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GOP DEBT CEILING BILL DETAILS: Republicans’ debt ceiling legislation would neuter the Biden administration’s signature achievement in the Inflation Reduction Act, including tax incentives to support technologies the party supports, such as nuclear energy.
The logic: Republicans want to cut spending, and the most obvious targets are the items Congress authorized without support from any of them.
The cuts also fall in line with the case Republicans are also making against the IRA, which is that it will be a boon for Chinese businesses (the joint Ford-CATL battery plant was the scapegoat during yesterday’s Ways and Means hearing), despite the stated intent of many Democratic lawmakers and language in the law meant to reduce reliance on China.
Things the bill would cut: All or part of at least a dozen tax credits created or amended by the IRA, as well as the new fee levied on excess methane emissions from oil and gas operations and various grant programs authorized by the bill.
The brand new commercial clean vehicle tax credit, which provides up to $7,500 for light-duty passenger vehicles purchased for commercial use and does not have the same sourcing requirements as the consumer vehicle credit, would be repealed entirely.
Other new subsidies that would be nixed include the credit for used consumer clean vehicles, and:
- The technology-neutral clean electricity investment credit, which offers 30% of the investment in the year the facility is placed in service and offers bonus credits for domestic content and project location (fossil fuel communities, brownfield sites, etc.)
- The clean hydrogen production tax credit
- The advanced manufacturing production tax credit, which provides direct pay for eligible solar, wind, and battery components and critical minerals
Other things it would shrink: The legislation also revives the 200,000 manufacturer cap for the consumer EV credit, which the IRA removed, allowing Tesla and a handful of other automakers’ models to be eligible for the credit again.
The changes the IRA made to increase the value of the 45Q tax credit for carbon capture and sequestration and direct air capture would also be rolled back.
The backlash: Democrats in Congress criticized the Republicans’ proposal as regressive, and words like “reckless” and “nonstarter” and “bull****” were thrown around.
Interest groups supportive of the law said it would undermine business certainty and nullify the billions of dollars of manufacturing and other projects announced on the back of the IRA’s passage.
A report published by American Clean Power earlier this week estimated that capital investment for utility-scale clean energy projects and manufacturing facilities to be announced since the law passed totals around $150 billion.
A House leadership policy aide said the repeal of the tax credits was not a position statement against technologies targeted by the incentives but was rather about keeping unified the conference, which showed serious signs of fracture during the speakership battle.
“It was better to just say, look, we’re going to repeal all of these energy provisions from the IRA, as opposed to picking and choosing some that could potentially make it more complicated with the conference,” the aide told Jeremy.
The legislation is also about the philosophy that subsidies are not the only way to make clean energy technologies more widespread, the aide said, and that Congress should take a more “holistic” approach to improving regulations, permitting, and the rest to enable more nuclear power generators to be built, for example.
“That doesn’t necessarily mean there wouldn’t be a tax component … [but] it’s not going to cost money to improve the NRC,” the person said.
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MANCHIN IDs HIS MAIN ISSUE WITH TREASURY’S EV CREDIT RULES: Sen. Joe Manchin offered more specifics this morning about where in particular he sees the Biden administration straying from congressional intent and “liberalizing” rules with how it’s implementing the IRA’s consumer clean vehicle tax credit, and it’s all about definitions.
Treasury’s new rules include foils and powders, inputs in battery electrodes, under the umbrella of “constituent materials.” Constituent materials “mark the end of processing” and are “employed directly in the manufacturing of battery components” under the rules, but they are not battery components themselves.
That matters because, under the law, battery components must in increasing shares be manufactured or assembled in North America.
From one department to another: Manchin pointed to a DOE grant award funded by the bipartisan infrastructure law, which awarded a company nearly $200 million to construct a facility to produce lithium iron phosphate cathode powder. The grant award identified the supply chain segment for the project as “component manufacturing” (See page 13).
Making LFP cathode powder would be considered processing under Treasury’s new rules, which is subject to less stringent rules.
“We want this done in America,” Manchin said during an Energy and Natural Resources hearing on the White House’s budget request.
Otherwise there’s “no urgency” for industries in North America to expand this part of the supply chain, he said to witness Energy Secretary Jennifer Granholm. He also said the definition would result in more credit dollars being awarded than the CBO’s score accounted for and would “bust the budget.”
Granholm said the grant applicant in that case, a company called ICL-IP America Inc., applied under “manufacturing” and that the department didn’t “direct them which way to go,” meaning it didn’t make a determination that the making of the powder is manufacturing or processing.
She also sought to calm Manchin’s concerns that China would be advantaged by how things fell on the processing-manufacturing by saying China will “potentially” be dubbed among the foreign entities of concern.
One note: Even if Treasury does include China or Chinese companies among the foreign entities, the law provides the kind of “bridge” we’re seeing everywhere these days that allows industry a bit of time to more or less cut ties with those entities of concern, something Manchin and the GOP seem to have no appetite for right now.
Beginning next year, eligible clean vehicles may not contain any battery components manufactured by a foreign entity of concern and beginning in 2025 a vehicle may not contain any critical minerals that were extracted, processed, or recycled by a foreign entity of concern.
GREEN NEW DEAL SPONSORS REINTRODUCE MEASURE 4 YEARS LATER: Sen. Edward Markey and Rep. Alexandria Ocasio-Cortez today re-introduced the “Green New Deal,” a pared-down version of their original sweeping climate bill meant to shape the spending of billions of dollars authorized by last year’s Inflation Reduction Act.
“We’re hoping that this guide will provide cities, states, tribes, nonprofits, businesses and individuals with the tools to take full advantage of what is in here,” Ocasio-Cortez said at a press conference outside the Capitol Thursday.
Markey also joined Rep. Ro Khanna (D-CA) to introduce the “Green New Deal for Health,” which will seek to help Americans affected by climate disasters.
The presser also served as a victory lap for lawmakers, who touted the original bill as the spark that helped ignite a broader grassroots movement for climate change.
“The core tenets of the green New Deal four years ago were considered unrealistic” Ocasio-Cortez said, but have now been enacted.
Green New Deal Network Director Kaniela Ing said the IRA “was the Green New Deal, phase one.”
NEW BILL WOULD TEST FLOATING SOLAR ON DWINDLING RESERVOIRS: Sen. Angus King and Rep. Paul Tonko announced new legislation to research the potential of installing floating solar panels in federal reservoirs to generate electricity and reduce water evaporation.
Water helps regulate the temperature of the panels and enables them to generate electricity more efficiently, while panels help shade the water and reduce evaporation, according to a bill primer. That could help prevent reservoirs such as Lake Mead from dwindling further.
The bill would require the Bureau of Reclamation to study the feasibility of deploying floating solar panels, which account for around 2% of domestic solar installations, on their reservoirs and pilot the technology.
DENMARK LIFTS SAILING RESTRICTIONS NEAR NORD STREAM BLAST SITE: The Danish Maritime Authority lifted sailing restrictions on waters near the site of the Nord Stream pipeline blasts, saying today that it is “no longer dangerous” for ships to navigate in the area.
While ships can now traverse the area, which had previously been closed off amid ongoing investigative activities into the September pipeline explosions, DMA officials discouraged any anchoring, fishing, or seabed works in a one-mile nautical radius around the leak site, citing still-present “underwater obstacles.”
The explosions spewed massive amounts of methane into the Baltic Sea. A recent report from the UN’s International Methane Emissions Observatory estimates the blasts could have leaked between 75 and 230 thousand tons of methane—the largest-ever single release of methane.
UKRAINE CALLS ON SHELL TO DONATE MORE THAN $1B IN ‘BLOOD MONEY’: A senior Ukrainian official called on Shell to donate more than $1 billion in unexpected profits caused by Russia’s war to help it rebuild its energy infrastructure, describing the profits as “blood money.”
“We call on Shell to put any Russian sale or dividend proceeds to work for the victims of the war — the same war that those assets have fuelled and funded,” Ukrainian President Volodymyr Zelensky’s economic adviser, Oleg Ustenko, said in a letter to Shell CEO Wael Sawan.
He urged Sawan more specifically to share with Ukraine any profits from Russia’s expected buyout of its stake in a major oil field and drilling venture in the country’s far east.
“If completed, this sale would represent the transfer of more than $1 billion in Russian cash into Shell’s accounts. That would be blood money, pure and simple,” Ustenko wrote.
The letter comes less than a month after another high-ranking Ukrainian official publicly called on energy giants to use their excess revenue to help rebuild in wake of an intense Russian shelling campaign this winter targeting energy infrastructure.
The cost of total repairs is estimated to be somewhere in the ballpark of up to $10 billion, according to UN officials, and the idea of having energy companies share their earnings with Ukraine is reportedly gaining traction among some EU member states. Read more from Politico EU here.
CLIMATE CHANGE AND EL NIÑO COULD BRING RECORD HEAT IN 2023: The world could see its highest average temperature on record either this year or next, according to a new report from the EU’s Copernicus Climate Change Service, or C3S, due to a combination of climate change-fueled warming as well as the expected return of the El Niño weather pattern.
The world has experienced the La Niña weather pattern, which generally causes a slight drop in temperatures, for the last three years. But that’s expected to change this year or early in 2024, scientists said.
“If El Niño does develop, there is a good chance 2023 will be even hotter than 2016,” the last time the record was set, “considering the world has continued to warm as humans continue to burn fossil fuels,” Friederike Otto, a senior lecturer at Imperial College London’s Grantham Institute, told Reuters.
This could be especially problematic in certain parts of the world, which have already experienced record heatwaves, droughts, and wildfires. Europe saw its hottest year on record in 2022, and sea ice in the Antarctic also dropped to a record low.
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