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Biden Decrees New Rule To Make Electricity More Expensive and Less Reliable

May 10, 2024 by Leave a Comment

Biden’s Environmental Protection Agency (EPA) has finalized its power plant rule and, in most cases, has made it more restrictive than what it proposed last year, incorporating comments from environmentalists rather than addressing concerns about the impacts on consumers and the utilities who serve them. EPA’s power plant rule targets electricity from coal and natural gas, which together make up about 60 percent of the electricity generation in the United States while providing firm power to the grid and back-up to intermittent and weather-driven solar and wind plants. The rule is likely to face challenges in court and from Congress.

The changes include:

  • Coal plants will need to start capturing 90 percent of their carbon dioxide emissions by 2032 rather than in 2030, as originally proposed. However, Carbon capture and sequestration technology is neither commercially available nor economic.
  • Future gas-fired plants must install carbon capture systems by 2032, rather than 2035.
  • The threshold for future gas facilities that are considered high-capacity — and thus covered by the rule’s strictest standards—now applies to plants that run 40 percent of the time, rather than 50 percent, as originally proposed.
  • Green hydrogen is no longer being used as a benchmark technology for future gas plants.
  • Facilities that broke ground after the proposal came out last year and that will run frequently must capture 90 percent of their emissions, or prevent that amount of emissions some other way, or close down.
  • Fossil fuels plants that are not retrofitted with carbon capture systems must exit the grid by January 2039, instead of January 2040 as originally proposed. Environmental groups, the National Resource Defense Council (NRDC) and the Clean Air Task Force had asked EPA to set that date to January 2038.

Existing natural gas plants are not included in the current rule as EPA administrator Michael Regan says the agency is taking more time to strengthen rules for existing gas power plants. For now, the agency is gathering input for that proposed rule in a “non-regulatory docket,” which the EPA website says are “not related to the development of a rule.” The agency did not say how long that process might take, but some believe it will be after the election so as not to alarm Americans by the threat to the grid that a very restrictive regulation would cause. The reliability of the U.S. electric grid is being threatened by intermittent and weather-driven wind and solar power and a reduction of firm power from retirements of coal, natural gas and nuclear power capacity.

According to Jim Matheson, CEO of the National Rural Electric Cooperative Association, “The path outlined by the EPA today is unlawful, unrealistic and unachievable” because the rule oversteps EPA’s authority, relies on technologies that are not ready to deploy and does not give existing coal and new gas power plants enough time to comply. The group’s members spread throughout rural America get 63 percent of their electricity from fossil fuels, as does most of the nation.

Besides the power plant rule, the EPA is also finalizing rules to limit toxic wastewater pollution from coal plants, strengthen regulations on coal ash and limit mercury and other toxins from burning coal for electricity. This is consistent with President Biden’s promise to end fossil fuels in the United States, despite those fuels supplying the vast majority of energy.

Bipartisan Congressional Objections

A group of House Democrats, led by House Energy-Water Appropriations Subcommittee ranking member Marcy Kaptur (D-Ohio), urged EPA Administrator Michael Regan to “defer finalizing the proposed rules until an updated reliability assessment of the proposal is complete and made public.”  Congresswoman Kaptur is worried that closing so many electricity plants will lead to power disruptions whose effects will ripple through the economy and people’s lives.

Rep. Andrew Garbarino (R-N.Y.), the co-chair of the bipartisan House Climate Solutions Caucus, said that while “decarbonization of the electric power sector is an important environmental priority,” it “must be accomplished in a manner that preserves electric affordability, reliability, and security.” He also said that EPA and the White House ought to go through Congress in pursuing an emissions reduction blueprint rather than relying on regulations.

Last year, Senate Environment and Public Works ranking member Shelley Moore Capito (R-W.Va.) and Senate Energy and Natural Resources ranking member John Barrasso (R-Wyo.) asked the Federal Energy Regulatory Commission to hold “a series of technical conferences to analyze the impact of the [rule] on electric reliability.”  FERC did not respond to the request so there is no independent analysis of the potential impact on the grid.

Carbon Capture Technology Still in Its Infancy

EPA’s justification for the rule relies on projections about how fast new technologies to reduce carbon dioxide emissions develop, notably carbon capture and storage (CCS) on power plant smokestacks. CCS proposes to capture carbon dioxide to keep it out of the atmosphere and would store it, usually underground. That technology is not fully proven despite the Department of Energy (DOE) spending hundreds of millions of dollars funding carbon capture projects, and comes with controversies, such as building more pipelines through communities, which in many cases are not wanted. The carbon dioxide that is captured also can be sold to enhance oil recovery, something environmental groups also oppose.

DOE spent $684 million on carbon capture projects at six coal plants with just one currently operating in Texas after shuttering in 2020 because it could not sustain itself during the pandemic. The other five plants could not sustain themselves financially from the outset. Since the CCS technology is far from being economically viable, if generators are required to add it to reduce 90 percent of their carbon dioxide emissions, the generators will be forced to close. Prospects might be more advantageous if the Biden administration treated all technologies alike. However, with severe penalties and restrictions on fossil fuel technologies and massive subsidies and regulatory exceptions on renewable technologies, the playing field is not level.

Chamber of Commerce Found Multiple Errors in the Original Rule Analysis

An analysis by the US Chamber of Commerce’s Global Energy Institute found significant issues with EPA’s modeling and assumptions associated with the original rule that are likely to still apply. The analysis questioned the EPA’s methodology, highlighting exaggerated emissions reduction claims, overlooked electricity demand factors and questionable deployment timelines for carbon capture and sequestration. As such, the Global Energy Institute found that the EPA may have had its “thumb on the scale” when it came to justifying the rule, in pursuit of its political goals.

Specifically, the Chamber of Commerce found:

  • Unrealistic claims of massive emissions reductions occurring in the absence of the new rule, which leads to significantly suppressed cost projections.
  • Omitting materially increased electricity demand from other EPA rulemakings, which will place greater stress on the power grid.
  • Modeling outputs and real-world data that call into question the deployment timelines of carbon capture and sequestration, which is the technology that EPA is relying on as the centerpiece for industry compliance with the rule.

Conclusion

EPA’s final power plant carbon rule would give some units more time to capture their carbon dioxide emissions, but most aspects of the final rule are stricter than what the agency proposed last year. Under the EPA final rule, newly-built gas plants and existing coal plants will need to eventually control 90 percent of their carbon emissions, which means capturing carbon dioxide emissions using technologies that remove it out of the smokestack before they can be released into the atmosphere, using a technology, carbon capture and sequestration, that is not commercially available or economic. That means that U.S. consumers will be faced with either exorbitant costs for control equipment and greater electric usage being forced upon them by President Biden through his mandates, regulations and standards or be put in a situation of electric reliability akin to third world nations as wind and solar power are inherently unreliable.

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

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The Unregulated Podcast #181: That Was 34 Years Ago!

May 10, 2024 by Leave a Comment

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna talk the 2024 race for the White House, Team Biden’s stunning endorsement of child mining, and are joined by Isaac Orr, the Vice-President of Policy Research at Always On Energy Research, for a discussion on Biden’s regulatory assault on America’s electric grid.

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Biden Makes It Easier For Chinese Companies To Cash In On EV Subsidies

May 7, 2024 by Leave a Comment

The Biden administration will allow consumers to get up to $7,500 on tax credits for electric vehicles containing Chinese graphite through 2026–a two-year extension, making it easier for car manufacturers to make and sell vehicles eligible for the tax credit. The Treasury Department published final rules governing the tax credits, which are designed to encourage EV production and push supply chains for minerals and batteries into the United States. Democrats in Congress expanded EV tax credits in the 2022 Inflation Reduction Act (IRA) to spur rapid electrification of the passenger-automobile fleet, but included a series of escalating requirements that the vehicles exclude critical minerals and other materials from some foreign countries, especially China. China produced about 77 percent of the world’s graphite in 2023 compared to none for the United States.

The graphite restriction was set to take effect in 2025, and because most graphite comes from China, the number of electric vehicles eligible for the tax credit would have dropped, reducing EV sales. Only 22 of 122 EV models on sale in the United States currently qualify for part or all of the $7,500 tax credit. Industry officials objected to the 2025 date as it would be harder to meet Biden’s EV mandates and they would have to pay fines for not meeting EV sales targets. The federal government also determined that it was too difficult to trace the origin of graphite because natural graphite is often mixed with synthetic graphite made from petroleum coke. Other low-value materials, including minerals contained in electrolyte salts and electrode binders, get similar treatment.

To qualify for the two-year extension, automakers must show the government how they will reorient their supply chains and document the origins of their graphite. Because it can take a long time to reshape manufacturing processes, companies will need to move quickly to find more graphite sources outside China so they have electric vehicles eligible for the tax credit in early 2027.

Not Everyone is Happy About the Extension

Sen. Joe Manchin (D., W.Va.), an author of the IRA legislation who pressed for measures to remove Chinese materials from EV supply chains, criticized the Treasury’s two-year extension. He said it delays domestic investment while benefiting “foreign adversaries” such as China and Russia. “Treasury has provided a long-term pathway for these countries to remain in our supply chains,” Manchin said. “It’s outrageous.”

The North American Graphite Alliance, which represents producers, said it was disappointed that automakers were given more time to wean themselves from Chinese graphite. It urged the administration to hold firm to the new timeline, so that car companies and battery makers will lock into purchase contracts for 2027.

Automakers Make Changes to Supply Chains

To get their electric vehicles to qualify for the tax credit, automakers have been adjusting their supply chains for batteries and minerals that have been heavily dependent on China. Car companies and their joint-venture partners are spending tens of billions of dollars to construct battery factories in the United States, allowing companies to qualify some models for a portion of the tax credit that requires that electric vehicles batteries are made in North America–a threshold that began this year. The mineral rules, however, are harder on auto supply chains because most of the core raw materials, such as lithium, nickel, graphite and manganese, are either extracted or processed in China.  China is especially adept at processing the minerals to make them market-ready from their raw or concentrated form, using inexpensive coal power.

The various phase-ins of the IRA rules have resulted in some EV models falling in and out of eligibility as new rules take effect. The battery requirements that began in January rendered several models ineligible because certain components were sourced from outside North America. General Motors, for example, built about 20,000 electric vehicles—including the Chevrolet Blazer and Cadillac Lyriq SUVs—that did not qualify because of the battery rules. In March, the company adjusted its supply to regain eligibility for those models. Companies appear to be concentrating more on pleasing the government’s EV demands than they have been on meeting consumer demands, judging by the slowing EV demand in the auto market.

Conclusion

The Biden administration recently made a number of rule changes that impact the EV tax credit. The rules specify how much government ownership and control in foreign places such as China makes a supplier a “foreign entity of concern.”  They detail how consumers can claim the credits when they purchase new and used cars from dealers rather than waiting to get them on their tax returns. So far this year, more than 100,000 credits worth more than $700 million have been claimed at the point of sale.

One of the recent changes allows automakers to continue to use graphite from China in their electric vehicles through 2026 as the industry indicated that they needed more time to find other suppliers. The Treasury Department also noted that the origin of graphite supplies was difficult to track and is allowing automakers the 2-year extension as long as they work on changing suppliers and document the origin of their graphite. Biden is again doing all it can to get Americans to change their personal mode of transportation to electric vehicles and to allow China to keep its dominance in mineral supply chains and EV batteries.

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

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The Unregulated Podcast #180: May Their Solo Cups Overfloweth 

May 3, 2024 by Leave a Comment

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the harrowing rise in inflation, the continued occupation of campuses across America by the Hamas Wing, a big week in Congress, and more.

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Biden Threatens To Forgo Constitution Over Climate Concerns

May 3, 2024 by Leave a Comment

Senate Majority Leader Chuck Schumer and other Democratic politicians have urged President Biden to declare climate change, which Biden calls an existential threat, a national emergency. According to Bloomberg’s sources, that means that Biden could impose a draconian crackdown on fossil fuels, including suspending offshore drilling, restricting exports of oil and LNG, and ‘throttling’ the industry’s ability to transport its production via pipelines, ships and rail.  Industry experts warned that the measure would discourage investment in domestic energy production and result in higher retail prices. The result would be a recipe for massive economic disaster. Implementation would provide Biden with control over the entire U.S. economy, control of production, manufacturing, distribution, and consumption with his pet renewable projects providing most of the new energy.  Fossil fuels supply about 80 percent of the nation’s energy.

According to the White House, the idea of declaring a climate emergency, first considered in 2021 and again in 2022, is again being considered. Declaring a climate emergency would provide the president with dictatorial powers to hamstring the domestic oil and gas industry more than his executive orders and regulations have already accomplished, which has resulted so far in economic costs of over a $1 trillion. The price tag on private households and businesses of Biden’s regulatory actions is triple the regulatory cost under the Obama administration and 30 times higher than the new regulations under President Trump, according to the American Action Forum.

In what is effectively seen as the Environmental Protection Agency’s “plan to ration electricity”, the Wall Street Journal observed: “The Biden Administration’s regulations are coming so fast and furious that its hard even to keep track.” The Journal said the EPA “proposed its latest doozy—rules that will effectively force coal plants to shut down while banning new natural-gas plants.” These are rules in EPA’s finalized power plant rule.

Independently making a move to declare climate a national emergency ignores that the demand for oil and natural gas is global and will not be reduced because Biden puts limits on U.S. domestic oil and gas production and distribution. Such a move would inevitably create billions of dollars in capital migrating to other parts of the world where environmental regulations are far less stringent than in the United States. The U.S. oil and gas industry has dramatically cut emissions of both methane and carbon dioxide even as it has achieved new records in production. The United States has an Environmental Quality Index much higher than other major oil and gas producing countries. For oil, the United States has an index score of 51.1 compared to 39 for the next 20 oil producers, and for natural gas, the average is 38.6 to 51.1 for the United States.

According to White House officials, they have not made a decision on an emergency proclamation, nor is any declaration imminent. White House discussions over potential policy steps can span years, and many do not come to fruition. According to White House spokesperson Angelo Fernandez Hernandez, Biden has “delivered on the most ambitious climate agenda in history. President Biden has treated the climate crisis as an emergency since day one and will continue to build a clean energy future that lowers utility bills, creates good-paying union jobs, makes our economy the envy of the world and prioritizes communities that for too long have been left behind.”

Her statement, however, ignores the fact that gasoline prices have risen over 50 percent since Biden has become President and residential electricity prices have risen 27 percent. It also ignores the high inflation that has resulted under Biden’s Presidency and the high borrowing costs that are limiting new development projects despite substantial subsidies for the administration’s favorite pet projects funded by American taxpayers.

If Biden were to proclaim a climate national emergency that would veto the extraction, processing and use of fossil fuels in the United States, the massive subsidies and mandates to support favored green industries such as solar, wind, electric vehicles and battery technologies would grow even more. According to the U.S. Energy Information Administration, subsidies for renewable energy producers more than doubled between 2016 and 2022, forming nearly half of all federal energy-related support in that period. The subsidies, via investment tax credits and other instruments mainly based on debt, made available in Biden’s Inflation Reduction Act of 2022 totaling over an estimated $1 trillion over the next ten years increases that number even more. There are also the hidden costs involved with the countless mandates to force “green” initiatives on the public.

Declaring a climate emergency would benefit China since China leads the world in providing batteries, solar panels, critical minerals and components of “green products.” Any plan to force Americans to buy Chinese products increases China’s carbon dioxide emissions as China burns 9 times as much coal as the United States and produces more carbon dioxide emissions than the United States, EU, and Japan combined. If President Biden was able to immediately stop all fossil energy use in the United states, the temperature impact would be a reduction in global temperatures of 0.173°C by 2100—a trifling amount.

Proclaiming a national emergency excuses executive authority from the constraints of the normal rule of law. It evades public opinion, the checks and balances of legislation, and the censure of constitutional impeachment. An emergency declaration allows the president to access funds from the Treasury even for purposes that Congress might have specifically rejected, taking away the House’s “power of the purse.” Thus, accountability to the people for the expenditure of their money, the Constitution’s safeguard for imposing popular will on government, is made redundant. Research by the Brennan Center for Justice catalogs 123 statutory authorities that become available to the president when he declares a national emergency.

Conclusion

President Biden has threatened to make climate a nation emergency several times where he would then be able to force major reductions on the production and distribution of fossil fuels. Most recently, such a proclamation would be to gain the support of the youth who see climate change as an issue. But such a draconian move would be an economic disaster as energy is the backbone of the economy. Biden and his White House staff are right in proclaiming that he has taken more action regarding the environment than any other President and those actions are costing American taxpayers trillions, most of which are being funded from increased national debt.

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

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House Bills Safeguard Federal Land Production

May 2, 2024 by Leave a Comment

WASHINGTON DC (05/02/2024) – This week, the House passed a series of bills sponsored by Natural Resources Committee and Western Caucus Members related to resource development and mining on federal lands. AEA included H.R. 6285, “Alaska’s Right to Produce Act of 2023” in its American Energy Scorecard. This legislation affirms that the National Petroleum Reserve in Alaska and a portion of the Alaska Coastal Plain should – by clear and specific direction from Congress – be available for oil and gas leasing and development.

Following the passage of these bills, AEA President Thomas Pyle issued the following statement:

“We continue to support legislative efforts that call out the Biden administration for their wrongheaded attempts to restrict domestic energy production and raise energy prices. In particular, we commend Natural Resources Subcommittee on Energy and Mineral Resources Chairman Pete Stauber for working to defend oil and gas development in Alaska, while this Department of Interior tries to illegally cancel and suspend leases. The administration’s ‘anywhere but America’ energy policies will spell job losses across The Last Frontier and higher costs for consumers in the lower 48 states. Thankfully, Congressman Stauber recognizes this and is working to protect Alaskans, Minnesotans, and all Americans.”


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Key Vote YES on H.R. 6285

May 1, 2024 by Leave a Comment

The American Energy Alliance supports H.R. 6285 Alaska’s Right to Produce Act of 2023, legislation which would affirm Congress’s clear instructions on leasing and development of energy resources in Alaska.

By clear and specific legislation, Congress has directed that the National Petroleum Reserve in Alaska and a portion of the Alaska Coastal Plain shall be available for oil and gas leasing and development. The Department of Interior, with no legal authorization, has declared that it will simply ignore this clear law and will of Congress, purporting to cancel leases and suspending leasing in these areas.

These actions by Interior are illegal, and this legislation reiterates that Interior’s actions are in contravention of clearly stated existing statute.

A YES vote on H.R. 6285 is a vote in support of free markets and affordable energy. AEA will include this vote in its American Energy Scorecard.

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The Unregulated Podcast 179: Mike’s Last Show

April 26, 2024 by Leave a Comment

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the recently passed foreign aid bill, updates on the unfolding presidential contest, and everything else that has Mike heating up.

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Team Biden Wants You In A Chinese EV

April 25, 2024 by Leave a Comment

A made-in-China electric vehicle will arrive at U.S. dealers this summer offering power and efficiency similar to the Tesla Model Y, with sticker price of about $8,000 less. The $35,000 window sticker of Volvo’s compact SUV (the EX30)–a five-seater electric SUV that will have a 275-mile driving range and a five-second 0-60 mile-per-hour time–will provide a more affordable electric vehicle to U.S. markets. Volvo is the Swedish luxury brand owned by China’s Geely. The competitive price reflects a combination of China’s cost advantages and Volvo’s ability to skirt U.S. tariffs on Chinese cars because it also has U.S. manufacturing operations. Chinese EV makers can undercut global competitors largely because of the nation’s domination of battery minerals’ mining and refining, as well as its decades-long commitment to EV development, including heavy government subsidies. In addition, Geely has cut manufacturing costs by merging supply chains and sharing platforms and parts with Volvo and other Geely brands. Despite its lower price, Volvo is expecting profit margins on the EX30 of between 15 percent and 20 percent globally.

The EX30 is one of only a handful of China-made cars sold in the United States, none of them from Chinese brands. Vehicles from China currently face a 27.5 percent tariff. Volvo, however, is eligible for tariff refunds under a law that awards them to firms with U.S. manufacturing operations — such as Volvo’s South Carolina plant — that also export similar products. According to a Volvo spokesperson, the company pays all legally required duties on cars and parts, and although owned by Geely, it is independently operated and designs its cars in Sweden.

The EX30 could get even cheaper if Volvo and its dealers use an EV-policy loophole regarding leased vehicles enacted in the Inflation Reduction Act of 2022. The legislation reauthorized an existing $7,500 tax credit for EV buyers — but blocked the subsidy for cars with components from countries, including China, that are deemed an economic or security threat. The U.S. Internal Revenue Service determined, however, that leased electric vehicles qualify as commercial vehicles and are eligible for a similar $7,500 subsidy with no China-content restrictions. That could bring a leased EX30’s effective price to $27,500. The EX30’s specifications closely match Tesla’s Model Y, and Volvo dealers are touting the comparison. The major difference is that Tesla’s Model Y has more cargo room.

According to a sales manager at Volvo Cars Carlsbad in California, the dealership has already taken deposits for every 2025 EX30 it expects to be allocated. More than half of the dealership’s customers who buy currently available Volvo electric vehicles initially lease them to qualify for the U.S. tax credit — then immediately buy out the lease, a loophole that apparently the Biden administration has missed.

U.S. Competition from China

The EX30’s low price and entrance into the U.S. auto market point out the competition that U.S. automakers will face from low-cost Chinese EV imports, particularly if they can avoid tariffs. Chinese manufacturers could also avoid U.S. tariffs by setting up plants in Mexico, inside the North American free trade zone, then exporting vehicles to the United States. China’s BYD, which recently outsold Tesla for global EV sales, announced plans for a Mexico plant earlier this year.

In China’s auto market, the world’s largest, dozens of domestic EV brands are experiencing a price war while foreign automakers have steadily lost market share. The intense competition has driven China’s biggest EV makers, led by BYD to accelerate exporting electric vehicles that can capture higher prices and profits in less competitive overseas markets. BYD, China’s largest automaker, for example, offers an array of electric vehicles for less than $30,000 in China, including an electric hatchback that sells for less than $10,000. BYD is planning to sell the same hatchback in Latin America for about $21,000, still far below any U.S. electric vehicle. As a result, cheap Chinese electric vehicles could cause an “extinction-level event” for U.S. automakers.

Tesla Lowers Prices

Recently, Tesla lowered the Model Y’s price by $2,000 in the United States as part of a series of global reductions. In an effort to increase sales, Tesla has cut prices on three models (X, Y, and S) this month. Tesla is cutting prices as it faces softening demand and stiffer competition from China’s EV makers.

Tesla had plans for a cheaper car, called the Model 2. It was expected to cost around $25,000 — roughly 26 percent less than the Model 3 — and be more attractive in potential new markets like India. But Musk pivoted from the Model 2 approach to robotaxis, and he has indicated that the Cybercab would be introduced in August.  Due to first-quarter profits falling 55 percent, to $1.1 billion, on an annualized basis, and revenue falling 9 percent, to $21.3 billion, Musk has promised to focus on “more affordable models.” The “new models” would be introduced by early 2025 using its current platforms and production lines. Recently, the company announced it would lay off more than 10 percent of its work force as sales slow and competition, especially from Chinese rivals, erodes market share.

Conclusion

Geely’s Volvo is making an entrance into U.S. auto markets this summer at substantially lower prices than U.S. car manufacturers can afford to meet due to China’s dominance of the battery supply chain, Volvo’s operational efficiencies and its ability to avoid U.S. tariffs by having a U.S. plant in South Carolina. Geely and Volvo have created a series of shared platforms allowing Volvo and other Geely brands to share batteries, motors, gears and electric power-management inverters – all high-cost EV components that are cheaper in high volumes. The sticker price for Volvo’s EX30 electric SUV of $35,000 can be lowered by leasing the car through a loophole in the U.S. law allowing it a $7,500 tax subsidy despite it being built in China with Chinese components.

Chinese automakers’ operational efficiencies, government support, and innovations have propelled the country to the forefront of the EV industry, as has the country’s aggressive stakes in the minerals production and processing supply chain worldwide.  President Biden or his successors may need to salvage the U.S. auto industry in the future as cheap Chinese electric vehicles, which Biden’s policies are promoting and even subsidizing, could become an “extinction-level event” for U.S. automakers.

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

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Biden’s EV Mandate A Gift To Communist China

April 24, 2024 by Leave a Comment

Biden’s policies of forcing electric vehicles on the American public and domestic auto manufacturers through regulations and standards is playing into China’s hands. China, with few oil and gas resources of its own, has found electric vehicles to be a way to dominate the world’s auto market. China achieved number one ranking in EV sales last year. As with other commodities, Chinese companies have an operating edge on EV production with cheap energy and labor, operational efficiencies and hefty government support. And China controls the bulk of global raw materials, such as lithium, for EV batteries. According to an auto analyst, Chinese EV manufacturers have a structural cost advantage of 25 percent. Now, Chinese automakers and shippers are ordering a record number of car-carrying vessels to support the country’s boom in EV exports, putting China on course to amass the world’s fourth-largest fleet of car-carrying vessels by 2028. China is in the EV game to win it, even though it is U.S. and European climate policies that are creating the demand by adhering to the Paris Climate Accord ignored by China, India and other countries around the world.

Now that China has surpassed Japan as the world’s largest vehicle exporter, it is vastly expanding its shipping fleet to send the vehicles around the globe. According to Reuters, China has 47 car-carrying ships on order, a quarter of all ships globally. Once this armada has been delivered to China, the Chinese controlled car carrier fleet will jump from current 2.4 percent to 8.7 percent of the world total with new trade routes established almost exclusively for Chinese automakers.  The increase in orders has mostly benefited Chinese shipyards, which received 82 percent of orders globally. Because Chinese shipyards are also actively building ships for China’s fast-growing navy, the boon to business from EV export ships indirectly aids China’s military buildup.

How China Became Dominate in the EV Market

Chinese automakers are around 30 percent quicker in development than legacy manufacturers. They work on many stages of development at once and they are willing to substitute traditional suppliers for smaller, faster ones. They run more virtual tests instead of time-consuming mechanical ones. And they are redefining when a car is ready to sell on the market.

NIO, one of China’s leading electric-vehicle startups, takes less than 36 months from the start of a project to delivery to customers, compared with roughly four years for many traditional carmakers. The company manufactures cars with latent technology such as a spare chip that allows it to frequently add new features through software updates that is enabling it to gain market share. Zeekr, an EV component of auto manufacturer Geely, can develop vehicles from scratch in as fast as 24 months. It rapidly releases different models ranging from SUVs, multipurpose vehicles, and hatchbacks that all share manufacturing and digital architecture with other Geely brands such as Polestar and Smart.

China’s carmakers are backed by generous government stimulus policies. They are heavily customer focused, emphasizing software and digital technology, from driver-assistance functions to in-car entertainment. The slowdown in demand for electric vehicles is spurring Chinese carmakers to constantly update and release new models. Cars launched last year contributed to 90 percent of China’s passenger-car sales growth. Chinese buyers tend to prefer new or recently released cars, making their cars have a short shelf life. Domestic Chinese EV makers offer models for sale for an average of 1.3 years before they are updated or refreshed, compared with 4.2 years for other global brands.

China controls the market for lithium—a major metal in EV battery production. China dominates lithium processing, controlling nearly half of global lithium production and 60 percent of electric battery production capacity. Its access to lithium deposits currently accounts for less than 25 percent of the world’s lithium resources, but it could account for nearly a third of the world’s supply by the middle of the decade as it ramps up efforts to attract lithium mines. The UBS AG bank expects Chinese-controlled mines, including projects in Africa, to raise output to 705,000 tons by 2025, from 194,000 tons in 2022. China is also responsible for 70 percent of production capacity for cathodes and 85 percent for anodes, which are both crucial components of batteries.

China also controls the bulk of other global raw materials needed for EV batteries, including cobalt, graphite, and nickel. Chinese companies now own most mines in central Africa that produces around 70 percent of the world’s cobalt.  Over half of cobalt and graphite processing and refining capacity is also located in China.

China’s Build Your Dream (BYD) EV manufacturer has become the world’s largest maker of electric vehicles in just over a decade. BYD delivered 1.86 million fully electric and plug-in hybrid vehicles in 2022, outselling Tesla’s 1.3 million by 42 percent. BYD’s innovations in battery packs and its founder’s belief in batteries as the dominant power source have been key to its success.

Biden Aids China Through Regulatory Action and Anti-Mining Activity

Biden’s Environmental Protection Agency (EPA) finalized emission standards in late March for light-duty vehicles that would effectively require 67 percent of new models sold to be electric or hybrid by the end of 2032. The regulations are in spite of slowing American EV demand that has led to losses and slowdowns in production for automakers. Several American auto manufacturers have posted huge losses due to EV development and sales, including Ford, which lost $4.7 billion on electric vehicles in 2023, losing nearly $65,000 on each electric vehicles that it sold. General Motors lost $1.7 billion in the fourth quarter of 2023, despite strong profits overall. Biden’s rush into electric vehicles is not allowing U.S. automakers the time to transition to electric vehicles that Americans may want and at a price they can afford.

As noted above, China has broad command over the current EV supply chain due to its control over minerals needed to build batteries required for electric vehicles. The country currently controls 87 percent of the world’s mineral refining capacity, while U.S. attempts to increase its own capacity face obstacles from the Biden administration. As a result, Biden is forcing electric vehicles to be made outside the United States despite throwing tens of billions of tax dollars at them. Biden’s war on mining has made the U.S. almost entirely dependent on China (and a handful of other unfriendly nations) for many of the metals and precious minerals necessary for EV batteries to be produced. China and its partner countries have a near monopoly throughout the value chain.

Chinese electric vehicles have already made large headwinds in the European market, with around 19.4 percent of electric vehicles sold on the continent in 2023 being made in China, which is expected to rise to 25 percent by the end of 2024. The European Union announced in September 2023 that it had launched an investigation over whether to impose punitive tariffs on Chinese electric vehicles due to artificially cheap prices from state subsidies.  The EU’s record in this area is not good, however, as Politico recently reported that European solar companies were “hurdling towards extinction” in the face of Chinese dominance of the solar energy market on the continent.

Conclusion

Chinese automakers’ operational efficiencies, government support, and innovations have propelled it to the forefront of the EV industry. China state control over lithium and other critical mineral resources and BYD’s success exemplify the country’s dominance. As the world deliberately transitions toward electric transportation by adhering to the Paris Climate Accord, China has positioned itself as a dominant force in shaping the global landscape of electric mobility. This is happening as China rapidly expands all forms of energy, including coal mining and generation and nuclear power. It is artfully moving the global landscape to areas where it dominates after years of preparing for the transition and away from oil and gas resources where the United States dominates. The Biden administration is promoting China’s domination by pursuing “green” technologies and an unworkable energy transition by adherence to the Paris Accord, even as China ignores them and continues to be the world’s biggest emitter of carbon dioxide, by far.

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

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