Jack Belcher is a principal at Cornerstone Government Affairs, where he focuses on regulatory affairs, risk management and ESG matters within the energy and transportation sectors.

A major legislative budget reconciliation package—the “One Big Beautiful Bill Act” that recently passed the House of Representatives and is now in front of the Senate—misses the opportunity to recognize the firm, baseload and dispatchable attributes of geothermal energy. To avoid the unintended consequence of thwarting geothermal development in the U.S. at a time when we need it most, Senate lawmakers need to recognize this oversight and provide the same treatment for geothermal as the House provided for nuclear energy.

In furtherance of Republican energy policy and deficit reduction priorities, the House-passed bill reduces and eliminates federal tax credits that were added, expanded and supported by the Biden administration through the Inflation Reduction Act, with an intention to focus on accelerating the phase-out and eligibility for wind and solar energy-related credits, while supporting thermal, dispatchable sources like nuclear, natural gas and geothermal.

While nuclear was significantly spared from tax policy changes, geothermal—not widely known to be a beneficiary of tax credits—was not, to the potential detriment of current and future geothermal energy projects.

The impact of the loss of these tax credits, and specifically the 48E Clean Electricity Investment Tax Credit and 45Y Clean Electricity Production Tax Credit, could be devastating to the geothermal industry.

First, several existing projects that scoped out their project economics based on the inclusion of the credits may now find their margins to be significantly reduced and the projects no longer economic. For future projects, the impacts could be even greater. Over the past two years, over 150 new geothermal energy projects have been announced in the U.S. The loss of the tax credits could render many of these projects uneconomic.

A change in the qualification of projects receiving the clean electricity tax credits, by requiring them to be placed in service by the end of 2028 and the commencement of construction within 60 days of the bill’s enactment, creates an unrealistic timeline for many geothermal projects due to the long lead times needed to address permitting challenges. At the same time, the removal of tax credit transferability to project investors severely hampers the investibility of many projects.

Over the past few years, there has been enormous growth in interest and private sector investment in geothermal energy projects. Data center demand for electricity is expected to grow from 25 gigawatts (GW) in 2024 to 80 GW by 2030, when it will comprise 9% of total U.S. demand.

Geothermal energy, with its 24/7 dispatchable, reliable, zero-carbon power, is primed to meet increased demand from data centers and reindustrialization. The U.S. Department of Energy estimates that with strategic public investments and public policy support, geothermal energy projects could contribute up to 300 GW of firm electricity production by 2050.

The U.S. oil and gas industry, with its expertise in drilling, fracturing, subsurface and reservoir management, geology and infrastructure development and management, also stands poised to benefit from growth in geothermal energy.

Oil and gas producers are increasingly partnering with geothermal developers to explore opportunities to produce geothermal resources, and there are opportunities for co-development of oil and gas and geothermal from the same well. Several energy service companies are already in the geothermal business and can grow with the industry. However, those opportunities could fade if tax incentives for geothermal are not spared.

Geothermal energy is a baseload form of generation that is aligned with the administration’s energy dominance goals, and it is strongly supported by Energy Secretary Chris Wright and Interior Secretary Doug Burgum.

Among the many Senate members who would otherwise be supportive of geothermal energy, awareness of the negative impacts of the House-passed bill on geothermal remains low, providing a narrow window of time for constituents and interested parties, including the oil and gas industry, to weigh in with Senate offices to make them aware of the unintended damage the loss of tax credits could have on geothermal energy projects, and stress the need for geothermal to have the same treatment as nuclear.

The future of the U.S. geothermal industry could depend on it.

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