July 30, 2025
Alison Coffey, Lima Hossain & Kelly Sheehan
The One Big Beautiful Bill Act (OBBBA) isn’t only cutting vital clean energy tax credits and gutting federal funding for the clean energy transition, it is also systematically creating energy inequality that reinforces existing disparities while creating new ones. While most analyses to date focus on aggregate job losses or emissions increases, IEJ’s insights reveal how OBBBA’s cuts compound across multiple systems, creating cascading injustices for the communities that need clean energy most.
Why This Matters: Energy justice isn’t just about keeping the lights on; it’s about who controls the switch. OBBBA prioritized energy exclusion through corporate control, environmental racism, & systematic marginalization of vulnerable communities over energy democracy: community ownership, participation, & justice.
The Systematic Pattern: These aren’t isolated policy changes—they represent Congress’s creation of energy redlining, where clean, affordable energy and climate resilience become luxury amenities available only to those who can afford them. Communities that face disproportionate impacts of climate change are also systematically excluded from the clean energy transition, while wealthy areas capture its benefits.
The Double Squeeze Crisis: OBBBA simultaneously slashes SNAP and Medicaid benefits while adding new work requirements and bureaucratic barriers. This creates a devastating compounding crisis where families face higher energy bills at the exact moment they lose access to food assistance and healthcare, forcing impossible choices between paying utility bills, buying food, or accessing medical care.
1. Higher household energy costs & higher energy burdens
Early analyses of OBBBA indicate that the phaseout of clean energy tax credits and rollback of renewable energy development will have significant consequences for energy affordability. With electric demand projected to rise significantly in the coming years, barriers to renewable energy development are expected to lead to higher household energy costs. The Center for American Progress projects that OBBBA will “increase average annual electricity costs by $110 per household as early as next year, with some states seeing more than $200 increases annually.” Princeton’s REPEAT Project estimates that average energy costs of U.S. households will go up “by roughly 165 dollars per household per year in 2030 and over 280 dollars per household per year in 2035—an increase of about 7.5% in 2030 and over 13% in 2035.” These cost increases will occur at a time when U.S. households are already struggling with energy affordability. Today, nearly 30% of U.S. households struggle to afford their energy needs, and 1 in 6 people are behind on their utility bills.
Yet, the increases in household energy costs will take a heavier toll on low-income families, increasing their energy burden —a key issue of energy justice. Energy burden refers to the percentage of household income spent on electricity, heating, and cooling, and this burden is not distributed equitably. Analysis by ACEEE shows that low-income households experience the highest energy burdens, spending nearly three times more of their limited income on energy than households with higher incomes. Black, Hispanic, and Indigenous communities are also disproportionately impacted by high energy burdens, spending 43%, 20%, and 45% more on energy, respectively, than white households. Against this backdrop of pre-existing energy inequity, rising household energy costs under OBBBA will worsen energy burdens, forcing low-income households and households of color to make even more difficult decisions and harmful trade-offs between paying their electric bills, putting food on the table, or meeting other pressing needs.
2. Communities left behind: systemic exclusion from clean energy access
For generations, federal policy has systematically excluded communities of color, tribal nations, and rural areas from economic opportunities through redlining, discriminatory lending practices, and disinvestment. OBBBA continues this legacy by cutting the incentives designed to address historical injustices while preserving benefits for wealthier communities, resulting in energy redlining.
Tribal Communities
The systematic exclusion of tribal communities from clean energy access represents the latest chapter in centuries of broken federal promises. Despite tribal nations possessing 6.5% of the total U.S. utility-scale renewable energy potential, resources that could provide a pathway to energy sovereignty, they face the nation’s worst energy access crisis. The historical context is stark: federal policies forced tribes onto remote reservations with limited infrastructure, then failed to invest in basic services like electricity. According to Energy Information Administration data, an estimated 14 % of households on Native American reservations lack access to electricity. By comparison, the national rate of households without electricity access is only 1.4%, making tribal communities 10 times more likely to lack basic access to electricity.
Simultaneously, OBBBA cuts SNAP benefits and adds work requirements in areas where the average unemployment rate exceeds 10% for tribal communities. Families facing mounting utility debts and reconnection fees now also lose food assistance and face Medicaid barriers, deepening cycles of energy poverty and systemic exclusion.
As the Alliance for Tribal Clean Energy states, “this represents a continuation of historical injustice and a blatant disregard for the federal trust and treaty responsibilities owed to tribal nations.“Energy sovereignty provides a pathway to break the cycle of dependency. For example, the Kayenta Solar Farm, the largest tribal owned solar plant in the United States, generates power for 28,500 homes while supporting cultural preservation.
OBBBA perpetuates this exclusion by eliminating credits and threatening programs specifically designed to address treaty obligations:
- Elective pay tax credits that reduced tribal project costs by 30-50%
- Grid transmission funding, stranding renewable projects without market access
- The Rural Energy for America Program supports small businesses, including tribal communities
- Threatens over $500 million in tribal renewable, clean energy projects already in development
Rural Communities
Rural America has long served as an extraction zone, first through agricultural commodity systems and then through fossil fuel extraction. The clean energy transition has begun to change this pattern. In 2021, landowners received $1.3 billion in lease payments from clean energy projects, which also generated jobs and tax revenue directly for rural communities. Rural areas are ideally positioned for this shift. Wind development concentrates where wind speeds are highest (the Plains and Midwest), and the Midwest gained 2.2 gigawatts of wind capacity, with solar providing 45% of regional renewable jobs.
OBBBA reverses these gains by:
- Eliminating 330,000+ renewable energy jobs, many in rural areas that need economic diversification
- Cutting grid modernization funding that enables renewable energy development in rural areas
- Pausing the Rural Energy for America Program, supporting farm and small businesses in implementing clean energy technologies
Urban Frontline Communities
Federal housing policies have systematically segregated communities of color into neighborhoods with poor housing stock, limited infrastructure, and disproportionate exposure to pollution and environmental harms. These same communities, shaped by decades of redlining and disinvestment, now face systematic exclusion from clean energy benefits as OBBBA deepens existing inequalities.
The pattern mirrors historical housing discrimination. While wealthy neighborhoods gain access to the latest energy-efficient technologies and clean energy, low-income communities are left with aging, inefficient housing stock and few pathways to improvement. OBBBA eliminates the incentives that could bridge this gap. When federal investments that incentivize energy efficiency improvements in affordable housing are eliminated, it is likely that only market-rate developments (which can afford upgrades without incentives) will receive energy efficiency improvements and upgrades. This leaves affordable housing stock aging and inefficient, while newer, more expensive housing gets the latest clean energy technologies.
OBBBA accelerates this pattern by jeopardizing access to community-scale renewable energy:
- Federal tax credits, 45Y & 48E, that make community solar programs financially viable are eliminated, which reduces access to renewable energy for renters and low-income families
- The 179D & 45L commercial buildings tax deduction cuts (up to $5.65/sq ft) eliminate incentives for energy efficiency upgrades in housing
- Only luxury developments can afford energy efficiency upgrades without federal support
3. Increased risk from extended outages in marginalized communities
The OBBBA’s elimination of clean energy tax credits is expected to cut new electric generation significantly over the coming decade. Projections from Princeton’s REPEAT Project indicate that by 2035, OBBBA will decrease renewable energy generation “by more than 820-terawatt-hours – more than the entire contribution of nuclear or coal to our electricity supply today.” Analysis from Resources for the Future estimates that by 2035, OBBBA will reduce wind generation capacity by 125-225 GW and solar capacity by 175 GW. At the same time, demand for new electricity generation is projected to increase significantly, in part due to the enormous load growth projected to meet the electric needs of AI data centers. In this context, reducing renewable energy generation capacity is likely to put communities across the country at risk of more frequent outages when extreme weather strikes and the grid is strained.
Low-income and communities of color already face disproportionately high risks from extended power outages. Racialized disinvestment in utility infrastructure has left many communities of color with less reliable electric service, and several analyses demonstrate that following extreme weather, disadvantaged communities and communities of color are likely to endure longer outages and extended waits before their service is restored. Extended outages are also more likely to cause adverse health and economic impacts for marginalized groups. Exposure to extreme temperatures exacerbates pre-existing conditions linked to racial health disparities, extended outages lead to lost wages and spoiled food, and historical disinvestment means many communities do not have easy access to heating/warming centers or resilience hubs when the power goes out. Under OBBBA, massive cuts to renewable energy generation capacity will place these communities at even higher risk of losing power.
4. Expansion of drilling and extraction
Oil and gas drilling wells are disproportionately located in communities of color. The health risks of living near drilling sites include respiratory disease, cancers, heart problems, premature birth rates, skin rashes, and mental health problems. And oil and gas drilling is accelerating climate change through the release of methane, a greenhouse gas 86 times as potent as carbon dioxide over a 20-year period.
This legislation accelerates oil and gas drilling and provides the fossil fuel industry with subsidies that harm energy communities. It expands offshore oil drilling by requiring increased lease sales in Alaska and the Gulf of Mexico. It eliminates the royalties that oil and gas producers pay for gas that is wasted on federal land leasing through venting and flaring. It rescinds the Methane Emissions Reduction Program funds for oil and gas systems that were designed to cut methane leaks. It also provides a further tax break for oil and gas producers by allowing them to deduct intangible drilling and exploration costs. Together, this means more profits for the fossil fuel companies while communities living near drilling sites are left with the health burdens.
5. Rising emissions and climate threats to frontline communities
OBBBA’s cuts to renewable energy development and the administration’s promotion of fossil fuel dominance will increase greenhouse gas emissions. Energy Innovation projects that by 2030, OBBBA will lead to “160 million metric tons of carbon dioxide equivalent…the equivalent of adding 72 million cars to the road.” Princeton REPEAT Project analysis estimates an even higher increase, with U.S. greenhouse gas emissions reaching “roughly 190 million metric tons per year in 2030 and 470 million tons in 2035.” This growth in emissions will further threaten the international community’s efforts to limit planetary warming to 1.5°C, while producing massive consequences in local communities.
The increase in carbon emissions under OBBBA will deepen climate injustice for communities on the frontlines of fossil fuel extraction and climate change. The increase in pollution emitted from the fossil fuel industry, coupled with the administration’s systematic rollback of clean air and water protections, will lead to devastating health impacts. Various analyses point to the enormous annual healthcare costs and mortality impacts associated with this exposure to air pollution. Low-income people and communities of color are known to bear the most significant burden, as legacies of environmental racism and housing discrimination have sited polluting industries in these communities, or made healthier neighborhoods out of reach. Emissions will also continue to drive climate-linked disasters. Black, Indigenous, people of color, and low-income communities again will be disproportionately impacted – most vulnerable to the harms of hurricanes, wildfires, and floods, and frequently less prioritized in recovery.
With the elimination of crucial clean energy tax credits, slashes to federal investment in the clean energy transition, and the de-funding of vital social safety programs that help countless households stay afloat, OBBBA represents a devastating blow not just to the growth of renewable energy – but to the fight for energy justice.
As a result of this bill, energy will become less affordable, less accessible, less reliable, and less clean. OBBBA will deepen and compound the socio-economic and racial inequities that have long excluded low-income households, communities of color, tribal nations, and rural residents from the benefits of renewable energy. And marginalized communities will bear the greatest costs – to their economic security, their health and wellbeing, and their right to a liveable future.
The fight for energy justice is far from over, but addressing the massive challenges posed by OBBBA will demand new commitments, creative strategies, and power-building across different regions, communities, and sectors. The moment requires states to step in with new policies, incentives, and funding for equitable renewable energy. It calls for new coalitions that can exert added influence over decision-makers, and it needs powerful narratives and visions that demonstrate a just energy system and a future is still possible.
