This is a landmark US federal law aimed at reducing inflation by reducing fiscal deficit by USD 238 billion over three years. It also includes provisions for investment in climate change mitigation for USD 361 billion, making it the largest climate change related investment in US history. This includes investments in wind, solar and other renewables, in nuclear power, carbon capture systems for energy and industry, light and heavy duty clean vehicles, clean fuel production, green hydrogen, direct air capture facilities, as well as energy efficiency upgrades for buildings and support for heat pumps. It is expected that this will help reduce US GHG emissions by ~1 GtCO2e.
In 2024, the Department of the Treasury and the Internal Revenue Service (IRS) and Department of Energy announced tax credit allocations of up to USD 6 billion for projects that expand clean energy manufacturing and recycling and critical materials refining, processing and recycling, and for projects that reduce greenhouse gas emissions at industrial facilities. Additionally in 2024, the IRS established final regulations regarding Federal income tax credits for the purchase of qualifying new and previously-owned clean vehicles, including new and previously-owned plug-in electric vehicles powered by an electric battery and new qualified fuel cell motor vehicles. These regulations establish supply chain verification requirements for electric vehicle batteries, focusing on critical minerals and foreign entity compliance.

The One Big Beautiful Bill (OBBB) rolls back or modifies a significant share of the climate provisions introduced or expanded under the Inflation Reduction Act. This includes:
- Tighter restrictions on the Clean Electricity Production Tax Credit (PTC), Clean Electricity Investment Tax Credit (ITC), and reduced support for the manufacturing of renewable energy components under the Advanced Manufacturing Tax Credit
- Tax credits for distributed, residential wind and solar deployment, namely the early phase out of the Residential Clean Energy Credit
- Phasing out key EV tax credits: the New Clean Vehicle Credit, the Qualified Commercial Clean Vehicle Credit, and the Used Clean Vehicle Credit
- Tax credits for industry and
- Support fossil fuel production through reducing royalty rates for oil and gas exploration and production, which were originally increased under the IRA, as well as extending coverage of the IRA’s Advanced Manufacturing Production Credit to subsidise metallurgical coal’s production
- Reducing the accessibility of the Hydrogen Production Tax Credit
- Amendments to the Clean Fuel Production Credit and the Sustainable Aviation Fuel Tax Credit, including an extension to 2029, but with reduced the credit values, strict domestic production requirements, and fuel lifecycle emissions accounting excluding indirect land use change emissions
- Permanently revoking funds to develop of standardised labels for low-embodied carbon building materials
- Rescinding grant funding to support state and local implementation of energy codes and the Biden Administration's National Initiative to Advance Building Codes
- Rescinding the climate mitigation- and adaptation-focused funding in the agricultural sector, including for the Environmental Quality Incentives Program (EQIP), Conservation Stewardship Program (CSP), and the Partnerships for Climate-Smart Commodities Initiative