America's New Energy Bill: New challenge for Uganda's path to cleaner energy

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OPINION

By Sandra Namukaya

Uganda is on the cusp of a major transformation. For decades, the Country has relied on biomass for over 85% of its household energy needs, leading to widespread deforestation and serious health issues from indoor air pollution. The recent discovery of significant oil and gas reserves in the Albertine region offers a path to a cleaner and more reliable energy future.

Yet, this promising trajectory is unfolding against a backdrop of shifting international policies, most notably America's new energy posture under the new reconciliation bill, known as the "One Big Beautiful Bill Act" (OBBBA), which could complicate Uganda's energy transition.

The government plans to use domestic gas for power and produce cleaner-cooking LPG, cutting emissions by 80% and slowing deforestation. It’s promoting household connections and partnerships for distribution.

Yet effective deployment of LPG as a transitional fuel demands careful policy design. Upfront costs must be kept within reach of low-income households through targeted subsidies and equity programmes to prevent price volatility from global oil markets from discouraging adoption.

Expanding distribution beyond urban centres requires investments in safe storage depots, reliable last-mile delivery fleets, and rigorous safety standards backed by consumer education campaigns.

Meanwhile, oil and gas companies can co-invest in local bottling facilities, support micro-franchise distribution models, and underwrite training programs that build domestic downstream capacity. When managed well, widespread LPG use can deliver immediate health and environmental benefits, provided methane leakage is minimised and adopted in hybrid configuration systems.

In addition to domestic production, Uganda is exploring regional solutions to ensure fuel security. A government-commissioned feasibility study is evaluating the conversion of 100 MW of ageing diesel and heavy-fuel-oil power plants to gas-to-power, with feedstock options including domestic gas, LPG blends, and LNG imports from Tanzania’s planned Lindi export terminal.

A proposed 1,400 km pipeline being assessed in partnership with Tanzanian authorities would deliver competitively priced LNG directly to Uganda, hedging against diesel price volatility and yielding environmental gains such as a 30 percent reduction in carbon intensity compared to liquid fuels.

However, the international environment has grown more challenging. On July 4, 2025, President Donald J. Trump signed "The One Big Beautiful Bill" into law. This sweeping legislation, which a White House statement confirms as a "once-in-a-generation" piece of legislation, includes a massive expansion of domestic oil and gas production capacity aimed at driving down energy costs.

While the bill’s full impact is still being analysed, its clear focus on fossil fuel expansion is poised to tighten global markets and keep gas prices elevated. This places upward pressure on Uganda’s import costs, presenting a complex challenge for a nation relying on these resources for its energy transition

Major international lenders increasingly tie concessional financing to strict fossil-fuel phase-out mandates, making Uganda’s gas projects ineligible for “climate finance” despite their immediate environmental and health benefits over biomass. Wary private investors may hesitate to fund gas infrastructure, and higher LNG prices could undermine affordability for low-income families, slowing the transition away from charcoal and firewood.

Balancing these competing pressures demands a nuanced, pragmatic strategy. Uganda must continue to champion a “just energy transition” framework that recognises natural gas and LPG as vital bridge fuels and tools for immediate public-health gains and environmental protection, not endpoints in themselves. Blended-finance instruments, such as just-transition partnership facilities and concessional debt backed by public guarantees, will be critical to attracting private capital.

Equally important is that, beyond deepening regional cooperation on pipeline infrastructure, is harnessing the Eastern Africa Power Pool to achieve economies of scale, and diversifying partnerships to include Europe, China, India and Gulf-state financiers, each bringing distinct technical expertise and investment models.

By pursuing this balanced path, leveraging its gas resources to secure reliable, cleaner power while aggressively scaling solar, nuclear and battery storage, Uganda can safeguard its long-term climate goals and unlock inclusive economic growth. In doing so, East Africa will not merely react to global policy shifts but will emerge as a proactive leader in forging sustainable energy futures for the continent.

The writer is an economic policy and energy professional

snamukaya@gmail.com