DOE Under, Biden’s Directon, Twists Numbers On Climate Spending

Biden’s Department of Energy (DOE) has projected that President Biden’s infrastructure bill and his Inflation Reduction Act will save Americans up to $38 billion on electricity costs over the remainder of the decade, using a version of the Energy Information Administration’s (EIA) National Energy Modeling System (NEMS). Despite EIA being part of the DOE, EIA was not asked to perform the analysis using NEMS. That was likely due to the spurious assumptions used by the DOE, as explained below.  As The Hill reported, “The report customized the National Energy Modeling System, which the Energy Information Administration uses in its Annual Energy Outlook, to model energy costs and national emissions in a scenario where the two laws were never implemented, based on the 2022 outlook report.” By “customizing” the model, the authors disclosed their view of our future energy picture based upon Biden’s goals rather than facts.

Further, the $38 billion does not even come close to covering the cost of the bills that will be paid by taxpayers. Goldman Sachs believes that the Inflation Reduction Act (IRA) will cost U.S. taxpayers $1.2 trillion—more than triple the Congressional Budget Office’s (CBO) estimate of $391 billion for the climate provisions. The difference in cost mainly arises from lucrative tax credits in the IRA that are not capped, and the fact that the Biden Administration is loosely interpreting conditions for those credits, driving their costs up. The President’s infrastructure bill is costing taxpayers another $580 billion in new spending, with the total cost of that bill also at $1.2 trillion. Clearly, the savings in electric consumer bills that DOE estimates are not even close to being commensurate with the cost of the two pieces of legislation to taxpayers, even by the debunked CBO scores.

DOE’s Questionable Results

The DOE reports that between now and 2030, the two laws will allow for the deployment of up to 250 gigawatts of new wind energy and up to 475 gigawatts of new solar. These numbers are vastly higher than what EIA projects in its Annual Energy Outlook 2023, where it has accounted for these laws. The EIA projects that between 2022 and 2030, wind capacity is expected to increase by 156 gigawatts and solar capacity is expected to increase by 263 gigawatts. In other words, the DOE modelers would have had to change the model’s inputs and/or assumptions to get about 100 gigawatts of additional wind capacity and over 200 gigawatts of additional solar capacity by 2030 than the EIA has forecasted.

Further, development activity for wind energy has slowed with the year-over-year downtrend in installations now stretched for nine consecutive quarters. For full year 2022, wind installations dropped by 56 percent from 2021 and in 2023, wind installations are down from 2022 levels. The industry’s pipeline of projects that are expected to come online between 2023 and 2027 increases by just 5 percent to 81,265 megawatts of capacity, from the fourth quarter of 2022 when developers had a total of 77,220 megawatts of planned capacity.

To get those huge increases in renewable capacity, the DOE assumed a Biden administration proposal that would accelerate electricity demand by assuming that 65 percent of new car sales in 2030 would be electric. This assumption is not current regulation as the Environmental Protection Agency proposed a rule this past spring that two-thirds of new car sales would need to be electric by 2032, which was followed by the National Highway Traffic Safety Administration proposing new car efficiency standards this summer that would also reach that level, but neither proposal has been finalized as the comment and review periods on both are still ongoing. Further, automakers claim that the new rules are not attainable as there are technical issues with electric vehicles, and even if they could reach those numbers, the U.S. electric grid would not be able to handle millions of electric vehicles plugging into the grid at different times of day and in a multitude of locations.

The Reason for the Study

President Biden wants the American public to believe that the economy on his watch is robust, despite inflation of about 15 percent since he took office and higher prices for necessities, including food and gasoline. Biden is using the first anniversary of his signature Inflation Reduction Act to pitch the climate law as an economic powerhouse. However, the U.S. public remains largely unaware of its contents despite the legislation providing billions of dollars in tax credits to push consumers into buying electric vehicles and companies to produce renewable energy. Biden claims that the legislation already created 170,000 “clean” energy jobs and will create some 1.5 million jobs over the next decade. He makes those claims despite the fact that only one percent of fossil fuel employees have moved to “clean” energy jobs. Fossil fuel jobs pay better than the “clean” energy jobs, according to Biden’s Labor Department.

Further, according to Robert Bryce, under the Inflation Reduction Act which incentivizes the production of electric vehicles among other green technologies, each new “green” job at the GM’s battery plant (which the company is developing with Korea’s LG) in Spring Hill, Tennessee, will cost taxpayers $7.7 million and each new “green” job at the Ford plant (which Ford is partnering in with China’s CATL) in Marshall, Michigan, will cost taxpayers $3.4 million. Clearly, green jobs do not come cheap.

Also according to President Biden, the legislation has shifted production of critical components away from China and into the United States. But, that is not true. China still dominates the battery supply chain for electric vehicles, processes most of the rare earth and other critical minerals needed for electric vehicles and renewable technologies, and supplies most of the solar panels the U.S. needs either directly or indirectly from other Southeast Asia countries. While Senator Manchin added provisions in the Inflation Reduction Act to industrialize the United States in critical minerals, Biden has done all he can to waylay that by revoking leases, delaying permits, and adding flora and fauna to the endangered species list. His actions conflict with his words.

Conclusion

The Department of Energy has posted a report that uses the National Energy Modeling System to show that President Biden’s signature laws will produce savings in electric bills for American consumers. However, the estimated savings are a drop in the bucket of the cost that taxpayers will have to pay to cover the provisions in the bills that incentivize “clean” energy. While Biden is traveling the country, trying to make Americans believe that his economy is robust despite inflation and high gasoline and food prices, he is finding that Americans are unaware of the bills and their supposed successes. That’s because those successes do not exist, at least not yet! Biden realizes this and is having his regulators do more to push Americans into buying electric vehicles and in furthering his climate plan. Unfortunately for Americans, the Biden climate plan will be all grief and no joy as American energy will become unreliable, expensive and dependent upon China.

*This article was adapted from content originally published by the Institute for Energy Research.