On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss Biden rolling out eggs, his 2024 presidential campaign, and heavy-handed auto regulations among other stories.
Links:
Biden’s Ongoing War Against Reliable, Affordable Transportation
April 14, 2023 by Leave a Comment
Not only is President Biden changing regulations to force Americans to buy electric vehicles by establishing new, rigorous standards for tailpipe emissions for model years 2027 through 2032 that gasoline-powered vehicles cannot meet, he is also forcing an 80,000 mile, eight-year warranty for electric vehicles on automakers. The auto standards, expected to be the toughest in U.S. history, are designed to cap emissions allowed per mile, encouraging the sale of electric vehicles that do not produce tailpipe emissions. (The Biden administration, however, is currently ignoring the fact that about 60 percent of the electricity these vehicles use today to charge their batteries is generated using fossil fuels and that the administration’s politically approved wind and solar power technologies are unreliable.) The new requirements, in combination with electric vehicle and charging incentives in new federal laws, are set so that two-thirds of new cars and light trucks sold in the United States need to be electric by 2032–a dramatic increase from the single-digit market share represented by new sales of battery electric and plug-in hybrid electric vehicles in 2022. This is nothing less than a backdoor approach to banning internal combustion engines in the United States using the EPA to regulate them out of existence.
The new standards will become more stringent over time, tracking the trajectory established by existing standards for model years 2025 and 2026 where fleet-wide limits tighten 10 percent between those years. The new requirements are essentially a defacto electric vehicle mandate that will be a challenge for automakers. Car manufacturers have warned the Biden administration that EV sales and emission reductions depend partially on factors outside their control, including investments in charging infrastructure, which currently are not sufficient for the massive change that would be required in charging the number of vehicles required to reach the goals set by the Biden administration. If tens of millions of people are driving electric vehicles, an exponential increase in the number of public charging stations will be needed, especially of the DC-powered fast-charging stations. Those stations will need electricity, which is becoming much more expensive and increasingly stressed by the addition of intermittent wind turbines and solar panels that are being regulated and subsidized into the nation’s grid.
The Inflation Reduction Act (IRA), approved by a party-line vote in the Democrat-controlled Congress last year and the Biden administration, provides up to $7,500 in tax incentives for buyers of electric vehicles with restrictions on where components and vehicles are produced. The act also provides billions of dollars to support battery production in the United States. But the industry and its customers have a long way to go. While sales of electric vehicles are increasing, they accounted for only 5.8 percent of the 13.8 million new cars and trucks sold in the United States last year.
Current Electric Vehicle Warranties
An EV’s warranty coverage is broken down into two major components, comprehensive and powertrain coverage. Comprehensive (“full”) coverage applies to parts and labor costs for covered repairs. Powertrain coverage is usually in effect for a longer period and applies specifically to major mechanical components like the electric motor and transmission. Not typically covered is scheduled maintenance service, wear-and-tear items like brake linings and windshield wiper blades, and failure caused by improper maintenance. Federal regulations mandate that an EV’s battery pack, its most expensive component, be covered for at least eight years or 100,000 miles. Automakers’ warranties also include specific coverage against corrosion, which applies to body panels that have been completely “rusted through,” but not to paint bubbling.
Every new-vehicle warranty, however, contains exceptions and exclusions. Some automakers, however, only cover an EV’s battery pack against total failure, while others, including BMW, Chevrolet, Nissan, Tesla (Model 3) and Volkswagen will replace it if it reaches a specified reduced capacity percentage, usually 60-70 percent, while under warranty. Some brands will transfer whatever remains of the original warranty to a second owner, while others may impose limitations. Also, select components (e.g. tires and dealer-installed accessories) can have separate warranties backed by the original-equipment manufacturers and come with their own exclusions.
Recently, Tesla launched new extended service warranties for its electric vehicles that can be purchased straight from its mobile app. Tesla’s powertrain warranty is for eight years or 120,000 to 150,000 miles, depending on the model. Its basic vehicle warranty is for four years or 50,000 miles, whichever comes first. Its new warranty offering is an extended warranty that it is selling directly through its mobile app for a period of two years or 25,000 miles, whichever occurs first. It begins after the Basic Vehicle Limited Warranty expires and its cost depends on the Tesla model.
Issues with EV Adoption
A major hurdle in EV adoption is whether Americans are willing to accept changes to their work and lifestyle to drive costly electric vehicles that have poor range and towing capability, long charging times, and few charging facilities. Even with the tax credits in the Inflation Reduction Act, electric vehicles are substantially more expensive than conventional vehicles. And now that Biden has chosen to force-feed them onto the American public through CAFE, an artificially inflated demand is likely to drive demand for minerals which will increase in cost. Rising demand and costs for minerals will affect prices for buyers.
Another hurdle is finding a sufficient supply of processed lithium–a soft, silver-white metal that is the key to EV battery production. The world produces only a small fraction of the amount that will be needed for a majority of car buyers to go electric in the United States, Europe and China–markets where more than 50 million cars were sold last year. The pace at which mining companies can expand lithium production in the United States is dire without needed permitting and other reforms. In North Carolina, for example, Albemarle is trying to reopen a pit mine along Interstate 85 near Kings Mountain, 32 miles west of Charlotte. But to reopen the mine, which was in operation from the 1940s to the 1980s, the company must work out plans for protecting surrounding groundwater, determining if the mine’s walls are suitable for new operations and dealing with contaminants that may be found in the pit lake at the mine’s bottom. Residents in the area are working to block the resumption of mining operations, as they have in opening lithium mines in Nevada. Dealing with these issues and lawsuits can take decades.
The supply and production of other metals — including nickel, rare-earth metals, manganese and cobalt — must also increase to support a tenfold increase in EV sales. Further, no matter where these minerals are mined, most of the ores must be sent to China for processing, making Americans dependent on an authoritarian government for not only vehicle components, but also for the politically correct electric generators—wind turbines and solar panels that need minerals for which China dominates the supply.
Also, the plants and assembly lines needed to produce millions of electric vehicles every year do not yet exist. G.M., Ford and other manufacturers have plants under construction, but two or three times as many battery plants are needed to reach their sales targets and those of the Biden administration. Building and ramping up dozens of new plants will take years. It took G.M. about three years to complete its battery plant near Lordstown, Ohio, and the start of production has been slow. In the first three months of this year, G.M. sold fewer than 1,000 electric vehicles with battery packs from the Ohio factory. Ford, which started making its electric F-150 Lightning pickup a year ago, produced just over 2,000 of them a month in the first quarter of this year. The company’s goal is to be able to produce 600,000 electric vehicles a year by the start of 2024, and to make two million a year by the start of 2027.
Conclusion
As with other elements of Biden’s climate plan, the feasibility of reaching 67 percent of new car sales as electric in 2032 is a major stretch that either will result in Americans using an inferior product or having automakers pay fines for not meeting the requirements of the regulation. The Biden administration seems to believe that through regulations, it can force its net zero climate agenda on the American public and the manufacturing industry. Further, it is trying to do everything at once, rather than through stages in order to reach its dream of a net zero economy by mid-century. The cost and feasibility seems to not matter to the Biden politicians. The American public will be the ones to pay.
*This article was adapted from content originally published by the Institute for Energy Research.
Biden Pricing Working Families Out Of Car Ownership
April 13, 2023 by Leave a Comment
The New York Times notes that EPA is releasing rules that are intended to ensure that electric cars represent between 54 and 60 percent of all new cars sold in the United States by 2030 and 64 to 67 percent by 2032—in 9 years. That would exceed President Biden’s earlier goal announced in 2021 to have all-electric cars account for half of new car sales by 2030. The purpose of the new EPA regulations is to essentially regulate cars with combustible engines out of business by making the rules so stringent that car companies cannot comply, which is a de facto death knell. Today, less than six percent of cars are electric, despite tax credits of up to $7,500. The federal government is also providing tens of billions of subsidies to battery producers and offering prime parking spaces to electric vehicles with charging stations at nearly every shopping center in America. This ruling would result in a complete transformation of the automotive industrial base and the automotive market, whether the American public likes it or not.
Also, the new rule would be the U.S. federal government’s most aggressive climate regulation yet and more stringent than that of other countries. The European Union enacted vehicle emissions standards that are expected to phase out the sale of new gasoline-powered vehicles by 2035, and Canada and Britain have proposed standards similar to the European model.
Despite nearly every major car company having invested heavily in electric vehicles, few have committed to the levels that the Biden administration is seeking. Thus, the proposed regulation poses a significant challenge for automakers as many have also faced supply chain problems that have held up production levels. Even manufacturers who are enthusiastic about electric models are unsure whether consumers will buy enough of them to make up the majority of new car sales within a decade or where they will find the critical minerals to manufacture the electric vehicles.
Rapidly speeding up the adoption of electric vehicles in the United States would require other significant changes, including the construction of millions of new electric vehicle charging stations, an overhaul of electric grids to accommodate the power needs of those chargers and securing supplies of minerals and other materials needed for batteries. Experts say it will not be possible for electric vehicles to go from niche to mainstream without making electric charging stations as ubiquitous as corner gas stations. A 2021 infrastructure law provided $7.5 billion to build a network of about 500,000 charging stations along federal highways, but a January report from S&P Global concluded that millions were needed.
Since electric vehicles require fewer than half as many workers to build as gasoline-powered cars because they require less parts, there is likely to be economic dislocation for American workers, particularly given the speed that the Biden administration is moving. To deal with the job disruption situation, Biden administration officials have held weekly telephone calls with union leaders as they worked on the proposed rule. Biden has repeatedly misled the American public relating to his climate goals, presenting the transition as an economic opportunity and emphasizing that it will create new jobs in a “clean energy” economy–jobs in wind, solar, hydrogen, nuclear, and electric vehicles that are not happening.
The proposed EPA regulation will need to go through a public comment period and could be amended before becoming final. Regardless, it is certainly to be met by legal challenges.
DOE Adds to the Process
Further, the Department of Energy (DOE) is proposing to reduce electric vehicles’ mileage ratings to help achieve Biden’s proposed fuel economy requirements–a move that could force automakers to sell more low-emission (electric) cars. DOE plans to significantly revise how it calculates the petroleum-equivalent fuel economy rating for electric and plug-in electric hybrids for use in the National Highway Traffic Safety Administration’s (NHTSA) Corporate Average Fuel Economy (CAFE) program. NHTSA is expected to soon propose parallel new stringent CAFE requirements to those of EPA. In 2022, NHTSA sharply raised CAFE standards for vehicles.
Conclusion
The Biden Administration and climate change alarmists are moving swiftly to get rid of gas-fueled cars–essentially through abolition. While EPA’s proposed rule would not mandate that electric vehicles make up a certain number or percentage of sales, it would require that automakers ensure that the total number of vehicles they sell each year does not exceed a certain emissions limit. Because the limit would be so severe, it would force carmakers to ensure that two-thirds of the vehicles they sold were all-electric by 2032, or automakers will be forced to pay fines. Automakers buy credits or pay fines if they cannot meet the Corporate Average Fuel Equivalent (CAFE) requirements. Stellantis, then known as Fiat Chrysler, paid $152.3 million in total CAFE fines for 2016 and 2017 and faces additional civil penalties. In 2022, NHTSA more than doubled CAFE penalties. Essentially, the proposed regulation(s) are depriving the American public of vehicle choice that most fits their lifestyle and could easily affect economic growth in this country by stifling transportation. This is especially true when only one-third of Americans would consider purchasing an electric vehicle.
*This article was adapted from content originally published by the Institute for Energy Research.
Biden to Motorists: My Way or the Highway
April 12, 2023 by Leave a Comment
WASHINGTON DC (04/12/2023) – Earlier today, the Environmental Protection Agency released a set of proposed rules that would effectively regulate cars with internal combustible engines out of business. The rule is an attempt to accelerate the number of electric vehicle sales to 67 percent by 2032.
Today, less than six percent of cars are electric, despite years of generous tax credits and other favorable treatment at all levels of government. The federal government is also providing tens of billions of subsidies to battery producers and offering prime parking spaces to electric vehicles with charging stations at nearly every shopping center in America.
AEA President Thomas Pyle issued the following statement:
“By proposing these rules, the Biden administration is effectively banning the internal combustion engine. To say that such a policy threatens the freedoms of ordinary Americans who cannot afford electric vehicles greatly understates the danger of these proposed rules. Electric vehicles may have their place in the market, but their obvious limitations are the reason why their sales currently only make up only a small percentage of the market. Consumer choice is a bedrock American principle, and Americans will not take kindly to being strong-armed into buying vehicles that are incapable of meeting their needs.
The fact that unelected bureaucrats have the power to remake the entire automobile fleet without a single legislator weighing in is another example of how the administrative state is threatening the freedoms of the American people.
Before he makes any more moves to take away your car, perhaps President Biden should lead by example and give up his Corvette.”
Additional Resources:
- Biden Releases New Rules to Force Electric Vehicles on Americans
- New York Follows California’s LEad in Banning Gasoline Vehicles
- California Does Not Have Enough Power to Deal with Its Heat Wave, How Will It Meet Its New Rules for Electric Vehicles?
- Electric Vehicles’ Continued Government Dependency
For media inquiries please contact:
[email protected]
Biden Puts OPEC Behind The Wheel Of America’s Gas Prices
April 11, 2023 by Leave a Comment
The Organization of Petroleum Exporting Countries (OPEC) and fellow oil-producing allies (OPEC+) are back in the driver’s seat as U.S. shale oil is no longer the marginal fuel due to President Joe Biden’s anti-oil and gas policies. Brent oil jumped to $85 a barrel since members of OPEC+ including Russia announced production cuts of 1.16 million barrels per day on April 2, adding to earlier cuts the bloc made. OPEC+ wants higher prices to pay for Saudi Arabia’s domestic projects and Russia’s invasion of Ukraine. The bloc is also concerned about market stability in the wake of U.S. and World Bank failures, which signify underlying economic problems in what the United Nations and World Economic Forum have called “the Great Reset.”
U.S. shale oil drillers over the last two decades helped to make the United States the world’s largest oil and gas producer. But those shale oil gains are slowing, while oil demand is increasing. According to a survey, U.S. oil and gas activity stalled in the first quarter of 2023, with respondents citing higher costs and interest rates—both resulting from Biden administration policies. Goldman Sachs sees “elevated OPEC pricing power – the ability to raise prices without significantly hurting demand – as the key economic driver” and estimates that the oil production cut will raise OPEC+ revenues. The U.S. finds itself in an increasingly weakened energy position.
OPEC has lowered its U.S. shale oil production forecast, having also done so in 2022 as the graph below depicts. There has been a lack of sufficient investment to increase supply despite its rebounding after the COVID lockdowns, which will support the prices OPEC+ wants. According to the International Energy Forum (IEF), oil and gas upstream capital spending increased 39 percent in 2022 to $499 billion, the highest level since 2014 and the largest ever year-on-year gain. But, according to the IEF, annual upstream investment needs to increase to $640 billion in 2030 to ensure adequate supplies.
OPEC is producing almost 1 million barrels per day less than its current output target, according to its own figures and other estimates, with shortfalls in Nigeria and Angola from which Western oil companies have moved away in recent years. While non-OPEC producers are still expected to produce more oil in 2023, the forecast of a supply increase of 1.44 million barrels per day falls short of expected world demand growth of 2.32 million barrels per day, according to OPEC forecasts. The International Energy Agency also expects demand growth to exceed supply growth, although to a lesser amount than OPEC.
In OPEC’s view, investment cuts after oil prices collapsed in 2015-2016 due to oversupply, along with a growing focus by investors on economic, social and governance (ESG) issues to move investment away from fossil fuels have led to a shortfall in the spending needed to meet demand. Because the scope for supply growth outside of OPEC+ members is limited and in combination with tighter conditions expected later this year, there is a greater upside risk to oil prices.
This Did Not Have to Happen
Had President Biden kept President Trump’s pro-America energy policies, U.S. oil production would have been about two billion barrels higher from 2021 to 2023. Over the past two years, American oil production would have been on average more than two million barrels higher per day. With that level of U.S. oil production, OPEC+’s recently announced cutbacks in oil production of 1.16 million barrels a day would have had little impact on world oil prices because U.S. drillers would have made up the difference. Instead, gasoline is now headed to $4 a gallon in many states – well over $1 a gallon higher than would be the case under President Trump’s energy policies.
Conclusion
OPEC+ has recently announced an oil production cut next month of 1.16 million barrels per day, which will raise oil prices and therefore gasoline prices for consumers. OPEC+ realizes that it is back in the driver’s seat regarding marginal oil production because President Biden’s anti-oil and gas policies have stymied U.S. shale oil production. This did not need to happen if President Trump’s energy policies had remained in place for it is estimated that those policies would have had the United States producing 2 million barrels a day more oil due to additional investment in the oil and gas sector. The United States has shown itself technically and geologically capable of energy dominance in the past, accounting for 81 percent of the world oil production increase between 2010 and 2019. In fact, U.S. oil and liquids production increased by 9.77 million barrels per day over that period. Unfortunately, ESG policies, continuing anti-petroleum policies and the messaging of the Biden administration are reducing U.S. domestic production potential and causing higher prices for Americans.
*This article was adapted from content originally published by the Institute for Energy Research.
The Unregulated Podcast #127: Dad’s Kitchen Table
April 6, 2023 by Leave a Comment
On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss former President Trump’s legal woes, a new paper from the Institute for Energy Research, the GOP and DNC swapping seats across the country, and more.
Links:
- Read the full indictment against Trump
- IER Paper: Energy Security Is National Security
- Wisconsin: Janet Protasiewicz flips Wisconsin Supreme Court
- North Carolina: Charlotte Rep Tricia Cotham switches to the GOP, creating a veto-proof majority for Republicans
- Nigel Lawson, Economic Force Under Thatcher, Dies at 91
Biden Looks To Japan For Green Energy Bailout
April 5, 2023 by Leave a Comment
The United States and Japan reached a trade agreement for critical minerals used in batteries–a deal aimed at allowing Japan to meet sourcing requirements for new electric-vehicle subsidies in the United States and beginning to shift energy supply chains away from China. Under the deal, the United States and Japan agreed not to levy export duties on critical minerals they trade and coordinate labor standards in producing minerals, among other steps. The Biden administration has started pursuing trade deals with close allies on critical minerals as it tries to address the restrictions it has placed on new subsidies for electric vehicles and China’s current dominance of the supply of minerals such as lithium and graphite that are necessary for making electric vehicles. President Biden is pursuing this tact rather than developing critical mineral mines in the United States where he is revoking leases, delaying permits, and adding to the list of endangered plants to stall its development.
Under the Inflation Reduction Act, the requirement for the tax credit for electric vehicles to qualify for the full $7,500 is that much of the minerals in the vehicle’s battery must come from the United States or a country with a free-trade agreement with the United States. Half of the tax credit is reserved for North American-assembled vehicles and batteries, and the other half of the credit is contingent on at least 40 percent of the value of critical minerals in the battery having been extracted or processed in the United States or a country with a U.S. free trade agreement or recycled in North America.
Many close U.S. allies, including Japan, the European Union and the U.K., do not have traditional free-trade agreements with the United States. The pact with Japan builds on a limited trade accord the two countries reached in 2019, which the United States and Japan will review every two years to see if they should end it or change it. The agreement to not impose export duties on trade in lithium, cobalt, manganese, nickel and graphite —all strategically important minerals — is a boon for Japanese automakers and companies like Panasonic, one of the biggest battery makers. A majority of global lithium production comes from China, Australia, Argentina and Chile; Russia dominates the global nickel market; and the Democratic Republic of Congo is the world’s largest cobalt producer.
The Biden administration worked the deal with Japan in such a way that minerals from there will now meet the sourcing requirement for the new tax credit—while not having to launch negotiations over broader trading issues that could prove lengthy and difficult to finalize. Biden administration officials believe Japan, which already processes and refines critical minerals, could become a major part of an overhauled supply chain for the goods. The United States is also negotiating a similar trade agreement with the EU, with plans to also try and strike a deal with the U.K.
Since the Biden administration is using executive authority to reach an agreement with Japan, it will not submit it to Congress for approval. The Biden administration, however, claims to have consulted closely with lawmakers on the agreement. According to a senior Biden administration official, the United States and Japan currently impose no export duties for trading critical minerals between their countries. The two countries also agreed to share information about reviewing foreign investments in the minerals sector.
Lawmakers in both parties, however, have criticized the administration’s push to make the agreement without receiving approval from Congress, calling it a violation of their constitutional authority, although many of these same lawmakers have supported Biden’s climate authorities under the Paris Accord, which has also never been submitted to Congress. According to the Biden administration, meeting climate goals will require a massive cooperative effort among U.S. allies to produce the vast amounts of minerals needed to electrify the global auto market, and the deal includes commitments on environmental standards and worker rights.
Biden administration officials see critical minerals agreements with members of the Group of Seven advanced democracies as the first piece of a broader strategy to reorient global supply chains away from China. Western officials have discussed forming a buyers club for critical minerals, in which G-7 nations would offer financing and other development support to countries such as Zambia that are rich in the resources—an effort to convince these nations to sell their minerals to the West instead of China. Of course, the United States could develop its own critical mineral resources, but that seems to be off the table as President Biden is catering to environmentalists, who do not want mining to take place in the United States, but push relentlessly for “green” policies requiring the use of significantly more critical minerals.
The Treasury Department is expected to release details about tax credits and adjustments to the law soon. According to the Biden administration, the Treasury Department is expected to define sourcing requirements for the EV tax subsidies by the end of March in guidance awaited by automakers, miners and battery producers. Billions, and perhaps hundreds of billions of dollars in tax credits are at stake in this decision.
Conclusion
According to the United States Geological Survey, the United States is endowed with critical minerals needed in electric vehicles and their batteries, as well as defense equipment, wind turbines and solar panels. Yet, the Biden Administration is revoking leases, delaying permits, and listing plants as endangered species to hinder critical mineral mine development to please its environmental friends, who do not want mining to occur in the United States while calling for the use of technologies requiring multiples of additional minerals consumption.
To show that the administration is not in China’s clutches for critical minerals, despite that country’s dominance, the Biden administration is undertaking agreements with its allies to allow them to qualify for tax benefits under the Inflation Reduction Act, despite the fact that these are trade agreements that should be approved by Congress. President Biden is wielding his Presidential authority as if he is ruling an authoritarian country and hurting the U.S. economy in doing so.
*This article was adapted from content originally published by the Institute for Energy Research.
Joe Manchin Is The Senate’s April Fool
April 1, 2023 by Leave a Comment
Senator Joe Manchin, Chairman of the Senate Energy and Natural Resources Committee, is not happy about how his wording in the Inflation Reduction Act is being interpreted by President Biden’s Department of the Treasury. Treasury’s proposal allows a much wider claim on the electric vehicle tax credit than he says he intended. The Treasury Department is offering U.S. automakers leniency in being able to use more foreign-sourced minerals and battery parts without losing the tax break and allowing European and Japanese companies to get a piece of the incentives. The proposal takes effect on April 18, giving automakers and consumers two more weeks before the new restrictions from the Inflation Reduction Act take place. After that date, fewer electric vehicles will qualify for the full tax credit than the number of models eligible under the old law, but more than was the intent of the Inflation Reduction Act. Its stated intent was to build the industry in the United States and not rely on China, which dominates the EV battery supply chain currently. Senator Joe Manchin called Treasury’s guidance a horrific giveaway to foreign suppliers.
According to the Inflation Reduction Act, to qualify for $3,750 of the credit, an increasing share of a vehicle’s battery minerals such as lithium and nickel has be extracted or processed in the United States or in a country with which the United States has a free-trade agreement. The other half of the credit is supposed to be available only for vehicles in which a majority of its battery components are made in North America, starting at 50 percent this year and up to 100 percent by 2029. Few EVs currently on the market are expected to qualify for even half of the credit. Automakers including Germany’s Volkswagen have announced plans to expand in North America, seeking certainty their models will qualify for the incentives. Most minerals are mined and processed in countries that do not have free trade agreements with the United States, such as China, Indonesia and the Democratic Republic of Congo. Key battery components—namely, active anode and cathode materials—are mostly produced in China, Japan and South Korea.
According to the Treasury Department’s proposed rules for the tax credit, electric vehicles leased to consumers will be able to qualify for a separate commercial vehicle tax credit, which does not entail sourcing, income or price restrictions. This is a huge loophole, because the law imposed an income limit to qualify for tax subsidies of $150,000 for individual EV buyers, and a price cap for vans, SUVs and pickups ($80,000), and sedans ($55,000). In the Treasury’s determination, dealers or auto finance companies could receive the tax credits or pass them on to customers. EV buyers have typically been high-income individuals, and this leasing loophole will allow them to reap tax subsidies through a backdoor approach.
Treasury is also redefining “free trade agreements” to include one-off deals with countries that commit not to impose trade barriers on critical minerals. The White House has already struck such a deal with Japan and is negotiating deals with Europe. This is a departure from congressionally approved trade agreements in much the same way the Biden Administration has declared the United States subject to the Paris Climate Accord without a treaty vote. Anode and cathode materials in batteries would also be treated as critical minerals rather than components. These changes will allow more vehicles to qualify for both parts of the credit, removing Senator Manchin’s sourcing conditions.
The revision to the rules means that the real cost of the climate and energy subsidies in the Inflation Reduction Act will be far more than the $391 billion that Democrats claimed when they passed the bill. Goldman Sachs estimated recently that the cost of the Inflation Reduction Act could be more than triple the original estimate–$1.2 trillion over 10 years because of the EV tax credits and other provisions of the bill. The Treasury Department is allowing comments on the proposed EV tax credit rule for 60 days.
The full list of qualifying cars will not be published for a couple of weeks and will be updated monthly. Tesla indicated that the least expensive version of its Model 3 sedan, one of the most popular electric cars, would no longer be eligible for the full credit because the car uses a battery made in China. General Motors, on the other hand, indicated that three electric vehicles it plans to sell this year — the Cadillac Lyriq and electric versions of the Chevrolet Equinox and Blazer sport utility vehicles — would qualify for the full credit.
Treasury’s guidance was originally due in December, but the department postponed the proposal’s release until the end of March. In the meantime, it allowed the credit to go into effect without any restrictions on where a vehicle was produced. Since January, electric vehicle buyers have been able to receive the credit as long as they did not exceed an income threshold and the car was below a certain price. The new proposed Treasury rules apply to vehicles picked up by their owners on or after April 17, even though they would not become final until at least June.
In 2024 and 2025, the criteria for the tax credit will become more stringent as provisions go into effect prohibiting the sourcing of any battery parts and critical minerals from “foreign entities of concern” — which should include China. That could be a major hurdle since many top mining companies are partially Chinese-owned or process their minerals in China. Guidance on the “foreign entities of concern” provision from the Treasury will not be released until later this year.
Conclusion
Senator Manchin said his comment “is simple: stop this now—just follow the law.” But the Biden Administration has been bucking the law in every way it can, including avoiding the congressionally enacted Offshore Leasing program, to further its climate agenda.
President Biden has a goal that 50 percent of new car sales in 2030 will be electric and is doing all he can to meet that target, including assuming powers beyond those traditionally exercised solely by the Executive Branch. In pursuit of his plans for new ways to electrify the United States, President Biden is assuming new powers which previously were held in check and balanced with other branches of the government. According to Manchin, “It is horrific that the Administration continues to ignore the purpose of the law which is to bring manufacturing back to America and ensure we have reliable and secure supply chains.”
*This article was adapted from content originally published by the Institute for Energy Research.
New York State Opens New Front In War On Gas Appliances
March 31, 2023 by Leave a Comment
New York will become the first state to pass a law banning natural-gas and other fossil-fuel hookups in new buildings on its way to meeting President Biden’s net zero carbon goals and the state’s own targets for greenhouse-gas reduction. The New York State Climate Leadership and Community Protection Act, passed in 2019, calls for a reduction in economy-wide greenhouse-gas emissions of 40 percent by 2030 and 85 percent by 2050 from 1990 levels.
The ban is to be added to the state’s coming budget, due to be completed this week. Democratic Governor Kathy Hochul outlined an all-electric building mandate in her spending plan, and both chambers of the Democratic-controlled State Legislature included similar proposals in their respective budget outlines. One outcome of the proposals and the forthcoming legislation would be an end to natural gas stoves in new homes, along with other gas-powered appliances such as water heaters, furnaces and clothes dryers. Clearly, this will take away energy options from N.Y. residents as well as affordability and reliability as the nation delves into almost complete electrification from intermittent renewable energy (mostly wind and solar power).
In all proposals, the ban will be phased in with the earliest date being January 1, 2025, to as late as December 31, 2028. The Senate and Assembly proposals exempt uses such as commercial kitchens, hospitals, crematoriums, laboratories and laundromats and the governor’s office indicates a possible range of exemptions. Under New York’s proposals for banning fossil-fuel hookups, people who already have gas stoves could keep them. That would also be true under a separate proposal from Governor Hochul to prohibit the sale of any new fossil-fuel heating equipment and related systems for existing homes and buildings starting in 2030. Most greenhouse emissions in U.S. buildings come from heating: 68 percent of emissions stem from space heating, 19 percent comes from water heating, 13 percent from cooking.
This new mandate is unpopular with N.Y. residents. A recent Siena College poll found that 53 percent of all New York respondents said they opposed it. Reliability and affordability are endangered with additional electrification as exemplified by the December blizzard in Buffalo that caused widespread power outages. Diversity of energy supply choices, which could help to avoid blackouts, would not be allowed under Governor Hochul’s proposal.
Some U.S. municipalities, including many Democratic-led cities in California, have all-electric building mandates, while lawmakers in some Republican-led states have passed laws blocking cities from imposing such requirements. In Florida, Republican Gov. Ron DeSantis urged lawmakers to approve a tax exemption for gas stoves and declared federal officials are not “taking our gas stoves away from us,” after a federal official said the Consumer Product Safety Commission should consider a ban. Since then, the Department of Energy has attempted another approach to the same end, proposing regulations that would make 50 percent of gas stoves in the United States illegal under “efficiency standards.” And, the reality may be worse because one estimate suggests that 95 percent of the market would not meet the proposed efficiency levels. In late 2021, New York City instituted a ban on fossil fuel combustion equipment including stoves, with exemptions for restaurants and other specific uses, in most new buildings under seven stories starting next year and in 2027 for taller buildings.
New York would be the first state to take this action through legislation; California and Washington state have done so through building codes. Last year, the Washington State Building Code Council required heat pumps as the main heating source in buildings. The changes, which take effect in July, allow gas heat pumps and the use of gas supplemental heating.
Gas Stove Usage
As of 2020, about 38 percent of the country’s households used natural gas for cooking. However, there is a wide degree of regional variation in its use. In four states — New Jersey, California, Illinois and New York — approximately 60 to 70 percent of homes cook with natural gas. The percentage is below 20 percent in nine other states, mostly located in the South. Nationally, electricity is the largest source of energy for cooking. Of the 123 million U.S. households surveyed, more than half — 65 million — said that electricity was the most-used source of power for their oven and stove. Electricity is also twice as likely to be the most-used range fuel for households making between approximately $5,000 or less annually to as much as $99,000. Gas is more prevalent when residents are earning $150,000 or more; 5.8 million households at that income level used gas compared with 5.6 million for electric.
A provision in the Inflation Reduction Act, the High-Efficiency Electric Home Rebate Program, offers low-income homeowners up to $840 in rebates for new electric ranges. For moderate-income homeowners, the program also offers rebates of up to 50 percent of the total cost of an electric range. A Consumer Reports survey of about 2,100 people nation-wide showed the following: three percent had an induction stove, 57 percent reported having other types of electric models, and thirty-seven percent had gas stoves. An induction stove—the most efficient electric range—costs about $1,000, and also requires the use of induction-capable cookware which may mean additional expenses for purchasers.
Conclusion
New York wants to be the first state to legislate a ban on gas stoves in new buildings with the hope that other states will follow in order to reach Biden’s goal of net zero carbon, despite the fact that most New Yorkers are not in favor of the action. Sixty to 70 percent of N.Y. homes cook with natural gas. While New York Governor Hochul has not proposed a measure to ban the sale of gas stoves for existing buildings, New York’s climate plan backs such a step in the future. That would be very costly for N.Y. families, and limit the diversity of energy supply at the very time when New York’s energy transition is beginning to show serious shortcomings. The state of Virginia found that a total gas appliance ban in the state would cost families as much as $26,000 for retrofits. States that are looking toward a total natural gas ban should realize that the costs are prohibitive and that eliminating choices for residents is a policy mandate most often found in authoritarian governments.
*This article was adapted from content originally published by the Institute for Energy Research.
The Unregulated Podcast #126: Opening Day
March 31, 2023 by Leave a Comment
On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the highlights from a busy week in Washington and their thoughts on the new season of Major League Baseball.
Links: