The Economic, Consumer Cost, and Pollution Impacts of Recent Federal Energy Policy Changes

This report by Energy Innovation uses the Energy Policy Simulator (EPS) to analyze the economic, consumer, and public health impacts of federal energy policy changes enacted by the 119th Congress and the second Trump administration between January 2025 and July 2026. The analysis focuses on the One Big Beautiful Bill Act (OBBBA) and various EPA and DOE regulatory repeals, forecasting significant increases in household energy costs, job losses in manufacturing, a cumulative GDP decline, and rising healthcare spending due to increased air pollution through 2040.

• Federal energy policy changes are projected to increase household energy spending by $460 per household in 2035 and $490 in 2040, totaling a cumulative increase of $4,500 from 2026 to 2040.
• The repeal of transportation electrification policies is expected to increase gasoline prices by 14 percent in 2035 and 26 percent in 2040, adding 37¢/gallon in 2035 and 64¢/gallon in 2040 (in 2025 USD) due to higher demand.
• The U.S. economy is projected to suffer a cumulative GDP loss of $2.3 trillion between 2026 and 2040, with net annual losses of $150 billion in 2030, peaking at $250 billion in 2032, and $120 billion in 2040.
• Recent policy changes are estimated to cost the U.S. economy an average of 820,000 jobs per year over the next decade, following an initial loss of 144,000 clean energy jobs in the 18 months prior to the report.
• Worsening local air pollution resulting from these policies is projected to increase direct healthcare costs by $43 billion from 2026 to 2040, with annual increases of $4 billion in 2035 and $4.5 billion in 2040.
• The termination of tax credits under the OBBBA and other regulatory actions will lead to a contraction in clean energy capacity; from 2031 to 2040, the industry is expected to add 68 GW less annual new capacity than previously forecast, primarily affecting batteries, solar, and onshore wind.
• Changes to hydrogen policy, including the shortening of the 45V tax-credit construction deadline to 2028 and the cancellation of the ARCHES and Pacific Northwest Hubs, have shifted production toward blue hydrogen (1.4 Mt) and away from green hydrogen (0.12 Mt).

APA

Orvis, R., & O’Brien, D. (2026). The Economic, Consumer Cost, and Pollution Impacts of Recent Federal Energy Policy Changes. Energy Innovation. https://energyinnovation.org/wp-content/uploads/The-Economic-Consumer-Cost-and-Pollution-Impacts-of-Federal-Energy-Policy-Changes.pdf

Chicago

Orvis, Robbie, and Daniel O’Brien. The Economic, Consumer Cost, and Pollution Impacts of Recent Federal Energy Policy Changes. Energy Innovation, 2026. https://energyinnovation.org/wp-content/uploads/The-Economic-Consumer-Cost-and-Pollution-Impacts-of-Federal-Energy-Policy-Changes.pdf.

Wikipedia

{{cite report |last1=Orvis |first1=Robbie |last2=O’Brien |first2=Daniel |title=The Economic, Consumer Cost, and Pollution Impacts of Recent Federal Energy Policy Changes |publisher=Energy Innovation |date=July 2026 |url=https://energyinnovation.org/wp-content/uploads/The-Economic-Consumer-Cost-and-Pollution-Impacts-of-Federal-Energy-Policy-Changes.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{orvis2026economic, author = {Orvis, Robbie and O’Brien, Daniel}, title = {{The Economic, Consumer Cost, and Pollution Impacts of Recent Federal Energy Policy Changes}}, institution = {Energy Innovation}, year = {2026}, month = jul, url = {https://energyinnovation.org/wp-content/uploads/The-Economic-Consumer-Cost-and-Pollution-Impacts-of-Federal-Energy-Policy-Changes.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }