How Trump’s ‘big, beautiful bill’ impacts Canada and the clean energy push
Spread across the more than 800 pages of U.S. President Donald Trump’s massive tax cut and spending package signed into law on Friday are measures that could have impacts on Canada, particularly on environmental and energy policies.
The “One Big Beautiful Bill Act” cuts billions of dollars in spending meant to boost clean energy infrastructure across the U.S., which building trades unions warn could result in over a million lost construction jobs.
The legislation also scraps tax credits for electric vehicles, which may push the North American auto industry further away from EVs.
Taken together, the measures effectively end a brief era where the U.S. and Canada were moving in the same direction in combatting the climate crisis, says George Hoberg, a professor at the University of British Columbia who focuses on climate and energy policy.
“It really interrupts whatever delicate momentum we had towards stronger climate policy and towards a clean energy transition,” he told Global News.
Tax credits passed under the Inflation Reduction Act during former president Joe Biden’s term for individual home solar systems, heat pumps and battery storage will end this year under the Republican bill. So will tax credits for upgrades such as windows, insulation, heating and cooling systems.
But growing concern is being raised for the impact to large-scale wind and solar projects, which qualified for tax credits even if they were to begin construction nearly a decade from now under Biden’s law.
Under Trump’s bill, the timeline shrinks. While projects that begin construction within a year of the law coming into force will still be eligible for a full credit, those that start beyond that must be fully operational by the end of 2027, or they lose out on the incentives.
Atlas Public Policy, a policy consultancy, said roughly 28 gigawatts of wind and solar projects are planned to be operational after the start of 2028 but haven’t begun construction yet. Under the bill, they’re unlikely to qualify for a credit, raising fears they could be cancelled altogether.
North America’s Building Trades Unions, which represents over three million trades workers in the U.S. and Canada, said late last month that the legislation “stands to be the biggest job-killing bill in the history of this country.”
“Simply put, it is the equivalent of terminating more than 1,000 Keystone XL pipeline projects,” president Sean McGarvey said in a statement, adding an estimated 1.75 million construction jobs were under threat.
The Laborers’ International Union of North America, home to half a million American and Canadian workers, echoed those fears after the U.S. Senate passed what ended up being the final version of the bill on Tuesday.
“This bill eradicates thousands of good-paying LIUNA jobs — jobs that were promised, planned, and already underway,” general president Brent Booker said.
“These solar and wind projects weren’t abstract policy ideas — they were real job opportunities for real people across every part of our country for the next seven years. Now, all projects that have not started construction within one year — a year marked by economic fragility and supply chain insecurity — will never break ground and our members will never work on them.”
Republicans argue the bill will “unleash American energy” through its multiple supports for oil, coal and gas production and mining. The legislation expands oil leases off U.S. coasts and includes tax incentives for corporate oil and gas producers.
“This historic legislation is a win for American-made energy, consumers and the workers who power our economy,” Mike Sommers, president and CEO of the American Petroleum Institute, said in a statement after the bill’s final passage Thursday.
The bill eliminates credits of up to US$7,500 for buyers of new electric vehicles and up to US$4,000 for buyers of used EVs, which industry analysts have said contributed to steadily rising EV sales in the U.S.
The credits will disappear after Sept. 30.
The Inflation Reduction Act ensured those credits were applied to vehicles made with North American auto parts. Canada later secured inclusion in that policy, spurring cross-border EV production.
But sales have stalled in both Canada and the U.S. and have fallen short of government goals.
Biden had set a target for half of all new vehicles sold in the U.S. to be electric by 2030, while Canada’s EV sales mandate requires that 20 per cent of all new light-duty vehicles sold next year be zero-emission. The target rises annually to 100 per cent by 2035.
Canadian automakers who met with Prime Minister Mark Carney this week to urge him to repeal the mandate said they were “cautiously optimistic” that their lobbying would pay off.
Meanwhile, automakers this year have steadily paused or reduced EV production and and the building of new battery plants in Ontario, threatening billions of dollars in investments.
“Getting rid of the (U.S.) tax credits really isn’t going to bode very well for the EV industry, and that has big implications for Canada on the idea of an integrated EV supply chain,” said Joseph Calnan, vice-president of the Canadian Global Affairs Institute who focuses on energy policy.
Like Trump, Carney has also been pursuing policies to make his country an “energy superpower.”
Unlike Trump, however, the Liberal government is taking an “all of the above” approach to energy infrastructure, rather than only focusing on fossil fuels.
“They’re moving in the same direction, but the Carney government has moved more toward the centre, and the Trump government has moved more toward the kind of further end of discussions of of energy policy,” Calnan said.
In discussions among premiers and stakeholders on “nation-building projects” set to be fast-tracked under newly passed federal legislation, government leaders have discussed pursuing both new oil and gas projects as well as renewable energy, critical minerals and carbon capture simultaneously.
Alberta Premier Danielle Smith has pitched a “grand bargain” where a proposed $16.5-billion carbon capture project would go ahead in tandem with a new crude oil pipeline to the West Coast under the major projects bill. Ottawa is currently drafting a final list of major projects to undertake.
Experts say there are opportunities for Canada to attract investments from the United States now that its tax credits have been scrapped. Artificial intelligence companies looking to reduce their environmental impact could be lured by Canada’s hydropower resources to power their data centres, Hoburg said.
It may be harder for Canada to present itself as a viable alternative for wind and solar projects, however, Calnan said, given parts of the U.S. are some of the sunniest and windiest places in the world.
Yet uncertainty in the U.S. could still lead companies to look elsewhere.
Tariffs will also play a role in how Canada is either impacted or can potentially benefit by the shifts in policy. Canada could consider waiving its counter-tariffs on U.S. goods and companies to spur investment, according to Calnan.
The high tariffs on Chinese goods — as well as Beijing’s ongoing threats to national security — should also fuel Canada’s ongoing push to create domestic supply chains not just for critical minerals, but also for solar panels and wind turbines.
Ultimately, Hoberg says Trump’s bill will have major implications on North America’s shared climate goals, including efforts to reduce greenhouse gas emissions.
“It makes it harder for the Canadian government to pursue ambitious policies,” he said. “It doesn’t make it impossible, but it makes it more costly, and as a result it increases domestic political resistance.”
He said the Carney government’s efforts to reorient Canada’s trade and economic relationships toward Europe and Asia could present opportunities to pursue shared climate goals with those allies.
—with files from the Associated Press
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