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AEA Applauds Bipartisan Vote to Stop WOTUS Overreach

March 10, 2023 by Leave a Comment

WASHINGTON DC (03/10/2023) – The American Energy Alliance (AEA), the country’s premier pro-consumer, pro-taxpayer, and free-market energy organization, applauds members who voted in favor of H.J. Res. 27, the Congressional Review Act resolution disapproving of the revised definition of “waters of the United States” under the Clean Water Act.

Nine House Democrats broke from their party on Thursday to overturn the Biden administration’s water regulation that stretched the legal definition of navigable waters in the U.S.

AEA President Thomas Pyle issued the following statement:

This bipartisan vote halting the federal bureaucracy’s overreach is a welcome check on President Biden’s extreme environmental agenda. The Clean Water Act clearly spells out an extensive state role in the regulation of water sources. The federal statutory regulatory role is overseeing navigable waters of the United States. The repeated attempts by federal bureaucrats to stretch this definition to cover nearly all water sources in the country is an illegal power grab.

This most recent rule from the Biden administration is yet another version of the same old power grab that has been repeatedly struck down by the courts. The definition of “waters of the United States” in this rulemaking is so broad that it deeply intrudes on state responsibilities contrary to the express intent of the Clean Water Act. It will be used as a pretext to insert federal bureaucrats into industries and areas that are already well-regulated by the states themselves.

With the Supreme Court set to reach a decision that will hopefully better clarify how the term “waters of the United States” should be construed, this rule should not have been rushed out at all. That the bureaucracy pressed forward with this power grab regardless only emphasizes why it was so important for Congress to act.


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Biden’s Illegal Offshore Development Delay

March 10, 2023 by Leave a Comment

President Biden’s oil and gas offshore lease plan is late and will be even later as the Interior Department argues it needs until December to finalize the plan. It told a court it needs the rest of the year to complete an analysis on the delayed five-year program, which will replace the expired 2017-2022 program. There is currently no active offshore leasing program providing for new lease sales despite the Outer Continental Shelf Lands Act mandating that the Secretary of the Interior ‘shall prepare’ this program to ‘best meet national energy needs.’ America’s energy future is on hold as the Biden Administration deliberates on how to comply with the law at the same time it is working to “end fossil fuels” as President Biden promised. Senator Manchin, who chairs the Energy and Natural Resources Committee, said the administration is “putting their radical climate agenda ahead of our nation’s energy security” with the delay and what is even more terrifying is that on top of this disturbing timeline, Interior refuses to confirm if they intend to actually include any lease sales in the final plan. The draft proposal released last July had an option of no lease sales.

Federal law directs the Interior Department to issue an offshore leasing program detailing the year and location of potential oil and gas lease sales over the course of a five-year period. All previous administrations have finalized new programs to take over expiring plans basically on time. Biden’s Department of Interior proposed its new five-year program in July 2022 when the previous plan expired but has yet to advance it further. It expects to publish a proposed final program in September 2023, which triggers a mandatory 60-day review period for the President and Congress, after which the secretary may approve the program. That schedule makes it 18 months late.

According to attorneys for the Interior Department, litigation brought by Republican states and oil and gas industry groups is a factor causing the delay. Before Interior can finalize a new five-year leasing plan, the administration has to respond to 760,000 public comments. It also needs to complete an analysis that includes greenhouse gas emissions and the economic impacts of alternative leasing scenarios. For the latter, the Interior Department says it needs data from the Energy Information Administration that should be available this month. It also needs to conduct analyses on leasing benefits and air quality, among others.

Inflation Reduction Act

The Inflation Reduction Act (IRA) directed the Department of interior to reinstate three offshore lease sales in the previous five-year program that Interior canceled in May 2022. Interior attorneys claim that this creates a temporary avenue for continued Outer Continental Shelf leasing until the end of September. The Biden administration held a lease sale in the Gulf of Mexico that was originally invalidated by the courts and another off the Alaska coast. Interior’s Bureau of Energy Management will hold another Gulf of Mexico lease sale on March 29, 2023, but environmental groups who oppose oil and gas leasing filed a lawsuit against that sale on March 6.  The IRA also linked continued oil and gas leasing to the development of renewable energy on federal lands and in federal waters. Senator Manchin said, “I will remind the administration that the Inflation Reduction Act also prevents them from issuing any leases for renewables, like offshore wind or onshore solar, unless there are first reasonable lease sales for oil and gas that actually result in leases being awarded.”

Background

President Biden’s Department of Interior released its draft offshore lease plan late on July 1, 2022—just before the Fourth of July holiday and when American families were paying historically-high gasoline prices. A final plan was due by June 30, 2022 when the current plan ended. Biden’s draft plan lays out several options for public input regarding the number of offshore oil and gas lease sales that should be held over the next five years, ranging from zero to eleven. In total, the draft plan had ten potential new leases in the Gulf of Mexico and one in the Cook Inlet off the southern coast of Alaska. There are no new leases in federal waters off the Atlantic and Pacific coasts. Biden’s plan is in sharp contrast to President Trump’s proposed offshore lease plan that had 47 new offshore drilling leases, including in the Atlantic and Pacific oceans. President Trump had proposed a vast expansion of drilling sales to cover more than 90 percent of coastal waters, including areas off California and new zones in the Atlantic and Arctic.  This was part of his “American Energy Dominance” policy, which sought to make the United States stronger.

Biden’s Abysmal Lease Record

When Biden became President, he immediately placed a moratorium on lease sales supposedly for agencies to review their practices due to climate change. During his first 19 months in office, President Biden leased fewer acres for offshore oil and gas production than any other President before him since the inception of offshore drilling rights. Not since Harry Truman have fewer acres of federal land or offshore rights to develop oil and gas resources been leased by a U.S. president. Under President Truman, offshore drilling was just beginning and the federal government did not yet control the deep-water leases that have made up the largest part of the federal oil-and-gas program. It is clear from the graph below that the Biden administration is withholding U.S. energy development at a time when the world is facing an energy crisis and consumers are experiencing very high energy prices. President Biden is withholding resources that Americans own, resulting in gasoline prices reaching an all-time high of $5 a gallon in June 2022 and remaining over a dollar per gallon above the gas price when he took office  The following graph from the Wall Street Journal indicates how few acres have been leased during Biden’s first 19 months in office despite the law requiring oil and natural gas lease sales.

Source: Wall Street Journal

President Biden’s Interior Department leased 126,228 acres for drilling through August 20, 2022. Under Biden’s stewardship leasing is down 97 percent from the first 19 months of President Trump’s term. No other president since Richard Nixon in 1969-70 leased out fewer than 4.4 million acres at this stage in his first term, and that was in the wake of the Santa Barbara oil spill of January 1969. Harry Truman was the last president to lease out fewer acres—65,658—in 1945-46, but as noted above the offshore program was just starting during his term. During former presidents Jimmy Carter and Ronald Reagan, leasing was at record highs in the 1970s and early 1980s in response to geopolitical oil crises. Mr. Reagan still holds the record, leasing nearly 48 million acres in his first 19 months, almost three times as much as any other president.

Source: Wall Street Journal

The U.S. Department of Interior awarded 203 leases for oil and gas development during Biden’s first 19 months in office while former Presidents Trump and Obama each approved 10 times as many leases during that time period. Going back into prior Presidencies, the 203 leases under Mr. Biden amount to just 3.2 percent of what all the Presidents from Dwight Eisenhower to Donald Trump awarded on average in the same time period.

Conclusion

“No more drilling on federal lands, no more drilling including offshore—no ability for the oil industry to continue to drill—period,” Biden said when he ran for office. That’s the President’s plan and he has succeeded so far in placing delays and other obstacles in the way of leasing. The draft offshore leasing plan required by law will be at least 18 months late when it is finalized at the end of this year. And, it may state no lease sales since that was one of the options released in the proposal of July 1, 2022. About 15 percent of U.S. oil production was produced in the Gulf of Mexico in 2022 on leases that the American public owns, using American technology that has been deployed in other places around the world. Biden is doing his best to reduce that number by limiting new supplies.  This is setting the stage for energy price hikes in the future, which Biden has typically blamed on the people working in the oil and gas industries that he is stopping from exploring.

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

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The Unregulated Podcast #123: Why Are Conservatives Bad Mommy? – Guest Gov. Mike Dunleavy

March 10, 2023 by Leave a Comment

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna are joined by Governor Mike Dunleavy, (R-Alaska) for a discussion on the Biden administration’s war on American energy.

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AEA to Congress: Just Say No to President Biden’s Reckless Budget Proposal

March 9, 2023 by Leave a Comment

WASHINGTON DC (03/09/2023) – Today, President Biden released his federal budget proposal, seeking billions in additional spending for green corporate interests on a host of programs across the federal government.

AEA President Thomas Pyle issued the following statement:

This budget proposal signals that President Biden has looked at the inflation and energy price increases of the last two years and decided that he wants more of both. Since President Biden took office, gasoline prices are up 44 percent and the average retail price of electricity is up over 20 percent.

As President Biden’s destructive policies continue to mount, it’s obvious that there is no plan to correct course. Instead, President Biden tells us that if we want relief from his inflationary policies we should buy electric vehicles, which average over $58,000, or install an expensive heat pump. For a man who fashions himself as a champion of the working class, President Biden doesn’t appear to be sensitive to the needs of American energy consumers.

Fortunately, real relief could be had if President Biden were to end his war on domestic energy producers and abandon his green industrial policies. America is the best in the world at delivering reliable, affordable, and clean energy to consumers. Washington needs to get out of the energy business. This budget does the opposite. Congress should reject it.


President Biden’s budget proposal includes:

  • $16.5 billion in climate science funding and “clean energy innovation”
    • This includes $3.5 billion of the $8.8 billion total for DOE’s Office of Science and $1.6 billion at NSF
    • $1 billion for fusion energy
  • $4.5 billion in additional “clean energy” spending
  • Pledges to more than quadruple international climate finance and provide more than $3 billion for the President’s “Emergency Plan for Adaptation and Resilience”
    • This includes a $1.6 billion contribution to the Green Climate Fund and a $1.2 billion loan to the Clean Technology Fund
  • $1.8 billion for the EPA to advance “environmental justice”
  • $1.2 billion for the Department of Energy’s industrial decarbonization activities
  • $64.4 million at EPA to implement the American Innovation and Manufacturing Act, a corporate giveaway program


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Anti-Pipeline Activism Creates Expensive Consequences For American Families

March 7, 2023 by Leave a Comment

The Energy Information Administration (EIA) reported that interstate natural gas pipeline capacity additions reached a record low in 2022 based on data collected since 1995. In 2022, 897 million cubic feet per day of interstate natural gas pipeline capacity was added from five projects, according to EIA’s latest State-to-State Capacity Tracker, which contains information on the capacity of natural gas pipelines that cross state and international borders. The five projects that increased interstate natural gas capacity in 2022 focused primarily on upgrading compressor stations, with only one project adding a relatively small amount of new pipe. As natural gas is our cleanest hydrocarbon and the United States has it in abundance, this represents a historic impediment to future economic growth.

The 2022 gas pipeline capacity additions are just 3 percent of the record amount added (28,040 million cubic feet per day) in 2017. Since the Federal Energy Regulatory Commission (FERC) has to approve new interstate natural gas pipeline capacity, the news speaks loudly regarding its motivations as does President Biden’s promise to cause the demise of the U.S. oil and gas industry stated during his campaign. Regulatory hurdles are clearly stymying growth in pipeline capacity and thus to natural gas production, which points to much-needed permitting reform for interstate pipelines.

Source: Energy Information Administration

EIA Report

EIA notes that capacity was added to intrastate pipelines and to existing FERC-administered interstate pipelines as expansions that increased intrastate capacity in 2022. Since 2017, about 70 percent of the growth in natural gas production came from the Permian and Haynesville regions, located near liquefied natural gas (LNG) export terminals along the Gulf Coast. In Texas and Louisiana, intrastate projects, rather than interstate projects, increased takeaway capacity and connected natural gas production to LNG export terminals.

Building large-scale, commercial natural gas pipelines that cross state boundaries involves a number of contractual, engineering, regulatory, and financial requirements that involve addition coordination and that take longer to complete compared with intrastate pipeline projects. Some of those interstate gas pipelines have been in the works for years but due to rising costs from permitting delays have had to cancel projects. One such project was the Atlantic Coast project, a pipeline from West Virginia to North Carolina along a route that had to pass through the Appalachian Trail in Virginia. In the summer of 2020, despite a major win on the right-of-way issue at the U.S. Supreme Court, the developers of the pipeline scrapped the project due to ongoing delays and major cost overruns.

Mountain Valley Pipeline

The 303-mile Mountain Valley pipeline was originally set for completion in 2018 and while it is now 94 percent complete, it is being stonewalled by activists in federal court. Permitting delays and court action have increased the pipeline’s cost from the original estimate of $3.5 billion to $6.6 billion. Recently, the pipeline received a positive report from the U.S. Fish and Wildlife Service that indicated 5 federally protected species of bats, fish and a plant would not likely to be jeopardized by the pipeline.

A ruling from the Fourth Circuit is expected soon in a lawsuit in which environmental groups are contesting a stream-crossing approval by the West Virginia Department of Environmental Protection and a similar approval by the Virginia Department of Environmental Quality that is expected by early summer. If all goes well, Equitrans Midstream Corp., the lead partner in the project, hopes to have the remaining work done in time for the pipeline to begin transporting natural gas by the end of this year, along a route that would take it from northern West Virginia, through Southwest Virginia, and connecting with an existing pipeline near the North Carolina line. This pipeline alone would add more than double the capacity of total U.S. interstate pipeline additions last year.

FERC’s Jurisdiction and Biden’s Edict

During the first days of his Presidency, President Biden embarked on his environmental goals to “end fossil fuels,” pushing FERC to consider changes to the way it reviews applications to approve and construct new natural gas infrastructure projects by addressing greenhouse gas emissions and environmental justice concerns in its decisions. Last year, FERC released a new certificate policy statement, which would govern the process for approving new natural gas infrastructure projects and an “interim” policy statement on how it would consider greenhouse gas emissions and climate change impacts from new natural gas infrastructure.

Originally, FERC intended to apply the policy statements to both pending and new applications, effective without a comment period or transition schedule. But, after receiving backlash from Congress, FERC changed its issuances to “draft” policy statements rather than “interim” policy statements, made the policy change apply only to new proposed projects, and held a comment period. The proposed revisions to the certificate policy statement are significant, having the potential to pause or stop the development of new projects and major expansions. There is no timeline by which FERC must act, leaving some developers to question the viability of new natural gas infrastructure projects. While the comment period has expired, FERC has not released final actions regarding the policy, so project decisions are in limbo.

New England Imports Natural Gas

The U.S. Northeast is importing LNG from foreign producers to meet its natural gas demand because of insufficient pipeline capacity to bring natural gas from neighboring Pennsylvania where the Marcellus basin holds large natural gas deposits. New York state has been particularly hard on pipeline construction under Governor Cuomo, and those policies have continued under Governor Hochul.  Due to regulatory hurdles and lengthy court battles, pipeline companies have not built pipeline capacity needed in the region. Rather than add pipeline capacity, “band aid fixes” to New England’s gas supply such as suspending the Jones Act to temporarily ease receipt of more LNG imports and federal assistance in paying for New England consumers’ energy bills are being used by the Biden administration, which are not lasting or affordable solutions to addressing electric reliability concerns. Further, the Marcellus basin could be supplying LNG facilities with natural gas if the new interstate pipeline capacity could be built.

Conclusion

EIA data show that interstate pipeline capacity is being held hostage by regulatory hurdles and court proceedings as the least amount of interstate natural gas pipeline capacity was added in 2022 since data collection began in 1995. Lack of pipeline permitting reform has resulted in spiraling costs that resulted in pipeline cancellations. Those pipeline projects that persist have costs skyrocketing as can be seen by the Mountain Valley Pipeline’s costs almost doubling. President Biden wants the domestic oil and gas industry to be gone and is doing all his administration can to cause its demise, even pushing an independent agency that has control over interstate pipelines to do its bidding. If consumers use natural gas, they should be aware that there is a war against their fuel choice underway, which has the potential to radically alter their lives.

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

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The Unregulated Podcast #122 Hug A Nurse

March 6, 2023 by Leave a Comment

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the biggest news of the week and the wildest soundbites to come out of the Biden White House.

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Bipartisan Rebuke of ESG Agenda

March 2, 2023 by Leave a Comment

WASHINGTON DC (03/02/2023) – This week, the House and Senate voted to cancel a Labor Department rule that encourages retirement plan managers to weigh environmental and social issues when making investments.

AEA President Thomas Pyle issued the following statement:

“Today, Congress firmly rejected the Biden administration’s extreme environmental agenda by voting to cancel the Labor Department’s implementation of their ESG rule.

ESG issues are about political and policy beliefs. These personal political opinions of the managers and leadership at financial firms should have no bearing on how they manage their customers’ 401k investments unless a customer has specifically chosen to invest in a fund or program that prioritizes those beliefs.

The financial institutions that manage 401k and other retirement plans are fundamentally stewards of other people’s money. They cannot and should not be using other people’s retirement funds to push their own political agendas. The last thing that people want is their retirement fund pushing progressive politics down their throats.”

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The Unregulated Podcast #121: Recalibrating Our Radars

February 24, 2023 by Leave a Comment

On this episode of The Unregulated Podcast, Tom Pyle and Mike McKenna discuss a busy week of headlines and the lackluster response from the White House.

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As European Electricity Prices Spiral Energy Taxes Hike

February 24, 2023 by Leave a Comment

In late February 2023, the price of carbon permits on the European Union’s carbon market hit 100 euros ($106.57) per metric ton – the amount of increased costs that factories and power plants must pay when they emit carbon dioxide. The benchmark EU Allowance (EUA) contract had hit a high of 101.25 euros per metric ton. EUAs are the main currency in the European Union’s Emissions Trading System (ETS) which forces manufacturers, power companies and airlines to pay for each metric ton of carbon dioxide they emit as part of EU’s efforts to meet its self-imposed climate targets. The EU committed to cutting net emissions by 55 percent by 2030 from 1990 levels. EU companies have an April deadline to buy and submit enough permits to cover last year’s emissions. Power sector demand for permits in 2022 increased when Russian gas supplies were cut, helping to fuel a 7 percent increase in EU power generation from coal, which contributed to 2022’s record world coal consumption.  Prices were also driven up due to expectations of colder weather and low wind speeds that increased the demand for permits from fossil fuel power generators.

Background

The EU Emissions Trading System was launched in 2005. It sets a cap on the amount of carbon dioxide emissions that a sector, or group of sectors, can produce. The cap decreases each year to obtain a continual reduction in emissions. The system creates carbon permits, called EU Allowances (EUAs) for those emissions, which companies must buy for each metric ton of carbon dioxide they emit. Industries either have to pass the carbon permit cost to customers or absorb it themselves, lowering their margins. For perspective on the impacts, a $100 per metric ton carbon tax would increase the price of gasoline by 90 cents per gallon, the price of natural gas by $5.30 per thousand cubic feet, and add $1 per gallon to the price of diesel and heating oil.

The EU’s emissions trading system covers about 40 percent of EU emissions, forcing over 10,000 manufacturers, power plants and airlines flying within Europe to submit EU carbon permits each year for their emissions. The bloc agreed to add shipping to the trading system by 2026 and launch a separate trading system in 2027 to cover emissions from fuels used in road transport and to heat buildings.

The carbon permit price has varied over time. Prices, however, rallied in 2021 by 150 percent when EU policymakers launched a series of carbon reduction laws. Those laws prompted utilities to switch from coal to natural gas. But skyrocketing gas prices last year temporarily made coal generation cheaper.

Power sector companies are required to buy all the permits needed to fully cover their emissions, but many manufacturing industries receive free permits each year, reducing the costs they pay to comply, called free allocation. About 57 percent of the carbon permits in the EU emission trading system are sold, with the rest given to companies for free.

Free permits are given to sectors that are vulnerable to “carbon leakage”– the risk that high carbon costs would prompt companies to relocate abroad to regions without carbon costs. Over 40 sectors could be at risk of carbon leakage and thus receive free permits, including oil refineries, steel works and producers of iron, aluminum, metals, cement, lime, glass, ceramics, pulp, paper, fertilizers and organic chemicals.

EU has curbed the amount of free permits industry receives over time. It gave industry 80 percent of its permits in 2013, falling to 30 percent in 2020. Airlines receive more than 80 percent of their permits for free, but the EU agreed to make carriers pay for all of their permits by 2026. The rules are set to get tougher this decade, as the EU has agreed to phase out free allocation for industry by 2034.

In phasing out its free carbon permits, the EU plans to replace them with a carbon border levy on the emissions of imported goods to make firms abroad pay the same carbon price as European industry. Carbon costs vary greatly globally, with permits in China currently costing less than $10. The EU will impose a levy on imports of carbon-intensive steel, aluminum, cement, fertilizers and electricity, phased in gradually from 2026 until it covers all such imports in 2034. The cost paid by firms exporting those goods to Europe would be linked to the price of permits in the EU carbon market to put EU and overseas companies on a level footing, with consumers paying more for everything made with hydrocarbons.  Overseas firms will be required to buy a digital certificate for each metric ton of carbon dioxide emissions embedded in the goods they export to the EU.

High Carbon Permit Prices Could Incentivize New Carbon Reduction Technologies

EU hopes that the 100-euro permit price will incentivize some of the expensive carbon-reducing technologies such as hydrogen produced from renewable energy. The iron and steel sector, for example, is looking to “green hydrogen” to help with the production of carbon-neutral steel. “Green” technologies could also receive EU aid to avoid firms from relocating to take advantage of U.S. subsidies to companies who develop “green” technologies in North America. The European carbon price, however, could decline from the 100 euro level as the EU agreed to auction more carbon permits to help raise 20 billion euros for countries to wean themselves off Russian natural gas. As can be seen, carbon fees quickly become useful devices for governments to pursue many different policy goals even as consumers must absorb higher prices which eventually affect their quality of life.

Conclusion

In 2005, the EU instituted a cap and trade system to reduce carbon dioxide emissions. The system determines a carbon price that is expected to make emissions meet a cap that declines over time, which then raises the permit price. That price gets passed onto consumers or else eats into company profits. EU’s carbon price hit a record of $100 euros as utilities were forced to use more coal due to cuts in Russian natural gas supplies along with the expectation for colder weather, increasing demand for heating fuels, low wind speeds lowering utility generation, and an April deadline for companies to have permits to meet their carbon dioxide emissions in 2022. The EU’s energy is becoming more expensive by design, and will become even more expensive in the future.

The United States does not have a carbon tax or a carbon emissions trading system. Rather, regulations, subsidies and other interventions are being used to lower carbon dioxide emissions. Those also result in cost increases to consumers or the use of tax dollars for products that are not economic in free markets. President Biden has a goal to reduce greenhouse gas emissions, of which carbon dioxide is the major component, by 50 to 52 percent by 2030 from 2005 levels.

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

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Ford Teams Up With China To Cash In On EV Subsidies

February 22, 2023 by Leave a Comment

Ford Motor Co. recently announced plans to invest $3.5 billion to build an electric vehicle battery plant in Michigan with Chinese partner Contemporary Amperex Technology Limited (CATL)—the world’s number 1 maker of electric-car batteries with 13 factories in Europe and Asia. CATL would license technology to Ford to produce lithium iron phosphate (LFP) batteries and would provide the U.S. automaker with technical assistance. Building LFP batteries in Michigan enables Ford to obtain significant U.S. battery manufacturing subsidies from the Inflation Reduction Act that could help it hit a goal of 8 percent profit margins on its EV operations by 2026. IRA ties a significant share of federal subsidies to domestic production and raw materials content. Automakers and EV battery producers are setting up manufacturing in the United States to take advantage of federal subsidies that could generate up to $45 per kilowatt hour, offsetting the costs of production.

LFP batteries are less expensive than lithium-ion batteries because they do not include expensive ingredients like cobalt and nickel used in other batteries. LFP batteries also have the advantage of being more durable. But batteries that contain cobalt and nickel hold more energy, allowing electric vehicles to go farther before needing to be charged. Ford’s plan hinges on a judgment that lower cost and faster recharging will attract more customers, including commercial fleet buyers, who would accept the limitations of LFP batteries.

Ford plans to employ about 2,500 people at the plant and begin production in 2026. The Marshall plant, located 100 miles west of Detroit, is scheduled to launch with 35 gigawatt-hours of capacity – enough for 400,000 EVs a year – with room for expansion. The company plans to use the LFP batteries in its Mustang Mach-E, a sport-utility vehicle, and the F-150 Lightning, a pickup truck, and other electric vehicles. CATL will supply Ford with LFP cells until the Marshall plant begins production.

Michigan approved just over $1 billion in incentives over 15 years to win the project including “Critical Industry Program” grants of up to $210 million and $772 million to designate the project as a “Renaissance Zone” that will reduce both real and personal property taxes.

The Marshall factory is one of four battery plants Ford has announced plans to build in North America and Europe. Ford, General Motors and other automakers are building battery plants that are jointly owned with South Korean partners. Ford is building two battery plants in Kentucky and a third in Tennessee, both with SK On. G.M. recently started production at a battery plant in Ohio that it jointly owns with LG Energy Solution, and the partners are building two more plants, in Tennessee and Michigan.

Controversy Abounds

The announcement that Ford would be collaborating with China’s CATL produced criticism from U.S. leaders because CATL is owned by Chinese state-owned private equity firm Bohai Harvest RST. Further, 10 percent of the firm is tied to Joe Biden’s son Hunter Biden’s company, Skaneateles. China currently controls the supply chains for most of the production and/or processing of lithium, used in EV battery development, as well as the supply chain for EV battery materials, which has led them to world domination of manufacturing of EV batteries.  Senator Marco Rubio has called for an immediate CFIUS (Committee on Foreign Investment in the U.S.) review of the deal, saying the deal “will only deepen U.S. reliance on the Chinese Communist Party for battery tech, and is likely designed to make the factory eligible for Inflation Reduction Act (IRA) tax credits,” in a statement posted on his website.

Virginia had the opportunity to host the plant, but Virginia Governor Glenn Youngkin removed his state from consideration in December, calling it a “Trojan horse.” A Youngkin spokesperson said, “While Ford is an iconic American company, it became clear that this proposal would serve as a front for the Chinese Communist party, which could compromise our economic security and Virginians’ personal privacy.”  “Virginians can be confident that companies with known ties to the Chinese Communist Party won’t receive a leg up from the Commonwealth’s economic incentive packages.”

Conclusion

Ford is building a battery plant in Michigan with partner CATL—a Chinese firm that is the number one battery manufacturer in the world. The incentive for the partnership was the ability to produce LFP batteries that are cheaper than lithium-ion batteries and to obtain lucrative incentives from the Inflation Reduction Act by building the plant in the United States. Because of the partnership with a Chinese firm, Virginia refused to host the plant indicating national security concerns. Ford’s partnership with CATL is concerning to Congressional leaders, who intend to look closely at the business partnership.

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

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