American Energy Policy Cannot Afford to Be This Dumb

While China builds the economy of the future, Trump’s agenda combines the energy policy of the 1980s with the trade policy of the 1880s.

Photo by Nazrin Babashova on Unsplash

In January 1981, President Ronald Reagan nominated James B. Edwards to lead the Department of Energy. This was an unusual choice. As a dentist-turned-politician, Edwards’ expertise in drilling had more to do with root canals than oil fields. His appointment, however, was part of a coherent strategy: to dismantle the previous administration’s energy agenda. Under President Jimmy Carter, the U.S. had become a world leader in energy R&D. Solar projects took off around the country. Under Reagan, this progress unraveled. Research spending plummeted. Subsidies expired. Solar startups crumbled. As for the oil and gas industries? Reagan offered them new tax breaks.

The cost of this reversal was immense. According to Gregory Nemet, a professor and historian at the University of Wisconsin, Reagan’s election was the most important factor in the sudden halt of US solar development in the 20th century. Having invented the efficient photovoltaic cell in the 1950s and captured the lead in solar in the 1970s, the U.S. ceded the technological frontier to Japan, Germany, and eventually China, which now installs more solar panels than the rest of the world combined. We had the future in our hands, and we gave it away.

I’ve been thinking lately about Reagan and solar—and Edwards and molars¹. Like Reagan, Donald Trump came to power in 2025 in the middle of a historic effort to increase US renewable energy, such as solar, storage (i.e., batteries), and wind. Like Reagan, he is seeking to dismantle progress made under the previous Democratic president. And, far worse than Reagan, he’s doing this at a moment when renewable energy isn’t just a neat side project, but rather the fastest growing source of American electricity, in an age when energy demand is rising alongside the emergence of artificial intelligence.

At a hinge point in history, the U.S. needs an energy policy fit for the 2030s. Instead, we’re getting a rerun of the energy whiplash of the 1980s, at the very moment when we can least afford it.

Higher Electricity Prices to Own the Libs

Trump’s signature legislation—the so-called Big Beautiful Bill—doesn’t just dismantle the tax credits for solar, storage, and wind that Joe Biden signed into law as part of the Inflation Reduction Act. It goes further by adding a new tax that clean energy projects can only avoid if they can prove they aren’t using critical parts made in China. Similar to how the BBB includes onerous Medicaid "work requirements" that force low-income patients to trudge through bureaucratic mud to get health insurance, this provision would punish clean energy firms with excess paperwork; in fact, the policy is kind of like a work requirement for decarbonization. It essentially ties clean energy’s legs together and says, “okay, now let’s see how fast you can run.”

You’ll sometimes hear conservatives accuse progressives of caring so much about climate change that they’d force ordinary Americans to bear the cost of higher prices and worse lives just to save the planet. But right now, it’s Republicans who are willing to stymie energy production, at the risk of rising electricity costs, just to own progressives and punish their favorite energy sources. I’m not sure I fully understand what woke means to the far right, but I’ve sometimes gathered that it means “a movement that’s willing to sacrifice economic common sense for unsound cultural ideology.” If that’s right, this GOP energy policy is as woke as it gets.

To appreciate just how bad this law would be for energy policy, you don’t have to listen to environmentalists approaching DEFCON 1 levels of panic. You could instead listen to Republican tech entrepreneurs, red-state experts, and ordinary energy analysts. Many of them think the bill is “utterly insane.”

That’s how Elon Musk characterized the BBB’s punishing attacks on clean energy, which he called "a massive strategic error" that will "leave America extremely vulnerable in the future." Since Musk is the chief executive of an electric car company, you might wonder if this criticism is a bit self-interested. But he’s not alone. The chief policy officer of the pro-business US Chamber of Commerce wrote that "taxing energy production is never good policy" and these measures "should be removed." Doug Lewin, president of the energy consultancy Stoic Energy and author of the Texas Energy and Power newsletter predicted that the state is “going to build less [renewable energy], and what we build will be more expensive.”

To make new things, we have to want new things. The Trump administration doesn’t want new things. As it pines for the past, China is building the future.

The Trump administration has a reply to these critiques. Energy Secretary Chris Wright has claimed that solar and wind power are “expensive” sources of electricity that make the energy grid “less reliable” and mostly just make politicians “feel good.” This argument would have worked in, say, 1981. In 2025, however, every claim falls flat. Even including installation costs, solar energy plus storage is in many cases the cheapest source of energy production available. Along with wind power, it’s become so easy to build that almost all of the net electricity generation growth in Texas has come from renewable energy in the last decade. (Do you really think the typical Dallas energy baron in 2025 is building wind and solar because he cares so much about polar bears on ice floes?) Far from unreliable, renewable energy is now critical for stabilizing the Texas grid. As the New York Times reported:

During the scorching summer of 2023, the Texas energy grid wobbled as surging demand for electricity threatened to exceed supply. Several times, officials called on residents to conserve energy to avoid a grid failure.

This year it turned out much better — thanks in large part to more renewable energy.

The electrical grid in Texas has breezed through a summer in which, despite milder temperatures, the state again reached record levels of energy demand. It did so largely thanks to the substantial expansion of new solar farms.

When you take away an energy source whose cost is falling and whose reliability is rising, the effect is predictable: It becomes more expensive, and less reliable, for folks to heat and cool their homes and offices, run their appliances, and power big data centers. If the BBB passes, electricity prices are expected to surge in the next decade, especially in red states such as Oklahoma, South Carolina, and Texas. Ironically, that’s because Republican-led states in the sun-drenched south and windy midwest are currently deploying the most solar and wind. Battery manufacturing projects announced since the IRA in Georgia, Tennessee, and Indiana could be endangered, as well. South Carolina Gov. Henry McMaster, a Republican, warned Congress that, without IRA tax credits, nuclear power expansion in his state is “dead.”² Once again, many of this legislation’s opponents aren’t card-carrying members of the Sierra Club. They’re just conservatives who want cheaper electricity and didn’t lock their energy takes in a 40-year-old time capsule with acid-wash jeans and VHS tapes.

America’s Resource Curse, China’s Future Shock

Three decades ago, US economists coined the idea of a “resource curse” to describe the historical irony that countries blessed with commodities (e.g., gold, silver, oil, timber) remained trapped in the past, while nations without ample resources embraced new technology and grew faster. For example, resource-poor Netherlands eclipsed the Spanish Empire, despite the latter’s hauls of gold and silver; Switzerland and Japan grew faster than the petrol-state of Russia; and Korea and Taiwan left oil-rich Venezuela in the dust in the second half of the 20th century.

Now consider the U.S. and China. The United States sits on a geological jackpot with easily accessible oil and gas reserves. We are the largest producer of oil in the history of the world and the largest exporter of natural gas. But in our eagerness to maximize this fossil-fuel advantage, we risk smothering the clean-electric economy before it can mature. On the other hand, China lacks sufficient oil or gas to power a billion-person economy, which is why it has spent decades trying to wean itself off foreign dependency by developing alternative energy sources.

China wasn’t blessed with America’s hydrocarbon plenty. But which nation is the cursed one, now? China dominates global manufacturing of solar panels, wind turbines, advanced batteries, electric vehicles, and the mining and processing of materials critical to the global clean-energy economy. While the Trump administration pines for the energy policies of the past, China is racing toward the future.³ (For more on this theme, you should check out Noah Smith’s work on energy and China. You can start here.)

One measure of America’s resource curse is a historical ambivalence toward renewable energy. The U.S. had one clean-energy policy under Carter and another under Reagan. Then, we had one clean-energy policy under Biden and now another under Trump. While China invests along multi-decade time horizons, the U.S. is whiplashing between policy regimes every time a new American president puts his hand on the Bible. As the philanthropist and former energy trader John Arnold wrote this week, “reversing which fuels get subsidized and which get penalized every time control of Washington shifts is about the stupidest way to run an energy system that needs long term planning and stable supply chains.”

The implications for artificial intelligence are uncertain but worrying. Training and using AI demands energy abundance; scaling AI while running a normal economy without brownouts requires energy superabundance. I have heard some Republican defenders of the Trump administration say that, while they might not support the stuff on vaccines or science or immigration, they trust the White House to do the right thing on AI data centers and energy. But if there are brownouts and blackouts due to insufficient energy generation in the next few years, “the narrative on every TV and newspaper and meme is going to be that AI data centers did this,” Paul Williams, executive director of the Center for Public Enterprise, wrote. “If you thought data center development was challenging now, wait until bills go up 30% and every single media actor blames data centers.”

What would a more reasonable policy look like? In conversations with folks in the solar and storage industries over the past few days, the issue that came up more than any other wasn’t even tax policy. It was time policy. As we wrote in Abundance, it takes too long to build important stuff in America. It takes too long to build houses where people most want to live. It takes too long to build transit where people most want to move. And it takes too long to build energy at a time when electricity demand is skyrocketing. Rather than hamstring solar and storage with new onerous rules, the U.S. should be streamlining NEPA and permitting and finding ways to reduce interconnection queues so that solar and battery manufacturers can build on a reasonable schedule and get more electrons pumping onto the grid and into homes and corporate offices and data centers.

Getting all this right doesn’t just require policy expertise. It takes a certain disposition toward the future. To build new things, we have to want new things. The Big Beautiful Bill doesn’t want new things. It wants an energy policy that belongs in the 1980s to go along with a tariff regime that belongs in the 1880s. It’s hard to see exactly how we’ll beat China to the future if we’re chugging this hard in the opposite direction.

1. One often hears that Donald Trump represents a sharp break from the legacy of Ronald Reagan’s GOP. On several issues, such as the president’s weird fondness for Russian autocracy, the claim is clearly true. And yet: The Republican president is currently pushing a policy agenda that will cut taxes, slash spending for low-income Americans, increase national security spending, raise the deficit, and deliver a gut punch to solar power in the midst of an all-out dismantling of the previous administration’s energy policy. The previous sentence would be equally true if it were written in 1981 or 2025.

2. I am deliberately trying to avoid quoting progressives and typical environmentalists in this article just to prove how crazy this policy seems to many Republicans and non-partisan energy watchers.

3. I don’t remember the first place where I read that anti-decarbonization bias in the U.S. was reminiscent of the resource curse motif, but if someone leaves the OG reference in the comments, I can edit in later.