WHAT’S HAPPENING TODAY: Good afternoon and happy Wednesday, readers! In today’s Daily on Energy, we break down the Congressional Budget Office assessment of the House Republicans’ reconciliation bill, which found that it could add over $2 trillion to the federal deficit. 

In addition, California Democrat Sen. Alex Padilla announced he would place a blanket hold on any Environmental Protection Agency nominees, following Republicans voting to overturn three California emission waivers. Meanwhile, we also take a look at major automakers’ efforts to manage China’s export restrictions on rare earths.  

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Welcome to Daily on Energy, written by Washington Examiner energy and environment writers Callie Patteson (@CalliePatteson) and Maydeen Merino (@MaydeenMerino). Email cpatteson@washingtonexaminer dot com or mmerino@washingtonexaminer dot com for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

REPUBLICAN MEGATAX BILL TO GENERATE OVER $500B THROUGH CLEAN TAX CREDIT CUTS: The House-passed reconciliation budget bill will add roughly $2.4 trillion to the federal deficit, while also providing trillions of dollars in tax cuts, the Congressional Budget Office said. 

The CBO released its score of House Republicans’ One Big Beautiful Bill Act this morning, detailing how much revenue the government would generate if the legislation were to hit the president’s desk as written. 

The tax credit effect: The nonpartisan CBO estimated that the bill will cut taxes by $3.7 trillion, including through extending the 2017 Trump tax cuts. Republicans have sought to offset much of this, including by scaling back clean energy tax credits created or expanded by the 2022 Inflation Reduction Act. 

CBO estimated that the proposed cuts to clean subsidies – which include ending technology-neutral tax credits for all projects unless they are able to start construction within 60 days of the bill’s enactment and are placed in service by the end of 2028 – would generate roughly $565 billion over 10 years.

Natural Resources: The Republican legislative package includes several proposals from the House Natural Resources Committee, such as the ordering of new oil and gas leasing and withdrawal of funds from agencies such as the National Oceanic and Atmospheric Administration. CBO said today that these provisions would reduce federal spending by around $17 billion, roughly $1.5 billion less than what the committee had aimed for in its original proposal. 

Energy and Commerce: The bill also features proposed spending cuts from the Energy and Commerce Committee, which has largely looked to roll back climate funding implemented under the Biden administration. The CBO score estimates that provisions related to expedited permitting and rescinding the Greenhouse Gas Reduction Fund’s budget authority would lower spending by $78 million and $19 million respectively. Additionally, repealing Environmental Protection Agency rules on greenhouse gas emissions standards (including CAFE standards) would reduce spending by $32 billion. 

PADILLA PLACES BLANKET HOLD ON EPA NOMINEES: California Democrat Sen. Alex Padilla is placing a blanket hold on Environmental Protection Agency nominees after Republicans overturned California vehicle emissions waivers.  

Padilla’s move places a hold on seven EPA nominees, making the confirmation process longer. 

The holds will remain until Republicans “make appropriate accommodations so that California can protect its own environment and the health of its residents,” Padilla’s press release stated. 

In May, the Senate used the Congressional Review Act to overrule three California waivers meant to reduce vehicle emissions. One of the waivers allowed the state to set its stringent vehicle emissions standards as a way to transition toward electric vehicles. Republicans also repealed two other waivers that allowed California to set restrictions on nitrogen oxides emissions and mandate zero-emissions trucks. 

Lawmakers used the CRA to avoid a filibuster and vote in a simple majority to overturn the waivers, despite the Government Accountability Office and the Senate parliamentarian stating that the CRA cannot be used to overturn a waiver. 

BANKS SLASH OIL FORECASTS TO BELOW $60 LINE: More than two dozen banks have cut their 2025 forecasts for oil prices on the heels of OPEC+’s decision to accelerate its production output hike later this summer, a new survey has found. 

The details: The survey, conducted by corporate law firm Haynes Boone among 28 banks, found that the financial firms are now projecting that oil will sit around $58.30 per barrel. In the fall of last year, these same banks had projected that oil would be around $61.89 per barrel in 2025. 

Prices are expected to continue to drop through 2029, with projections hitting as low as $56.24 per barrel, before leveling out around the $56-57 mark in the early 2030s. 

The why: The price drop can largely be attributed to increased production from OPEC and fairly stable demand levels, as well as the dramatic decline in prices seen in April following the Trump administration’s tariff announcement. 

Key quote: “The results suggest that banks believe the underlying supply-demand dynamics will generally rebalance over time,” Energy Practice Group Partner Kim Mai told Haynes Boone. “It’s a vote of confidence in market fundamentals during a volatile policy environment.”

GEOTHERMAL TECH GETS A NOD FROM BILL GATES: Billionaire businessman Bill Gates is throwing his backing behind geothermal energy technologies as a way to meet growing power demands while also lowering emissions. 

This week, the Microsoft co-founder specifically voiced his support for the Houston-based geothermal company Fervo Energy, which is building what it has described as the world’s largest enhanced geothermal project in southern Utah. 

His endorsement came just days after Gates toured the construction site alongside junior Utah Republican Sen. John Curtis, who is seeking to protect clean energy tax credits at risk of being cut in the reconciliation bill. Gates told the Wall Street Journal that without these tax credits, Fervo may instead be forced to rely on customers willing to pay more for the clean energy. 

“We’ll help these guys build a gigawatt, but they really should build 10 gigawatts, and they should build a very high percentage of that in the U.S., including a hell of a lot of it in Utah,” Gates told the outlet. 

Fervo is aiming to bring the geothermal project, also known as Cape Station, online by 2028. It is expected to generate enough energy to power over 375,000 homes. The company has warned that the project could be delayed until the late 2030s if the tax credits are axed. 

Gates’s public support comes at a critical time as the Senate takes up the reconciliation package over the next month, amid growing pressure from clean energy industry groups to soften or remove cuts to the green subsidies. Republican lawmakers are looking to have the bill on the president’s desk by Independence Day. 

DOUBLED STEEL AND ALUMINUM TARIFFS IN EFFECT: The higher tariff on all steel and aluminum imports went into effect today.

In March, Trump announced 25% tariffs on all imports of aluminum and steel. Now those tariffs have reached 50% as of midnight. 

Steel and aluminum are key materials in the energy sector, as they are used to build wind turbines, transmission towers, solar panels, and much more. Some have warned that the tariffs could raise prices for those in the energy sector. 

“In my judgment, the increased tariffs will more effectively counter foreign countries that continue to offload low-priced, excess steel and aluminum in the United States market and thereby undercut the competitiveness of the United States steel and aluminum industries,” Trump said in his order to raise tariffs. 

EUROPEAN COMMISSION TO PRESENT PLAN FOR PHASING OUT RUSSIAN ENERGY: The European Commission will unveil a draft plan June 17 for phasing out Russian energy imports by the end of 2027, Bloomberg reports. 

People familiar with the matter said that the commission is likely to propose a measure to impose a zero import quota on Russian gas. It would also include measures to reduce Russian oil and restrict contracts on uranium. 

Since the beginning of the war in Ukraine, the European Union has worked on reducing its import of Russian gas, but Russia remains a significant source of fuel for the union. The majority of countries and the European Parliament would need to approve the plan for it to take effect. 

TRUMP ASKS CONGRESS TO CLAW BACK $9.4BN IN FUNDING: The White House yesterday asked Congress to claw back appropriated funding, including from international aid and climate programs, totaling $9.4 billion. 

The White House request targeted programs in the State Department, Corporation for Public Broadcasting, the U.S. Agency for International Development, the U.S. Institute of Peace, and other International Assistance Programs. 

“These rescissions would eliminate programs that are antithetical to American interests, such as funding the World Health Organization, LGBTQI+ activities, ‘equity’ programs, radical Green New Deal-type policies, and color revolutions in hostile places around the world,” the White House wrote. 

For instance, the request asks Congress to claw back millions to billions of dollars from programs like the Economic Support Fund, Clean Technology Fund, and the International Disaster Assistance account. 

The recission process allows Congress to rescind funding that has been previously appropriated but agencies have not yet spent. House Speaker Mike Johnson has indicated that the chamber would act quickly to pass the rescissions legislation. 

ICYMI – AUTOMAKERS CONSIDER MOVING MANUFACTURING TO CHINA TO GAIN RARE EARTHS: Major automakers are considering moving auto-parts manufacturing to China as a way to navigate the country’s hold on rare earths. 

The Wall Street Journal reported yesterday that four major automakers are looking at ways around China’s hold on exports of rare-earth metals that are used to make magnets, essential for electric vehicle production. 

In April, China placed export restrictions on several rare earth metals in response to the Trump administration’s sweeping tariffs on Chinese goods. China produces nearly 90% of the world’s rare earths, which are used in a wide range of products in the energy and defense sectors. 

Automakers are considering moving production of electric motors to China to bypass the export restrictions and have the rare-earth magnets installed. 

“If you want to export a magnet [from China] they won’t let you do that. If you can demonstrate that the magnet is in a motor in China, you can do that,” a supply-chain manager at one of the carmakers told the WSJ. 

Global automakers have raised concerns over China’s hold on rare-earths and critical minerals. Reuters reports that German automakers recently warned that the export restrictions could risk the shutdown of their production. 

Trump and Chinese President Xi Jinping are expected to speak this week, with the export restrictions being a high priority of discussion. 

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