Biden Law, which dates back to the administration’s administration with a more complex framework for ownership, licensing and material tests. Under these proposed new rules, even a fully owned project of the United States can be excluded to rely on equipment or services with indirect relationships in listed countries.

This will also strangle the growth of renewable energy sources at a time when demand and electrical prices are increasing, and partly return to rapid expansion in artificial intelligence centers and data centers. Data centers alone can consume up to 12 percent of the country’s electricity by 2028, with a significant increase of 4.4 percent in 2023.

To meet this mutation, the fastest and most effective solutions are in clean energy sources. In 2024, the storage of wind, solar energy and batteries consists of 94 percent of the new capacity additions in the United States; The battery storage share of these additions has multiplied from 2022 to 2024. The most driving American network, Texas, added 42 GB of solar energy, wind and batteries between 2021 and 2024-driven by the economy, not politics. While natural gas remains part of the energy mix, its spread is impeded by the accumulation of turbines. Take it from the CEO of Nextera, the largest special benefit in the country: The United States needs renewable energy sources, or risk the problem of “real power deficiency”.

Clean energy incentives in the law to reduce inflation do more than just making new projects at a standard speed – it also nourishes the Renaissance in American manufacturing. With a local content bonus on publishing tax credits and separate manufacturing credit for clean energy components, the law helped to convert supply chains away from China and support the construction of the United States industry.

The United States is now on the right track to meet more than half of the demand for solar unity through local production and start building an industrial base for the network scale. This progress is now under threat. Certainly, the provisions of the strict foreign entities will prevent the US batteries or solar panels that included inputs from China or even destroyed Chinese companies.

Republicans have the right to want to reduce dependence on China -controlled supply chains given China’s dominance through the main inputs, including minerals and important components of clean energy technologies. Carnegie International Peace Scatics held a “American Foreign Policy for Clean Energy” work last year to assess this challenge. Among the results of the group is the fact that the United States must balance the mission of “Bundeshor” and “Care of Friends” clean energy supply chains. The cold is required when the United States “has current economic strengths” (the most important is an industrial and intellectual ownership base) or “critical national security interests in technology”. Friends are needed as “the United States cannot simply produce the material (for example, many critical minerals) or when creating competitive economic advantages will be stressful (such as the place where the United States lacks implicit knowledge or an effective industrial base for competition).”

Instead of building on the incentives of the law to reduce inflation to the beach and Friendship Clean Energy, the Republican in the House of Representatives and the Senate planning a road that will undermine both goals. The first restrictions on the supply chain in the Law of Reduction of Inflation from “FEOC” (FEOC) (FEOC) was applied to tax credit for electric cars (EV). Both the House of Representatives and the Senate seek the draft reconciliation law to get rid of this tax credit, but the EV tax credit and the FEOC restriction succeeded in redirecting the battery and critical metal supply chains. FEOC definition covers the entities listed in the lists restricted to the American government or designated by the Minister of Energy, and also includes any entity “owned by or subject to the mandate” one of the four countries: China, Russia, North Korea or Iran. Even these three sentences require a great work for the US Department of Energy to spread instructions that explain what the quantitative and qualitative thresholds will be.

Instead of the FEOC standard, the Senate text offers a more complex set of restrictions imposed on the tax credits of energy, creating new classifications such as the “foreign affected entity” as well as the “physical aid cost rate” test. These overlapping tests will prevent a project from qualifying to obtain tax credits unless he is able to show that no or any resource-even many levels that have been removed-owned or affected by a foreign entity affected, for example, and also that it increases increasingly from the doorstep, including inputs such as manufacturing equipment. The New York University Tax Center has warned that project owners will have to follow their owners, but their lenders and other opposite parties will have, which would transform diligence in the routine supply chain into a comprehensive criminal exercise.

Moreover, the Senate Bill imposes punitive restrictions on licensing agreements, and the eligibility of eligibility to tax credit if the project depends on the intellectual property (IP) licensed from a foreign entity prohibited even if this IP is necessary for cold production. Also notes the Party Policy Center, “There is still a need for responsible technology licensing agreements, even from some FEOCS, to ensure that we are able to manufacture some technologies here in the United States and avoid waiver the entire industry for countries like China.”

If the target is Among the provisions of energy in the reconciliation bill is to create investment certainty, this maze of new requirements would do anything other than that. The fact is that every energy supply chain today – including oil and gas – is global. The same applies to the ingredients and machines used in the production of battery, wind and solar energy – as well as fuel that enters nuclear reactors and turbines used in earth thermal systems.

For example, although the thermal turbines are produced in Italy, Turkey and Israel in addition to China, the specialized components of these products in China are likely to be manufactured. These dependencies cannot be eliminated overnight, but can be reduced by a deliberate strategy and clear incentives. The United States has decaded for decades on hydrocarbon dominance, prompting industry with tax preferences, such as deducting the cost of unsuccessful drilling. Today’s dangerous energy dominance strategy requires the same long-term-simple-on clean technologies.

Republicans in congress should not try to invent the wheel. The FEOC standard in the law to reduce inflation, although it is not perfect, provides a more clear and more management way to protect national security without preventing clean energy. If the Trump administration’s “energy dominance” slogan means anything in the era of increasing demand for electricity, then Congress must improve the current frame instead of replacing it with a maze of the red tape. There is a lot at stake: not only the transmission of clean energy to the United States, but also its ability to display industrial power, low energy costs, competition in a world where energy dominance will be increasingly determined by those who can increase the speed and spread the next generation of technologies.