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

The analysis finds that recent federal policy shifts—including the One Big Beautiful Bill Act (OBBBA) and the repeal of various EPA standards—will lead to higher energy costs for households, significant GDP and job losses, and increased healthcare spending due to worsening air pollution. While a temporary boom in renewables is expected due to safe-harbor tax credit rules through 2030, the report forecasts a sharp contraction in clean energy capacity and a continued reliance on coal power after 2031.

• Federal 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 U.S. economy is expected to suffer a cumulative GDP loss of $2.3 trillion between 2026 and 2040, with net annual losses peaking at $250 billion in 2032.
• Labor market impacts include an average loss of 820,000 jobs per year over the next decade, with peak losses reaching 1.3 million jobs in 2032, primarily in the manufacturing sector.
• The repeal of transportation electrification policies is forecast to increase gasoline prices by 37¢/gallon in 2035 and 64¢/gallon in 2040 (in 2025 USD) due to higher demand.
• Worsening local air pollution from increased fossil fuel use is projected to raise direct healthcare costs by $43 billion from 2026 to 2040, with annual costs reaching $4.5 billion by 2040.
• Clean energy capacity will see a temporary surge through 2030 due to safe-harbor tax credits, but will contract significantly after 2031, adding 68 GW less annual new capacity than previous forecasts.
• Changes to EPA rules and the termination of tax credits are expected to keep expensive coal generation online longer, with approximately 100 GW of coal online in 2035 compared to previous forecasts of under 20 GW.
• Hydrogen policy shifts, including the shortening of the 45V tax credit timeline and the cancellation of the ARCHES and Pacific Northwest Hubs, have shifted production toward 'blue' hydrogen (natural gas with CCS) and away from 'green' electrolytic hydrogen.

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} }