MIT Research: Most IRA Clean Energy Achievements Can Still Be Retained Under OBBBA

Introduction

On July 8, 2026, the MIT Center for Energy and Environmental Policy Research released a study indicating that despite the early termination of some clean energy tax credits under the One Big Beautiful Bill Act (OBBBA), approximately 74% of the clean electricity capacity originally anticipated under the Inflation Reduction Act (IRA) is still expected to be realized. This finding provides a critical quantitative assessment of the U.S. energy transition—showing that while policy changes have caused some regression, the fundamental trend of clean energy expansion has not been completely reversed.

Industry Background

The Inflation Reduction Act, signed into law in 2022, is widely regarded as the largest climate investment in U.S. history, offering long-term tax credits and funding for wind, solar, energy storage, and hydrogen. However, the One Big Beautiful Bill Act passed in 2025 introduced several modifications to the IRA, including advancing the eligibility deadline for wind and solar facilities to receive the 48E investment tax credit and the 45Y production tax credit—projects must commence construction by July 4, 2025 to qualify for "safe harbor" protection, or otherwise be placed in service by December 31, 2027. In contrast, technologies such as battery storage and geothermal can continue to receive 100% tax credits until 2034.

This policy shift has raised concerns about a slowdown in clean energy deployment. Several analysts had previously predicted rising power purchase agreement (PPA) prices for wind and solar due to the shortened tax credit window. Against this backdrop, MIT’s quantitative assessment provides a key reference for understanding the actual impact.

Current Developments

The MIT study, authored by former research assistant Lily Bermel (now a visiting scholar at the Center on Global Energy Policy at Columbia University), compares the original IRA trajectory with the scenario under OBBBA, yielding the following key findings:

• Clean electricity capacity retention: Between 2025 and 2035, new clean electricity capacity under OBBBA reaches 67% to 74% of the IRA scenario, with emission reduction benefits retained at a similar proportion.
• Solar and storage are more resilient: Utility-scale solar and battery storage retain over 80% of generation, with storage being the least affected by policy changes.
• Onshore wind is significantly impacted: Retaining only 52% of generation and 47% of capacity, due to its highest sensitivity to tax credits.
• Changes in fossil fuel generation: Fossil fuel capacity "barely diverges" between the two scenarios, but fossil fuel generation under OBBBA is about 19% higher than under the IRA, mainly due to slower retirement of existing coal plants. Natural gas capacity is actually 3% higher under the IRA than under OBBBA, reflecting the IRA’s support for technologies such as natural gas carbon capture.The report specifically points out that the gap between the two scenarios is "essentially limited," because the impact primarily comes from the demand side (changes in tax credits), while both face the same supply-side ceiling—namely, the speed limit on permitting, siting, construction, and grid integration of clean energy projects.

Impact on the Energy System

Electricity Supply and Reliability Under the OBBBA scenario, although the pace of new renewable energy additions slows, the strong retention of battery storage helps maintain grid flexibility. However, the reduction in onshore wind may lead to a decline in the share of clean electricity in some regions (especially inland states rich in wind resources), thereby affecting regional emission reduction progress.

Carbon Emission Pathways The report estimates that compared to the IRA scenario, the OBBBA scenario will increase cumulative power sector carbon emissions by approximately 19% from 2025 to 2035. Slower coal-fired power plant retirements are the main reason. Nevertheless, since the share of clean energy in total electricity generation remains significantly higher than in a no-IRA scenario, the overall emission reduction trend has not reversed.

Electricity Costs The reduction in tax credits will raise the levelized cost of electricity (LCOE) for new wind and solar projects, and PPA prices have already shown signs of increase. However, the MIT report emphasizes that supply-side constraints (such as transmission bottlenecks) may have a more lasting impact on costs.

Challenges Ahead

Supply-Side Bottlenecks Are the Real Challenge Report author Bermel clearly stated: "Even if the IRA trajectory continues, transmission and other supply-side obstacles make its predictions difficult to fully realize." The current interconnection queue backlog in the U.S. grid is severe, with the average waiting time for new projects exceeding four years. Permitting reform and transmission expansion have become more urgent constraints than tax policy.

Persistent Policy Uncertainty After the passage of the OBBBA bill, the industry faces a shorter planning window. Some developers may delay or cancel planned projects, especially in the wind sector. In addition, the Trump administration's executive actions—including permitting freezes, stop-work orders, investigations, and tariffs—are further suppressing actual deployment speeds.

Raw Materials and Supply Chain Issues Changes in tax credits have not directly addressed trade frictions in photovoltaic modules, wind turbine blades, and battery materials. Tariff policies may continue to raise equipment costs, undermining some of the IRA's benefits.

Future Outlook

Next 5-10 Years (2027-2035) The MIT study projects that despite some regression caused by OBBBA, clean energy investment will continue to grow, albeit at a slower pace than the original IRA path. Battery storage and solar will dominate new capacity additions, while onshore wind may require higher electricity prices or innovative policy support to revive. Natural gas may maintain its role as a peaking power source, but coal power exit will accelerate.### Long-term Outlook (2035-2045) If supply-side bottlenecks are alleviated—especially through permitting reform and interregional transmission expansion—clean energy deployment will accelerate significantly. The report states: "Removing supply-side barriers will raise the ceiling, rapidly increasing deployment speed and reducing costs." In the future global energy competition landscape, if the U.S. fails to simultaneously eliminate permitting and grid constraints, its clean energy manufacturing advantage may be weakened.

Policy Recommendations - Congress should prioritize bipartisan permitting reform to streamline environmental review and grid interconnection processes. - The federal government needs to coordinate with states to accelerate high-voltage transmission corridor planning and support cross-regional renewable energy integration. - For the most affected onshore wind industry, consider launching temporary support mechanisms (such as targeted loans or auctions) to maintain the industrial base.

Conclusion

MIT's research conveys an important signal: although policy fluctuations have had some impact on clean energy investment (especially wind power), the fundamentals of U.S. energy transition have not wavered. The economics of solar and energy storage are already market-competitive, and tax credits act more as an accelerator than an engine. The real bottlenecks are at the grid and permitting levels—only by addressing supply constraints from a systemic perspective can the long-term benefits of the IRA be insulated from political cycles.