Sweeping modifications and eliminations of federal clean energy programs, part of the 2025 budget reconciliation signed into law by President Donald Trump on July 4, are expected to have significant economic and environmental impacts. The unprecedented momentum to clean up U.S. heavy industry in recent years will be particularly affected with industrial decarbonization losing more than $16 billion in expected public and private investment resulting in thousands of lost jobs.

Modeling by Energy Innovation shows that the legislation, also known as the One Big Beautiful Bill Act, will increase average household energy costs by $170 by 2035, eliminate 760,000 jobs by 2030 and reduce the country’s GDP by $980 billion. The greenhouse gas impacts resulting from the bill will contribute to climate change’s ongoing harms, with reductions in aggregate annual emission projected to nearly disappear. Additional program cuts made by federal agencies will compound these negative economic and environmental effects.

These consequences will be particularly felt by industrial companies seeking to reduce greenhouse gas emissions. Heavy industries like cement, steel and chemicals require massive capital investments and incur considerable economic risk to develop new facilities with first-of-a-kind technologies. Eliminating billions of dollars of public investment will impede development of innovative industrial technologies in the U.S, forfeiting American industries’ competitive advantage.

Industrial decarbonization programs have traditionally attracted bipartisan support because they can revitalize U.S. industries by bringing jobs and investments into communities while ensuring the U.S. remains a global leader in innovative industry. In recent years, Congress and the Biden administration passed laws and initiatives that provided unprecedented public support for industrial decarbonization.

WRI catalogued these industrial decarbonization programs last November. Out of 34 federal grants, tax credits and other initiatives, authorized and appropriated through the Bipartisan Infrastructure Law, Inflation Reduction Act, and the CHIPS and Science Act, WRI estimated that $135 billion would directly fund or enable industrial decarbonization, with $18.4 billion of that total specifically for heavy industry. While $18.4 billion is approximately 2.6% of the estimated $700 billion needed to decarbonize the heavy industry sector, it catalyzed billions in matching private investments and thousands of potential jobs.

In contrast, federal actions taken in 2025 have stalled that momentum. Even before the budget reconciliation bill was passed, decarbonizing sectors slowed down, delayed and canceled new projects in anticipation of federal funding reductions and business uncertainty. As of May, $15.5 billion of private clean energy investments (e.g. renewables, batteries, electric vehicles) were canceled in 2025, resulting in more than 10,000 lost jobs.

Due to industrial decarbonization technology’s lower levels of deployment and technological readiness compared to clean energy, discontinued support will likely affect it more. In the first quarter of 2025, amid billions of grant award cancelations, only $79 million was invested into new industrial decarbonization projects — barely 1% of the $7.8 billion of investments announced during the last quarter of 2024.

The passage of this budget reconciliation bill only worsens the outlook for developing cleaner heavy industry in the U.S. By analyzing recissions in the bill and agency-level actions against already expected or awarded funding, WRI estimates that around $6.8 billion of public funding, at least $9.5 billion in expected private investments and at least 4,900 jobs for new, cleaner U.S. industry projects could be lost.

Some industrial decarbonization programs were jointly impacted by both the reconciliation bill and federal agency action. Taken together, these Congressional measures and executive actions amount to massive funding cuts for industrial decarbonization. At the same time, there remains considerable uncertainty about the precise levels of funding that will ultimately be cut. Any of the 18 industrial companies whose grants for large first-of-a-kind demonstration projects were canceled can appeal the decision and, as of this month, at least one company is reportedly doing so.

Conversely, the 34 programs that WRI originally identified in its November 2024 assessment may still incur future cuts, recissions and restrictions as federal action continues government-wide rollbacks of clean energy programs. The beginning of the annual appropriations process signals that significant cuts to industrial programs are likely to continue.

The budget reconciliation bill and ongoing and future executive action have — and will — curtail vital public investment and contribute to an uncertain policy landscape; this will stymy U.S. industry’s efforts to develop world-leading decarbonized production and revitalize domestic manufacturing. Federal actions to allow remaining industrial programs to progress as planned will begin to put American industrial investment and growth back on track.