Federal EV tax credit: unnecessary, inefficient, unpopular, costly, and unfair

In April, Senator Debbie Stabenow (D-MI) introduced the Drive America Forward Act, a bill that would expand the tax credit for new plug-in electric vehicles (EVs) by allowing an additional 400,000 vehicles per manufacturer to be eligible for a credit of up to $7,000. Currently, the tax credit is worth up to$7,500 until a manufacturer sells more than 200,000 vehicles. In late September, groups that stand to benefit from the extension of the federal tax credits wrote to Senator McConnell and other leaders in Congress, encouraging them to support on the Drive America Forward Act. As IER has documented in the past, lawmakers should not extend the EV tax credit as the policy is unnecessary, inefficient, unpopular, costly, and unfair.

Unnecessary and inefficient

The EV tax credit is not necessary to support an electric vehicle market in the U.S. as one group estimates that 70 percent of EV owners would have purchased their vehicle without receiving a subsidy, which is reasonable seeing as 78 percent of credits go to households making more than $100,000 a year.  Furthermore, the federal tax credit overlaps with a number of other government privileges for EVs, including:

  • State rebates and/or other favors (reduced registration fees, carpool-lane access, etc.) in California, as well as in 44 other states and the District of Columbia.
  • Tax credits for infrastructure investment, a federal program that began in 2005 and, after six extensions, expired in 2017.
  • Federal R&D for “sustainable transportation,” mainly to reduce battery costs, averaging almost $700 million per year.
  • Credit for EV sales for automakers to meet their corporate fuel economy (CAFE) obligations.
  • Mandates in California and a dozen other states for automakers to sell Zero-Emission Vehicles—a quota in addition to subsidies.

Even if the federal tax credits were needed to support demand for EVs, the extension of the tax credit would be an absurdly inefficient means of achieving the stated goal of the policy, which is ostensibly to lower carbon emissions. The Manhattan Institute found that electric vehicles will reduce energy-related U.S. carbon dioxide emissions by less than 1 percent by 2050.

Unpopular

Lawmakers should be aware that the vast majority of people do not support subsidizing electric vehicle purchases. The American Energy Alliance recently released the results of surveys that examine the sentiments of likely voters about tax credits for electric vehicles. The surveys were administered to 800 likely voters statewide in each of three states (ME, MI and ND). The margin of error for the results in each state is 3.5 percent.

The findings include:

  • Voters don’t think they should pay for other people’s car purchases. In every state, overwhelming majorities (70 percent or more) said that while electric cars might be a good choice for some, those purchases should not be paid for by other consumers.
  • As always, few voters (less than 1/5 in all three states) trust the federal government to make decisions about what kinds of cars should be subsidized or mandated.
  • Voters’ sentiments about paying for others’ electric vehicles are especially sharp when they learn that those who purchase electric vehicles are, for the most part, wealthy and/or from California.
  • There is almost no willingness to pay for electric vehicle car purchases. When asked how much they would be willing to pay each year to support the purchase of electric vehicles by other consumers, the most popular answer in each state (by 70 percent or more) was “nothing.”

The full details of the survey can be found here.

Costly and unfair

Most importantly, an extension of the federal EV tax credit is unfair as the policy concentrates and directs benefits to wealthy individuals that are predominantly located in one geographic area, namely California. A breakdown of each state’s share of the EV tax credit is displayed in the map below:

In 2018, over 46 percent of new electric vehicle sales were made in California alone. Given that California represents only about 12 percent of the U.S. car market, this disparity means that the other 49 states are subsidizing expensive cars for Californians.  However, in order to understand the full extent of the benefits that people in California are receiving, some further explanation is in order.

When governments enact tax credit programs that favor special businesses without reducing spending, the overall impact is parallel to a direct subsidy as the costs of covering the tax liability shift to the American taxpayer or are subsumed in the national debt (future taxpayers). California offers a number of additional incentives on top of the federal tax credit for electric vehicles that are also driving demand for EVs in the state. These incentives include an additional purchase rebate of up to $7,000 through the Clean Vehicle Rebate Project, privileged access to high-occupancy vehicle lanes, and significant public spending on the infrastructure needed to support EVs. Therefore, the additional incentives that California (and other states) offer to promote EVs have broader impacts as these policies incentivize more people to make use of the federal tax credit, passing their costs on to American taxpayers. In other words, you’re not avoiding the costs of California’s EV policies by not living in California.

This problem is made even worse when we consider the impact of zero-emission vehicle (ZEV) regulations, which require manufacturers to offer for sale specific numbers of zero-emission vehicles. As recently as 2017, auto producers have been producing EVs at a loss in order to meet these standards, and they have been passing the costs on to their other consumers. This was made apparent in 2015 by Bob Lutz, the former Executive Vice President of Chrysler and former Vice-Chairman of GM, said:

“I don’t know if anybody noticed, but full-size sport-utilities used to be — just a few years ago used to be $42,000, all in, fully equipped. You can’t touch a Chevy Tahoe for under about $65,000 now. Yukons are in the $70,000. The Escalade comfortably hits $100,000. Three or four years ago they were about $60,000. What this is, is companies trying to recover what they’re losing at the other end with what I call compliance vehicles, which are Chevy Volts, Bolts, plug-in Cadillacs and fuel cell vehicles.”

Fiat Chrysler paid $600 million for ZEV compliance credits in 2015 (plus an unknown amount of losses on their EV sales), and sold 2.2 million vehicles, indicating Fiat Chrysler internal combustion engine (ICE) buyers paid a hidden tax of approximately $272 per vehicle to subsidize wealthy EV byers. ICE buyers were 99.3 percent of U.S. vehicle purchases in 2015. So, even if half the credits purchased were for hybrids, each EV sold in 2015 was subsidized by more than $13,000 in ZEV credit sales, in addition to all of the other federal, state, and local subsidies.

As is typical with most policies that benefit a politically privileged group, the plan to extend the federal tax credit program comes with tremendous costs, which are likely being compounded by people abusing the policy.  One estimate found that the overall costs of the Drive America Forward Act would be roughly $15.7 billion over 10 years and would range from $23,000 to $33,900 for each additional EV purchase under the expanded tax credit. Seeing as the costs of monitoring and enforcing the eligibility requirements of the EV tax credit program are not zero, it should surprise no one that the program has been abused as it has recently come to light that thousands of auto buyers may have improperly claimed more than $70 million in tax credits for purchases of new plug-in EVs. Finally, additional concerns arise over the equity of the federal EV tax credit due to the fact that half of EV tax credits are claimed by corporations, not individuals

End this charade

When the tax credit was first adopted, politicians assured us that the purpose of the program was to help launch the EV market in the U.S. and that the tax credit would remain capped at the current limit of 200,000 vehicles. At that time, we warned that once this program was in place, politicians would continue to extend the cap in order to appease the demands of manufacturers and other political constituencies that were created by the program. A decade later, we find ourselves in that exact situation. At this point, it should be clear that Congress should not expand the federal EV tax credit as the program is nothing more than an extension of special privileges to wealthy individuals and corporations that are mostly located in California. If Congress can’t find the courage to put an end to such an unfair and inefficient policy, President Trump should not hesitate to veto any legislation that extends the federal EV tax credit, as doing so would be consistent with his approach to other energy issues such as CAFE reform.


AEA to Senate: Highway Bill is Highway Robbery

WASHINGTON DC (July 30, 2019) – Today, Thomas Pyle, President of the American Energy Alliance, issued a letter to Senate Environment and Public Works Committee Chairman John Barrasso highlighting concerns about the recently introduced America’s Transportation Infrastructure Act. Included in the legislation is an unjustified, $1 billion handout to special interests in the form of charging stations for electric vehicles.  AEA maintains that provisions like this are nearly impossible to reverse in the future and create a regressive, unnecessary, and duplicative giveaway program to the wealthiest vehicle owners in the United States. 
 
Read the text of the letter below:
 

Chairman Barrasso,

The Senate Committee on Environment and Public Works is scheduled to consider the reauthorization of the highway bill and the Highway Trust Fund today.  At least some part of this consideration will include provisions that provide for $1 billion in federal grants for electric vehicle charging infrastructure.  This is among $10 billion in new spending included in a “climate change” subtitle.  All of this new spending is to be siphoned away from the Highway Trust Fund (HTF), meant to provide funding for the construction and maintenance of our nation’s roads and bridges.  The HTF already consistently runs out of money, a situation that will only be exacerbated by these new spending programs.

We oppose this new federal program for EV infrastructure for a number of reasons, including, but not limited to the following:

  • The grant program, once established in the HTF, will never be removed.  Our experience with other, non-highway spending in the trust fund (transit, bicycles, etc.) is that once it is given access to the trust fund, the access is never revoked.  Our nation’s highway infrastructure already rates poorly in significant part due to the diversion of highway funds to non-highway spending.
  • As we have noted elsewhere, federal support for electric vehicles provides economic advantages to upper income individuals at the expense of those in middle and lower income quintiles.  This grant program would exacerbate that problem.
  • This program will result in taxpayers in States with few electric vehicles or little desire for electric vehicles having their tax dollars redirected from the roads they actually use to subsidize electric vehicle owners in States like California and New York.
  • This program is duplicative.  There is already a loan program within DOE that allows companies and States to get taxpayer dollars to subsidize wealthy electric vehicle owners.

For these and other reasons, we oppose the provisions that would create a regressive, unnecessary, and duplicative giveaway program to wealthy, mostly coastal electric vehicle owners.  This giveaway not only redirects taxpayer money from the many States to the few, in looting the Highway Trust Fund it also leaves those many States, including Wyoming, with less money to maintain their own extensive road networks.


Sincerely,

Thomas J. Pyle

The Unregulated Podcast #171: Learn to Mine

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss shake-ups in the Senate, how the pending spending deal is shaping up, and what recent events in the 2024 presidential race mean for November. Later they are joined by Yaron Brook, Chairman of the Ayn Rand Institute, for a discussion on his recent work and the Biden administration’s relationship with Israel.

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China Building Factories In Mexico To Cash In On Biden’s EV Mandates

BYD, China’s largest EV auto maker, which recently surpassed Tesla as the world’s biggest seller of electric vehicles, is reviewing potential locations for a plant in Mexico that would allow it to bring its low-cost electric vehicles into the United States. Mexico offers close proximity to U.S. markets, relatively low labor costs and the opportunity to take advantage of low or zero tariffs on made-in-Mexico vehicles. Some of the locations BYD is considering are near the U.S. border. At least a dozen Chinese electric-car component suppliers have also announced new factories or added to their existing investments in Mexico in recent years. They are responding to a U.S.-Mexico-Canada trade deal that encourages carmakers in North America to use locally sourced materials.

BYD is looking to expand globally as it has an excess domestic EV inventory. CEOs at rival automakers have warned about the potential threat from China, with some suggesting the need for more government action to avert such competition in the United States as Chinese automakers have a big cost advantage in the electric vehicle market with China’s dominance of the battery supply chain and processing of essential minerals. Through engineering, government subsidies and lower labor costs, BYD and other China-based EV makers have been able to entice customers with stylish and technologically advanced electric vehicles at attractive prices. If China can lock buyers into electric vehicles dependent upon its dominant supply chains, it would strengthen its position as the world’s leading car manufacturer.

BYD’s low-price electric vehicles have gained traction with buyers in places such as Europe and Southeast Asia. Europe, where Chinese EV imports are strong due to their lower price and Europe’s net zero carbon goals, is conducting an investigation into whether China provided subsidies to the industry unfairly, making it more difficult for European EV carmakers to compete. The investigation could result in new tariffs if EU officials find the Chinese companies are receiving unfair subsidies. The Biden administration is monitoring Chinese investment in Mexico amid concerns Chinese businesses could take advantage of North American free-trade agreement rules.

Carlos Tavares, chief executive of Chrysler-parent Stellantis, likened China’s potential entry in the United States to the arrival of the Japanese automakers in the 1970s and South Korean firms in the 1990s, calling their expansion as “very Powerful.” Tesla Chief Executive Elon Musk also expressed similar concerns, saying the Chinese companies have already had significant success outside of China and are now the “most competitive” in the world.

Currently, Chinese-built electric vehicles are subject to a 27.5 percent tariff when imported into the United States that is composed of a 2.5 percent tariff that generally applies to imported cars plus an additional 25 percent tariff on Chinese-made cars that was introduced by the Trump administration in 2018. The Biden administration is debating whether to raise tariffs on Chinese electric vehicles further, and the Inflation Reduction Act limits eligibility for a $7,500 consumer tax credit for cars built with batteries made by Chinese companies.

In comparison, cars made at a Chinese-owned factory in Mexico would only be faced with the 2.5 percent tariff upon entering the United States and could possibly pay no tariff if they met stringent standards for local content under the U.S.-Canada-Mexico Agreement adopted in 2020.

Executives at Toyota estimated that Chinese companies had a 25 percent to 30 percent cost advantage over global competitors when manufacturing electric vehicles—more than enough to overcome the small 2.5-percent U.S. tariff. Pushing EV adoption too quickly would serve, however, as an invitation for Chinese EV companies including BYD, Geely and NIO to enter rigorously into the U.S. EV market. President Biden has a goal of electric vehicles making up 50 percent of new car sales by 2030, and his EPA and Department of Transportation have proposed rules that would effectively force electric vehicles to make up two-thirds of new car sales in 2032. The Biden Administration is pushing electric vehicles upon manufacturers and consumers and enticing them with subsidies for vehicles and charging stations.

BYD sees other potential uses for the plant in Mexico, including using it as an export hub for shipping cars to South America or sending batteries and other car parts to the United States. In China, BYD makes many EV parts in-house, including its EV batteries, to reduce costs—advantages it may or may not be able to replicate in Mexico. In North America, the company currently sells electric buses and trucks made at its location in Lancaster, California.

Conclusion

Chinese companies are looking into building EV car factories in Mexico to take advantage of the Mexico-U.S.-Canada trade agreement and avoid hefty tariffs on imports of electric vehicles coming directly from China. In particular, BYD, China’s largest EV automaker that recently surpassed Tesla in sales, is looking at locations in Mexico near the U.S. border. Chinese companies have a 25 to 30 percent cost advantage over U.S. competitors because of dominance in the EV battery supply chain and processing of critical minerals as well as low-cost labor and attractive energy prices. CEOs of U.S. automakers are worried that China could make a serious dent in the EV market as Japan and South Korea have done in the conventional auto market previously. With onerous proposed EV rules by Biden administration agencies on U.S. carmakers, the competition could be disastrous for legacy car makers, who are currently losing vast sums on meeting Biden’s EV goals.


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

The Unregulated Podcast #170: Frustration. Anxiety. Discouragement.

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the growing fatigue of the #TeamBiden and highlights from the world of energy.

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Biden Slows, Not Reverses, Unpopular EV Mandates In Election Year Gimmick

In a concession to automakers and labor unions during an election year, the Biden administration plans to relax elements of its regulations to limit tailpipe emissions that are designed to get Americans to switch from gas-powered cars to electric vehicles.  Biden’s EPA is planning to give automakers more time to ramp up sales of electric vehicles. The revised regulations would not require a sharp increase in EV sales until after 2030. The final rule is expected to be published by early spring. The auto industry and unionized auto workers backed Biden in the 2020 election but they now worry that Biden’s abrupt transition to electric vehicles would result in a loss of jobs. Further, consumer demand for electric vehicles has been waning, with potential buyers put off mainly by high vehicle prices and associated costs as well as the lack of charging stations.

Last spring, the Environmental Protection Agency proposed the toughest-ever limits on tailpipe emissions, forcing car makers to sell a huge number of zero-emissions vehicles in a relatively short time frame or pay stiff penalties. The EPA designed the proposed regulations so that 67 percent of sales of new cars and light-duty trucks would be all-electric by 2032, up from 7.6 percent in 2023, a radical remaking of the American automobile market. The regulation was designed to match Biden’s goal that 50 percent of new car sales must to be electric by 2030. EPA’s plan for the final regulations, however, is to have electric vehicle sales increase more gradually through 2030 but then to rise sharply.

The change is to mollify automakers who want more time to build a national network of charging stations and to bring down the cost of electric vehicles, and to labor unions that want more time to try to unionize new electric car plants that are opening around the country, particularly in the South. Biden needs auto union backing for this election, which was threatened last spring, when the Environmental Protection Agency proposed the new limits on tailpipe emissions. Soon after, Shawn Fain, president of the United Auto Workers, wrote that the union was withholding its endorsement of Mr. Biden’s re-election bid over “concerns with the electric vehicle transition.” The union has been wary of electric vehicles since they require fewer workers to assemble and many electric vehicle plants are being built in states with few unions. In public comments it filed regarding the proposed rule, the United Auto Workers pressed the Biden administration to relax the compliance timeline so that it “increases stringency more gradually, and occurs over a greater period of time.” In early January, the EPA sent a revised version of its auto emissions rule with the longer time frame to the White House. After receiving it, the United Auto Workers endorsed Mr. Biden. The EPA’s decision was clearly political, rather than based upon science as it had claimed.

Despite a record 1.2 million electric vehicles that were sold in the United States last year, EV growth is slowing, making the nearly tenfold increase in sales within just eight years that EPA regulations would require infeasible. The slowdown in EV sales is to be expected, as the market for early adopters — typically wealthier, coastal urban residents who have bought an electric vehicle as a second car — is saturated.

While buyers of new electric vehicles are eligible for up to $7,500 in federal tax credits, only 18 models are currently eligible for the full credit, down from about two dozen last year. One of those eligible models, the Ford F-150 Lightning, an all-electric pickup truck that once had a waiting list of 200,000, last year saw sales of 24,000, far short of the 150,000 sales projected by Ford. And while construction of EV chargers is expanding, nearly doubling from about 87,000 in 2019 to more than 172,000 last year, more than two million chargers will be needed by 2030 to support the growth in electric vehicles required by the proposed rules.

Auto companies have invested about $146 billion over the past three years in researching and developing electric vehicles. If the regulations as currently defined were implemented, auto companies would face billions of dollars per year in fines if the emissions associated with their auto sales exceed the limits set by the regulators.  These costs are being covered by price increases for vehicles consumers actually want, driving their prices higher.  This is already happening as new car prices have hit record highs. Even non-EV purchasers are paying the price for Biden’s EV dreams.

Source: Cox Automotive

EPA models show that postponing the sharp increase in electric vehicle sales until after 2030 would eliminate roughly the same amount of auto tailpipe emissions as the original proposal by 2055. According to Ali Zaidi, Biden’s senior climate adviser, Biden’s climate policies, combined with record federal investment in renewable energy, would still reach the president’s goal of cutting the country’s greenhouse gas emissions in half by 2030.

Conclusion

President Biden is reacting to an election year situation when he decided to slow the push for EV sales required by his regulations because he needs the votes of union members to get reelected. Not only does the EPA have a tailpipe emissions regulation that requires two-thirds of new car sales in 2032 to be electric, but the Department of Transportation’s Corporate Average Fuel Economy proposed standards require the same outcome and will need to be changed in concert with the EPA rule. This clearly shows that both science and safety are no longer relevant to either EPA or the NHTSA, and instead, their decisions are purely political.

Car manufacturers recognize that sales growth in electric vehicles is slowing and that more time is needed for consumers to adjust to the EV transition. Further, for more adoption of electric vehicles, prices need to come down, more charging stations need to be built, vehicle range needs to be improved as well as the battery technology that guides it, and insurance costs need to be more commensurate with those of traditional vehicles.


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

Qatar and Mexico Big Winners of Biden’s Attack on American LNG

The $2 billion conversion of Mexico’s Energia Costa Azul gas terminal into an LNG export facility will open a new, faster means for U.S. natural gas producers to access Asian gas markets, circumventing the Panama Canal. Costa Azul’s conversion is the first of several gas export projects proposed in Mexico, but President Joe Biden’s recent pause on LNG export approvals casts uncertainty over their timelines and development, as these ventures need Energy Department authorization to ship U.S. gas abroad.

By next year, American natural gas could start flowing by pipeline from the United States to a major export terminal on the Mexican Pacific coast, be converted to LNG and shipped to Asian markets. The new route could cut travel times to Asian nations roughly in half, bypassing the drought-ridden Panama Canal. The U.S. hydraulic fracturing boom has made the United States the world’s largest natural gas producer and exporter and world demand for U.S. natural gas has risen as the world has begun using more gas in power plants, factories and homes, substituting for coal in some cases. Natural gas demand is growing in China, India and Southeast Asian countries.

Mexico’s Energía Costa Azul, located between Baja California’s agave-covered mountains and the Pacific Ocean, was originally operated  as an import facility to supply gas to California and Arizona for electricity production. It is undergoing a $2 billion conversion into an LNG export facility for U.S.-produced gas to be shipped to Asia. It is the first in a network of gas exporting facilities planned along Mexico’s West coast.

Source: New York Times

Last month, the Biden administration paused the approval process for new export-terminal projects in the United States while its Department of Energy considers the effects of gas on greenhouse gas emissions. The pause affects several proposed Mexican LNG projects because they would be exporting U.S. gas. Costa Azul is not affected as it already has its approvals and is mostly complete, following an agreement between President Trump and Mexico’s president in 2020 under the United States-Mexico-Canada (USMCA) trade agreement. If all five planned terminals in Mexico were eventually built and operated at their proposed volumes, Mexico would become the fourth-largest exporter of gas in the world with each terminal theoretically operating for decades.

Besides being closer to Texan gas fields than states along the U.S. West Coast, Mexico’s less arduous environmental rules and cheaper construction costs are some of the reasons these export terminals are being proposed there rather than along the U.S. West Coast where states have opposed them. Mexico will get the investment and jobs instead. The terminals are essentially American as they are mostly owned, operated and supplied by U.S. gas companies. The United States has seven operating LNG export terminals and five more under construction, and is forecast to double its export volumes within the next four years.

Up until recently, tankers could make it through the Panama Canal relatively quickly, and journey times from U.S. Gulf of Mexico export terminals to Asia were reasonable. But drought in Panama has severely curtailed the number of ships passing through the canal each day.

Despite gas being cleaner to burn than oil or coal, environmentalists note that the emissions from liquefying the gas, which is energy intensive, and shipping it long distances around the globe should be considered. Despite that, state and federal officials in Mexico have touted the proposed export terminals as job creators.

Projected demands for gas in Asia have attracted investors from around the world and proposals for new export terminals have proliferated. Well before construction even begins, gas contracts have been signed for deliveries decades into the future.

According to Muthu Chezhian, the C.E.O. of LNG Alliance, a Singaporean company planning to build an export terminal in the Mexican state of Sonora, Biden’s directive has made potential Asian buyers nervous. Previously they had been excited about this LNG project and had felt assured of ample supplies due to nearly a decade of reliable U.S. gas expansion. Biden’s directive, however, sent shock waves through Asian demand markets. Because Chezhian’s project already has Department of Energy approval, there is a good chance it still will be built as long as its investors do not back out or unless it cannot meet a 2028 deadline to start operation. Missing the deadline would require applying for an extension from the Department of Energy, as extensions are also part of Biden’s pause directive.

The biggest proposed export terminal along the Gulf of California, called Mexico Pacific, faces tough odds. It would be roughly 10 times as large as Costa Azul if all its proposed phases were to be built. But while it also has Department of Energy approval, its deadline to start exporting is next year. Since construction takes years and has not yet begun, the project most likely would need to apply for an extension. If all of Mexico Pacific’s proposed phases were to be built, it would be even larger than the largest proposed project on U.S. soil, Venture Global’s CP2 project that caused environmentalists to push Biden into the pause to LNG approvals.

Since LNG projects are enormously expensive and need investment certainty, delays to construction are major problems and could result in huge cost increases. The ripple effects on the global gas market by President Biden’s directive are still shaking out. And it is unclear how long the pause will remain in effect, though some are speculating it will remain until after the election. Because the LNG industry often sells its product through long-term contracts decades in advance, investors are likely to look toward U.S. competitors in the gas market or to current operators in the United States and Mexico that have room for growth. Biden’s pause will help other big LNG producers like Qatar and Australia, placing the United States last. Within the United States and Mexico, projects that have received approval and do not need an extension will see a rush of interest because the unapproved projects will probably have at least a year of delay.

House Bill on LNG

The House of Representatives has a proposed bill to reverse the pause on LNG export approvals. H.R. 7176, Unlocking our Domestic LNG Potential Act of 2024, would give the Federal Energy Regulatory Commission, an independent agency, exclusive jurisdiction to approve LNG facilities. The bill is up for a floor vote. House law makers argue that the pause could have deleterious effects on national security and the climate. The bill is sponsored by Rep. August Pfluger (R-Texas) and Democrats Henry Cuellar of Texas and Mary Peltola of Alaska, along with 17 other House Republicans.

The White House has expressed strong opposition to the bill, but stopped short of issuing a veto threat. According to European Commission Executive Vice President Maros Sefcovic, U.S. LNG supplies to Europe will be unaffected for the next few years, but emphasized the U.S.’ responsibility for energy security beyond Europe. Sefcovic said the United States is now the “global guarantor of energy security” and its responsibility goes beyond Europe. Southeast Asia, India, Latin America and Africa need gas supplies to phase out reliance on coal. Biden’s pause directive could result in more coal being burned instead of natural gas.

Conclusion

The world is looking to American natural gas as the United States is now the largest producer and exporter of natural gas due to innovations in production through hydraulic fracturing and directional drilling. LNG export terminals are being constructed in the United States and in Mexico to ship LNG abroad. But President Biden has put a pause on approvals from the Department of Energy (DOE) so that that agency can evaluate the climate impacts of approving such projects.

DOE approvals not only affect the United States but also Mexican export terminals as they are fueled by U.S.-produced gas. Biden’s pause has the world worried and exporters troubled by the length of the delay, increases in costs, and prospective buyers going elsewhere for supplies such as to Qatar and Australia. President Biden is clearly not putting U.S. interests first. The House of Representatives has a bill that would put all approvals on the jurisdiction of FERC, which is an independent agency. The White House opposes the bill, but has not yet said that Biden would veto it.


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

The Unregulated Podcast #169: This Is Gratuitous

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna go over the recent shake-ups at FERC brought on, in part, by the FOIA requests made by the Institute for Energy Research, and other energy stories in the headlines. Later, Ryan Walters, the Superintendent of Public Instruction of Oklahoma, joins the show for a discussion on the state of American education.

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House Rightly Reverses President Biden’s Harmful Ban on U.S. LNG Facilities

WASHINGTON DC (02/15/2024) – Today, the U.S. House of Representatives passed H.R. 7176, the Unlocking our Domestic LNG Potential Act of 2024 by a vote of 224 – 200. This bill, introduced by Rep. August Pfluger (R-TX), reverses President Biden’s ban on approvals of exports of liquified natural gas (LNG). Increased U.S. exports reduce global emissions, restore U.S. reliability as an energy supplier to our allies, and lower energy prices for American consumers.

Following passage of this legislation, AEA President Thomas Pyle issued the following statement:

“President Biden’s recent decision to side with his base of out-of-touch environmental activists is yet another attack on American consumers and the energy security of our allies. We applaud this effort to reverse one of the administration’s growing list of more than 175 wrongheaded decisions and unlock the energy potential of the U.S. energy industry.”


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Key Vote YES on H.R. 7176

The American Energy Alliance support H.R. 7176, Unlocking our Domestic LNG Potential Act, which would remove restrictions on approvals of exports of liquified natural gas.

The restrictions targeted for repeal by H.R 7176 are antiquated procedures left over from the days of energy scarcity. Fears that the United States was running out of natural gas prompted special approval requirements for any exports. This is not the world we live in today. Domestic natural gas production has nearly doubled in the last 15 years and the United States has become the world’s leading exporter of LNG. Despite fear-mongering when LNG exports first began a decade an ago, domestic gas prices have not increased as a result of increasing exports, and remain far lower than the highs reached in the 2000’s. Increased export markets have further encouraged investment in domestic production, fueling a virtuous cycle of abundant, affordable energy for Americans, domestic economic growth, and increasing American energy supplies to our friends and allies around the world.

Today these restrictions only serve as political tools. In the early days of LNG exports, the Obama administration used these procedures to unreasonably delay approvals of LNG terminals. Eventually the overwhelming weight of evidence of positive economic, environmental, and national security benefits from LNG exports forced that administration to relent. Recently, the Biden administration has again sought to delay approvals for political reasons.

It is long past time to eliminate these restrictions on LNG exports. Their original justification has long since been superseded by natural gas production growth. The restrictions serve only to increase costs and uncertainty in the LNG industry, undermining domestic economic investment and weakening America’s geopolitical position.

A YES vote on H.R. 7176 is a vote in support of free markets and affordable energy. AEA will include this vote in its American Energy Scorecard.

The Unregulated Podcast #168: You Know Who You Are

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna provide a rundown of the the latest deals going down in Congress and the state of EV sales in America. The team are joined by Greg Sindelar, the CEO of the Texas Public Policy Foundation (TPPF) for a discussion on what’s happening in the great state of Texas.

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To Keep Roads Safe America’s Guardrails Will Need Replaced Under Biden’s EV Mandate

Electric vehicles typically weigh significantly more than gasoline-powered cars and can easily crash through steel highway guardrails that are not designed to withstand the extra force, raising concerns about roadside safety, according to a crash test by the University of Nebraska. Electric vehicles typically weigh 20 percent to 50 percent more than gas-powered vehicles due to their batteries that can weigh almost as much as a small gas-powered car. For example, Ford’s F-150 Lightning EV pickup is 2,000 to 3,000 pounds heavier than the same model’s combustion version. The Mustang Mach E electric SUV and the Volvo XC40 EV are roughly 33 percent heavier than their gasoline counterparts. Besides the weight factor, electric vehicle batteries are typically installed under the vehicle, giving it a low center of gravity. Because of these differences, guardrails do little to stop electric vehicles from pushing through the barriers typically made of steel. Paradoxically, the Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) is currently proposing a steep hike in fuel economy standards that will result in forcing two-thirds of new auto sales to be electric by 2032.

The U.S. guardrail system was not made to handle vehicles greater than 5,000 pounds and there are a lot of new vehicles in the 7,000-pound range being manufactured. The extra weight of electric vehicles comes from their outsized batteries needed to achieve a travel range of about 300 miles per charge. The extra weight also poses a problem to faster wear and tear to residential streets and driveways, vehicle tires and infrastructure like parking garages. A lot of parking structures were built to hold vehicles that weigh 2,000 to 4,000 pounds and the cities in which they predominate are most likely to attract EV buyers.

Last fall, engineers at Nebraska’s Midwest Roadside Safety Facility watched an electric-powered pickup truck hurtle toward a guardrail installed on the facility’s testing ground on the edge of the local municipal airport. The nearly 4-ton 2022 Rivian R1T tore through the metal guardrail and hardly slowed until hitting a concrete barrier yards away on the other side. Rivian trucks weigh nearly 2,000 pounds more than conventional pickups. Last year, the National Transportation Safety Board expressed concern about the safety risks heavy electric vehicles pose if they collide with lighter vehicles. The Rivian truck tested in Nebraska showed almost no damage to the cab’s interior after slamming into the concrete barrier, which indicates that they offer protection to their occupants if the electric vehicle is big enough and heavy enough.

While heavier vehicles are safer for their own occupants, they are more hazardous for the occupants of other vehicles. In crashes, the “baseline fatality probability” increases 47 percent for every 1,000 additional pounds and the fatality risk is even higher if the striking vehicle is a light truck (SUV, pickup truck, or minivan), according to the National Bureau of Economic Research. The average weight of U.S. vehicles increased from about 3,400 pounds to 4,300 pounds over the last 30 years as Americans switched from passenger cars to pickups and SUVs as Corporate Average Fuel Economy (CAFÉ) standards downsized regular passenger cars.

But the purpose of guardrails, found along tens of thousands of miles of U.S. roadway, is to keep passenger vehicles from leaving the road. Guardrails are intended to keep cars from careening off the road at critical areas, such as over bridges and waterways, near the edges of cliffs and ravines and over rocky terrain, where injury and death in an off-the-road crash is much more likely. Guardrails are generally a safety feature of last resort. 

Electric vehicles also have very high horsepower ratings, allowing them to accelerate quickly even in crowded urban areas, which drivers are typically not trained to handle.  Also, many newer electric SUVs are tall with limited visibility that poses risks to pedestrians or drivers of smaller vehicles.

similar finding to the Nebraska study was from a preliminary crash test sponsored by the U.S. Army Corps of Engineers’ Research and Development Center. A Tesla sedan crashed into a guardrail, lifted it and passed under it. Both tests show the guardrail system is likely to be overmatched by heavier electric vehicles. More testing, involving computer simulations and test crashes of electric vehicles, is planned and needed to determine how to engineer roadside barriers that minimize the effects of crashes. Better collaboration between transportation engineers and vehicle manufacturers is also needed.

Conclusion

While their design makes it more difficult for electric vehicles to roll over due to their low center of gravity, crash tests show that road barriers and guardrails may not be equipped to protect electric vehicle drivers. The University of Nebraska and the U.S. Army Corps of Engineers both conducted EV crash tests with guardrails, finding similar results. The guardrails were not built for the weight of many electric vehicles, nor were U.S. roads, driveways, parking garages and vehicle tires. Despite this safety issue and numerous other issues with electric vehicles, including higher costs, dependency upon China for necessary minerals, higher insurance costs, range anxiety and tires wearing out before 10,000 miles,  President Biden wants 50 percent of new car sales in the United States in 2030 to be electric.


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