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

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

Unnecessary and inefficient

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

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

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

Unpopular

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

The findings include:

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

The full details of the survey can be found here.

Costly and unfair

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

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

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

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

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

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

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

End this charade

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


AEA to Senate: Highway Bill is Highway Robbery

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

Chairman Barrasso,

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

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

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

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


Sincerely,

Thomas J. Pyle

Renewable Energy Mandates Increase Chances Of Major Blackouts

Texas and California lead the nation in power outages and in wind and solar generation. Since 2019, there have been 263 power outages across Texas–more than any other state–each lasting an average of 160 minutes and impacting an estimated average of 172,000 Texans. From 2019 to 2023, California had 221 power outages, ranking second, and Washington ranked third with 118 outages, based on data from the Department of Energy. Texas has the most wind capacity in the nation and is the nation’s top wind producer and California has the most solar capacity in the nation and is the nation’s top producer of solar power.

Texas

Over the past 5 years, more than a third of Texas’ outages occurred in 2021, when a freeze led to widespread outages and the deaths of at least 210 people around the middle of February. There were 47 outages in February 2021 out of 91 across Texas that year. Mass outages such as the one that occurred during the 2021 freeze are rare. Typically, the outages Texans experience are localized and caused by damage to power lines. Power outages — and other events such as wildfires — are becoming greater risks for utilities as the nation’s power grid infrastructure, much of which was installed more than 50 years ago, cannot handle surging electricity demand, higher rates of intermittency, and extreme weather events. Much of the U.S. electric grid was built in the 1960s and 1970s. While the system has been improved with automation and some emerging technologies, it is struggling to meet the electricity needs of Biden’s energy transition, such as renewable energy resources and growing building and transportation electrification.

In 2022, Texas led the nation in utility-scale wind-powered electricity generation, producing more than one-fourth of the U.S. total, leading the nation for the 17th year in a row. Wind power surpassed the state’s nuclear generation for the first time in 2014 and exceeded coal-fired generation for the first time in 2020.  In 2011, Texas was the first, and until 2020 the only, state to reach 10,000 megawatts of wind generating capacity. By February 2023, Texas had nearly 40,000 megawatts of wind capacity, which was more than one-fourth of the state’s utility-scale generating capacity and almost three fourths of its total renewable generating capacity, including from small-scale (less than 1 megawatt) solar installations. In 2022, wind supplied one-fifth of Texas’ in-state utility-scale (1 megawatt or larger) generation.

Texas ranks sixth in the nation in solar power potential. In 2022, the state was the country’s second-largest producer, after California, of solar power. Solar PV capacity at the state’s large- and small-scale facilities increased to more than 13,500 megawatts in early 2023. Solar energy accounted for about 5 percent of the state’s total electricity generation in 2022. Small-scale solar facilities provided about one-eighth of that total. Natural gas-fired power plants supplied about half the electricity generated in Texas in 2022, coal-fired power plants supplied 16 percent, and the state’s two operating nuclear power plants supplied 8 percent.

The Public Utility Commission of Texas, the state’s utility regulator, is requiring Texas utilities to file resiliency plans this year for the first time. These plans would lay out each utilities’ strategies to reduce outages and otherwise harden their infrastructure against weather-related events.

California

Between 2019 and 2023, California had its largest power outages in 2022 (69 outages) and in 2020 (56 outages). In August 2020, hundreds of thousands of Californians briefly lost power in rolling blackouts amid a heat wave, marking the first-time outages were ordered in the state due to insufficient energy supplies in nearly 20 years. The heat wave extended into September and was the state’s hottest and longest for September. For more than a week, the California Independent System Operator (CAISO) — which oversees the electrical grid serving 80 percent of the state — had been calling on residents to conserve their energy use in the later afternoon and evening amid extreme temperatures that sent electric demand on the grid to record levels. Heat waves drive up demand due to increased air-conditioning use. Typically, summer peak load in CAISO was about 30 gigawatts, but on a very hot day, it was over 50 gigawatts–a 60 percent plus increase, and virtually all air-conditioning.

California is second in the nation, after Texas, in total electricity generation from renewable resources and solar energy is the largest source of California’s renewable electricity generation.  In 2022, solar energy supplied 19 percent of the state’s utility-scale electricity net generation, increasing to 27 percent of the state’s total net electricity generation when small-scale solar generation is included. In 2022, California produced 31 percent of the nation’s total utility-scale and small-scale solar PV electricity generation and 69 percent of the nation’s utility-scale solar thermal electricity generation. At the beginning of 2023, California had more than 17,500 megawatts of utility-scale solar power capacity– more than any other state—and when small-scale facilities are included, the state had almost 32,000 megawatts of total solar capacity. The state is the nation’s top producer of electricity from solar energy, which generates less power in the evening and virtually none at night as the sun goes down, but that is when Californians arrive home from work and turn their air conditioners up and other appliances on.

In 2022, wind accounted for 7 percent of California’s total in-state electricity generation, and the state ranked eighth in the nation in wind-powered generation.  At the beginning of 2023, California had more than 6,200 megawatts of wind capacity.  In 2022, natural gas-fired power plants provided 42 percent of the state’s total net generation and nuclear power’s share was about 8 percent, about the same as hydropower’s contribution. According to the Energy Information Administration, California is the nation’s largest importer of electricity from other states, relying upon them for around 30 percent of its electricity.

Nation

Nationally, the number of outages from 2019 to 2023 was 93 percent higher than in the previous five years. Tennessee and Utah were the only states with a decrease in outages in the last 5 years (2019 to 2023) compared to the prior 5 years (2014 to 2018), among states with sufficient data. Tennessee generates most of its power from nuclear, natural gas and coal, which together provided over 85 percent of its generation in 2022, followed by 12 percent from hydropower. Solar energy, biomass, petroleum, and wind energy provided almost all the rest of Tennessee’s net generation—about 3 percent. About 80 percent of Utah’s electricity comes from coal and natural gas plants. In 2022, coal fueled 53 percent of Utah’s total electricity net generation, and natural gas accounted for 26 percent. Almost all the rest of Utah’s in-state electricity generation came from renewable energy sources (16 percent), primarily solar power. Utah generates about one-fifth more electricity than it consumes, and the state is a net supplier of power to other states.

Conclusion

A study has found that power outages have increased by 93 percent across the United States over the last 5 years—a time when solar and wind power have increased by 60 percent. Texas, who leads the nation in wind generation, and California, who leads the nation in solar generation, have had the largest number of power outages in the nation over those 5 years. The U.S. electric power grid is aging but it is being asked to handle increasing demand from President Biden’s forced “green” energy transition along with an increase in generation from intermittent and weather-driven renewables (wind and solar), which are to displace affordable and reliable natural gas and coal power that currently supply almost 60 percent of U.S. generation. That is a prescription for more power outages to come.


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

The Unregulated Podcast #173: More Barbie than Oppenheimer

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the circus like proceedings of the Senate Budget Committee. Later Carolyn Phippen, a candidate in the GOP primary for Utah’s senate seat,  joins the show to discuss the most pressing issues facing the Beehive State and the rest of the country.

Links:

 

Biden’s Offshore Wind Projects To Cost Double Initial Estimates

The cost to consumers of two offshore wind projects expected to support New York’s self-imposed climate goals has more than doubled from their original estimates, which were high to begin with. Developers had threatened to cancel their offshore wind projects without higher prices, citing inflation, supply chain challenges and rising costs driven by the pandemic, Bidenomics and Russia’s invasion of Ukraine. The agreements, which still need to be finalized, are expected to keep 1,700 megawatts of offshore wind on schedule for 2026. New York wants to reach 70 percent renewable energy by 2030, but to reach that goal—the highest renewable goal in the nation for 2030, the state will need to dump huge costs on its utility customers. The estimated impact to consumer bills for the two projects will be 2 percent, or about $2 per month for the new 25-year agreements—more than double what was expected in the 2019 agreements. The 2019 agreements, which were canceled, were projected to increase bills between 0.49 percent and 0.9 percent or 73 cents per month. Despite having pre-existing contracts with the state, both projects were able to bid into a November 2023 solicitation under New York state rules that allow bids from wind projects that need new contractual terms to remain financially viable. New York state government officials are walking away from protection of consumers in order to claim they are “leaders” in climate policies.

The two NY projects are the 810-megawatt Empire Wind 1 developed by Norwegian company Equinor and the 924-megawatt Sunrise Wind, slightly larger than the original 880 megawatts expected, developed by Orsted and Eversource. Empire Wind, located about 15 miles south of Long Island has received final federal approval, and Sunrise Wind, located more than 30 miles east of the eastern point of Long Island, expects final approval later this year. The projects are both expected to begin providing power by late 2026. The average development cost of the projects over 25 years is about $150 per megawatt-hour, the “strike price” for offshore renewable energy credits, for energy that is intermittent and weather driven with capacity factors less than 50 percent. In contrast, geothermal energy producers are using hydraulic fracturing to ultimately get costs down to $100 per megawatt hour for renewable energy that performs 24/7 and is reliable and carbon dioxide free.

The new offshore wind contracts are expected to include new economic benefit commitments beyond those agreed to by the developers in their 2019 contracts: $188 million in purchases of U.S. iron and steel; $32 million for disadvantaged communities; $16.5 million for wildlife and fisheries monitoring and a labor peace agreement for operations and maintenance. The agreements also maintain commitments by Empire Wind to utilize and support the South Brooklyn Marine Terminal as an assembly and staging port for offshore wind construction and for Sunrise Wind to use the Port of Coeymans near Albany for some foundation components. Both developers, Equinor and Orsted, are European companies.

The earlier awards for the projects had a net present value of $2.2 billion, but the current value is not yet available from the Governor’s office.  The strike prices in nominal dollars (not adjusted for inflation) for the original agreements were $110.37 per megawatt hour for Sunrise Wind and $118.38 per megawatt hour for Empire Wind 1. Sunrise Wind sought a requested increase to their average strike price of 27 percent while Empire Wind 1 sought a 35 percent increase. The increase in strike price from the previous contracts averaged about 30 percent. According to a New York government agency, the new cost estimates were “not directly comparable” since they are based on forecast energy prices and other factors.

A third bidder, the 1.3-gigawatt Community Offshore Wind 2 project, is “waitlisted” and may be awarded in the future. Two other large offshore wind projects have canceled their contracts, hurting the state’s ability to reach its 2030 renewable target. Equinor opted not to rebid its second offshore wind project, the 1,260-megawatt Empire Wind 2 facility, after canceling its existing contract in January. Instead, Empire Wind 2 will be ​“matured for future solicitation rounds,” according to the company. Its former partner, BP, did not indicate that it planned to rebid the Beacon Wind offshore wind facilities in the latest auction. New York plans a public webinar on the two re-awards on March 19, where the public may learn more about their decision to make consumers pay so much more for energy than the original prices.

New York is not the first or only state to allow financially distressed offshore wind facilities to re-bid their contracts after several project cancelations over the past few years. Other states, including New Jersey, Massachusetts, Rhode Island and Connecticut, have allowed similar actions. New Jersey, for example, agreed to contracts with three developers that included prices similar to those in New York’s new agreements. These solicitations have allowed projects that were nearing construction to continue as their governments seem unconcerned about higher costs for consumers in their states.  Other offshore wind development projects remain locked into contracts that they will either need to cancel or rebid in order to remain financially viable.

Nationwide Goals

Nationwide, the Biden administration has set a goal of installing 30 gigawatts of offshore wind by the end of this decade. Current estimates are that half of that are likely to be built. As of February, the United States had installed over 240 megawatts of offshore wind capacity off the coasts of New York, Massachusetts, Rhode Island and Virginia — up from just 42 megawatts a year ago. Biden’s offshore wind targets were thrown into jeopardy after financial hardships and logistical challenges hit project developers as inflation skyrocketed and supply chains were broken.

Supply-chain constraints, rising material costs, higher interest rates and permitting delays made it more expensive and less profitable to develop these massive and complex offshore wind projects. The developers most affected by these conditions were the ones that had already signed agreements with utilities or public agencies—agreements that were not flexible in renegotiating costs. Companies signed the long-term agreements early in the planning process to specify the rate customers will pay for the electricity and how much of the energy they will use. Last year, developers with contracts signed before the pandemic found it impossible to turn a profit under their existing terms. In 2023, developers canceled contracts to sell 5.5 gigawatts of offshore wind power from projects in New Jersey, Connecticut and Massachusetts, incurring billions of dollars in penalties. These experiences cast doubt on Biden’s belief that wind and solar are the cheapest forms of energy.

Conclusion

Last June, offshore wind developers petitioned New York state’s Public Service Commission for increased payments under their contracts. Those petitions were denied and new solicitations were made in November. Two of those are about to be awarded, covering development cost increases of about 30 percent. Under the new agreements for the 25-year contracts, consumers will be paying more than double the bill increase that was set under the original contract agreements in 2019. New York is aiming to build 9,000 megawatts of offshore wind capacity by 2035, and this solicitation will cover 1,700 megawatts with a late 2026 operational date. Other states are also offering new solicitations to keep their offshore wind projects viable. Despite that, a number of offshore wind projects have been canceled with developers paying penalties. President Biden wants 30,000 megawatts of offshore wind by 2030—only half that amount is expected, which is good for consumers, who will be paying heavily for the privilege of receiving electricity generated by offshore wind that is more expensive than electricity generated from natural gas.


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

EV Hypocrites At Home And Abroad

Supposedly, the reason for switching to electric vehicles from gasoline-powered vehicles is to reduce carbon dioxide emissions by using less gasoline and thus oil. However, a country that was way ahead of the United States in the transition to electric vehicles found that its oil demand did not decline from EV use despite electric vehicles making up 64 percent of new car sales and despite thousands of dollars in annually recurring subsidies. In fact, Norway’s ownership and use of gas-powered cars increased, especially for long trips where electric vehicles have a range problem. Despite Norway having some of the “greenest” electricity in the world with its vast hydropower resources, a Norwegian EV owner needs to get 45 years of use out of the vehicle’s imported EV battery, which has an expected life of 15 years, to offset the global carbon dioxide emissions from producing it.

Norway’s EV Incentives

The Norwegian government offered consumers massive subsidies to purchase an electric vehicle. New electric vehicles were exempt from several onerous taxes and the 25 percent value added tax (VAT). On average, a large new ICE vehicle would be subject to $27,000 in various taxes and an equivalent EV would pay none. Electric vehicles were also exempt from any road or ferry tolls, were allowed to use bus lanes, were offered free parking and charging in municipal areas, and had “charging rights” in apartment buildings. Although Norway rolled back some of these subsidies starting in 2017, an Oslo resident can still expect EV benefits that total $8,000 annually. Norway can do this in part because they have the largest sovereign wealth fund in the world, made possible by revenue generated by their oil and gas production.  The fund is approaching $1.5 trillion, representing about $250,000 per resident.

Norway spends nearly $4 billion annually on EV subsidies—about the amount it spends on total highway and public infrastructure maintenance. Because EV subsidies favor high-income urban citizens, who take advantage of free tolls, parking, and charging and avoid the onerous tax on larger luxury vehicles, public scrutiny made the Norwegian government reduce several subsidies. Municipal parking is no longer free, EV passengers (not the vehicles) are subject to certain tolls, and a partial purchase tax was introduced on new electric vehicles. The changes will likely reduce EV penetration. For example, in 2022, Sweden eliminated several subsidies that resulted in a 20 percent drop in EV sales.

Norwegians are reluctant to give up their ICE vehicles, even after purchasing an electric vehicle. Two-thirds of Norway’s EV households own at least one ICE vehicle. From 2010 to 2022, Norway added 550,000 electric vehicles, but the number of ICE vehicles on the road, rather than falling, increased by 32,630. While the population grew by 11 percent, the total number of passenger cars grew by 25 percent. Norwegians are using their electric vehicles when they want to avoid a road or ferry toll, have access to free parking or charging, or avoid congestion by using bus lanes. Otherwise, they use their ICE vehicle.

Norway’s electricity demand has increased as it shifted from fossil fuels to electricity for transportation, heating, and lighting. Since 2010, Norwegian electricity demand increased by 20 percent and total primary energy demand for all forms of energy increased by 5 percent. The shift to electric vehicles did little to reduce overall energy consumption despite claims they are far more efficient.

The Efficiency of EVs vs. ICE vehicles

Electric vehicles are less energy efficient  than ICE automobiles when all the costs of the supply chain are considered, including the costs of both the battery and the renewable power required to make “carbon-free” electric vehicles. Manufacturing an electric vehicle consumes far more energy than an ICE vehicle. Most of the additional energy is spent mining the materials for and manufacturing an EV’s lithium-ion battery. Mining companies use energy-intensive trucks, crushers, and mills to extract each battery’s nickel, cobalt, lithium, and copper and the manufacturing process consumes vast amounts of energy. While many analysts tout the carbon savings from displacing fossil fuels, they are not adequately accounting for the battery’s increased energy consumption. Once these adjustments are made, most, if not all, of the EV’s carbon advantage disappears.

Throughout the history of energy, there has not been an example where a new technology with inferior energy efficiency has replaced an existing, more efficient one. As a result, electric vehicles will fail to gain widespread adoption despite massive subsidies and the threat of ICE bans. Recently, both Ford and Hertz had to scale back their EV initiatives due to lower-than-expected consumer interest.

The Efficiency Issue in the “Green” Transition Is Even More Widespread

Global energy efficiency, which was improving by 1.9 percent annually for more than a decade, has been growing at only half that rate since 2021. The “green” energy transition, pushed by politicians, is actually making it more difficult to reduce carbon emissions because it is stimulating more energy consumption overall through increasing electricity demand and encouraging inefficient solar and wind investments that result in more emissions due to increased mineral mining and less energy output.

The Irony Continues

As Western countries are pushing electric vehicles and solar and wind power, China is building coal plants to produce the “green” technologies that the West needs for its energy transition. China’s BYD car maker has surpassed Tesla in EV sales; China manufactures over 70 percent of the world’s solar panels and it dominates the world in the processing of critical minerals needed for EV, “green” energy technology and weapon production. Subsidizing electric vehicles and green energy technologies actually gives China and other developing nations the incentive to use more fossil energy and release more carbon emissions making these products for Western countries whose governments encourage them.

Conclusion

The Biden administration needs to look at Norway for an understanding of the use consumers put to electric vehicles and ICE vehicles to realize that subsidies and regulatory mandates will not make consumers march to those orders. Norway’s experience brings out the reality that electric vehicles are purchased by the wealthy who get wealthier from government subsidies that make their lives better by providing benefits such as free parking, use of bus lanes and free tolls. Norway did not reduce oil use from selling more electric vehicles and thus its EV movement did not reduce carbon emissions. Instead, the movement resulted in more government spending. That is what President Biden is doing with the energy transition in the United States—spending government funds. The carbon emission reductions that have occurred in the United States have resulted from switching from coal to low-cost natural gas in the electric power sector, largely before Biden became President.


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

California’s Plastic Bag Ban Backfires Bigly

In 2014, California state legislators passed a law banning single-use plastic bags to reduce the amount of discarded plastic and to limit emissions resulting from their production. Californians, however, are now tossing more pounds of plastic bags than before the legislation was passed. A report by the consumer advocacy group CALPIRG found the tonnage of discarded bags rose from 4.08 per 1,000 people in 2014 to 5.89 per 1,000 people in 2021—a record high. The actual tonnage of plastic waste increased by almost 50 percent.  That is because the newer bags, which typically cost 10 cents, are thicker to meet technical specifications for “reusable,” but typically are not reused. “Reusable” plastic bags are at least four times thicker than typical single-use plastic bags. Also, during the COVID lockdown, groceries, restaurant dishes and other products were delivered to consumers’ doors, often in thick plastic bags. This finding is similar to a study of New Jersey’s plastic bag ban. In California, new legislation is being proposed that would also ban the thicker plastic bags from grocery and large retail stores.

Also, in California, Governor Gavin Newsom signed a law in 2022 that puts more responsibility on companies that produce the plastics. Under the law, at least 30 percent of plastic items sold, distributed or imported into California must be recyclable by January 1, 2028. By 2032, that number will increase to 65 percent. It also requires that waste from single-use plastics be reduced 25 percent by 2032 and provides CalRecycle, a state government agency,  with the authority to increase that percentage if the amount of plastic in the economy and waste stream grows. In the case of expanded polystyrene, that number needs to reach 25 percent by 2025. If that number is not hit, the hard-to-recycle foamy plastic will be banned. Recycling rates for polystyrene are in the low single digits, making it improbable that a 25 percent recycling target could be met in the three years from the signing of the bill. Language in the bill includes dates and consequences for failure, including a $50,000-per-day fine on any company or “entity” not in compliance with the law, as well as directions for how collected fees can and cannot be used.

Plastics companies will have oversight and authority over the program via a Producer Responsibility Organization, which will be made up of industry representatives. Among various duties, the group will be responsible for collecting fees from its participating organizations to pay for the program, as well as an annual $500-million fee that will be directed to a plastic pollution mitigation fund. According to the U.S. Environmental Protection Agency, more than 35 million tons of plastics were generated in the United States in 2018 and only 8.7 percent was recycled.

Consumers Turned to Free Paper Bags Where Available

Plastic bag bans that did not place a fee on paper bags caused many customers to substitute paper bags for plastic bags. In Portland, Oregon, paper bag use increased nearly 500 percent after its plastic bag ban was put into effect without a fee on paper bags. In 2020, Oregon’s statewide ban added a paper bag fee. Philadelphia, another city with no paper bag fee as part of its single-use plastic bag ordinance, had a 157 percent increase in the proportion of customers using at least one paper bag after its ban. In contrast, Vermont’s plastic bag ban, which includes a minimum 10-cent fee on paper bags, resulted in an estimated 3.6 percent increase in paper bag use. The plastic bag ordinance in Mountain View, California, which also included a minimum 10-cent fee on paper bags, resulted in a 67 percent decline in the proportion of customers using a paper bag. While paper bags are recyclable, using new ones for every grocery trip is more wasteful than using reusable plastic bags.

New Jersey’s Plastic Bag Ban

In 2020, New Jersey passed a law banning single-use plastic and paper bags in all stores and food service businesses—a law that went into effect in May, 2022 that was cheered by  “environmental groups.” While the total number of plastic bags did go down by more than 60 percent to 894 million bags, the alternative bags ended up having a much larger carbon footprint with the state’s consumption of plastic for bags spiking by a factor of nearly three. Plastic consumption went from 53 million pounds of plastic before the ban to 151 million pounds following the ban. Most of New Jersey’s stores switched to heavier, reusable shopping bags made with non-woven polypropylene, which uses over 15 times more plastic and generates more than five times the amount of greenhouse gas emissions during production per bag than polyethylene plastic bags. Further, the alternative bags were not widely recycled and do not typically contain any post-consumer recycled materials. Greenhouse gas emissions rose 500 percent compared to the old bags as consumers shelled out money for reusable bags at a time when Bidenomics was already pressuring grocery budgets.

Conclusion

States and localities are finding that the single-use plastic bag ban is back-firing on them as both plastic waste and emissions from bag use has gone up with the ban. While reusable bags are available, people are disposing of them in many cases as they did with single-use plastic bags, increasing plastic waste as more plastic goes into their manufacture to create their thickness, and increasing the emissions from their production. States and localities that allowed free paper bags in lieu of the plastic bags found their use to also increase, also resulting in more waste, as they were destroyed often after a single use. The plastic bag ban shows what can occur when politicians rush into laws and regulations without the proper research to see whether their goals will be attained.


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

200 Ways President Biden and the Democrats Have Made it Harder to Produce Oil & Gas

Joe Biden and his Democrats have a plan for American energy: make it harder to produce and more expensive to purchase. Since Biden took office, his administration and Congressional Democrats have taken over 200 actions deliberately designed to make it harder to produce energy here in America.  A list of those actions appears below. A PDF of the list is available to download here.


On January 20, 2021, 

  1. Besides canceling the Keystone XL pipeline, 
  2. President Biden restricted domestic production by issuing a moratorium on all oil and natural gas leasing activities in the Arctic National Wildlife Refuge. 
  3. He also restored and expanded the use of the government-created social cost of carbon metric to artificially increase the regulatory costs of energy production of fossil fuels when performing analyses, as well as artificially increase the so-called “benefits” of decreasing production.
  4. Biden continued to revoke Trump administration executive orders, including those related to the Waters of the United States rule and the Antiquities Act. The Trump-era actions decreased regulations on Federal land and expanded the ability to produce energy domestically. 

On January 27, 2021,

  1. Biden issued an executive order announcing a moratorium on new oil and gas leases on public lands 
  2. or in offshore waters 
  3. and reconsideration of Federal oil and gas permitting and leasing practices. 
  4. He directed his Interior Department to conduct a review of permitting and leasing policies. 
  5. Also, by Executive Order, Biden directed agencies to eliminate federal fossil fuel “subsidies” wherever possible, disadvantaging oil and natural gas compared to other industries that receive similar Federal tax treatments or other energy sources which receive direct subsidies. 
  6. This Biden Executive Order attacked the energy industry by promoting “ending international financing of carbon-intensive fossil fuel-based energy while simultaneously advancing sustainable development and a green recovery.” In other words, the U.S. government would leverage its power to attack oil and gas producers while subsidizing favored industries. 
  7. Biden’s EO pushed for an increase in enforcement of “environmental justice” violations and support for such efforts, which typically are advanced by radical environmental organizations and slip-and-fall lawyers hoping to cash in on the backs of energy consumers.  

On February 2, 2021,

  1. The EPA hired Marianne Engelman-Lado, a prominent environmental justice proponent, to advance its radical Green New Deal social justice agenda at the EPA, a signal to industry that it plans to continue its attack on American energy. 

On February 4, 2021,

  1. At the behest of the January 27th Climate Crisis EO, the DOJ withdrew several Trump-era enforcement documents which provided clarity and streamlined regulations to increase energy independence. 

On February 19, 2021, 

  1. Biden officially rejoined the Paris Climate Agreement, which is detrimental to Americans while propping up oil production in Russia and OPEC and increasing the dependence of Europe on Russian oil and natural gas. It also benefits China, who dominates the supply chain for critical minerals that are needed for wind turbines, solar panels, and electric vehicle batteries.

On February 23, 2021,

  1. Biden administration issued a Statement of Administration Policy in support of H.R. 803 which curtailed energy production on over 1.5 million acres of federal lands. 

On March 11, 2021,

  1. The President signed ARPA, which included numerous provisions advancing Biden’s green priorities, such as a $50 million environmental slush fund directed towards “environmental justice” groups, including efforts advanced by Biden’s EO. 
  2. ARPA also included $50 million in grant funding for Clean Air Act pollution-related activities aimed at advancing the green agenda at the expense of the fossil fuel industry.

On March 15, 2021,

  1. Biden’s Securities and Exchange Commission sought input regarding the possibility of a rule that would require hundreds of businesses to measure and disclose greenhouse gas emissions in a standardized way, hugely increasing the environmental costs of compliance and disincentivizing oil and gas production.

On April 15, 2021,

  1. The Federal Energy Regulatory Commission’s policy statement outlines — and effectively endorses — how the agency would consider market rules proposed by regional grid operators that seek to incorporate a state-determined carbon price in organized wholesale electricity markets. This amounts to a de facto endorsement of a carbon tax that would be paid by everyday Americans in their utility bills. 

On April 16, 2021, 

  1. At Biden’s Direction, Secretary of the Interior Deb Haaland revoked policies in Secretarial Order 3398 established by the Trump administration including rejecting “American Energy Independence” as a goal; 
  2. rejecting an “America-First Offshore Energy Strategy;” 
  3. rejecting “strengthening the Department of the Interior’s Energy Portfolio;” 
  4. and rejecting establishing the “Executive Committee for Expedited Permitting.” These actions set the stage for the unprecedented slowdown in energy activity by the Interior Department, steward of 2.46 billion acres of federal mineral estate and all its energy and mineral resources.

On April 22, 2021,

  1. Biden issued the U.S. International Climate Finance Plan to funnel international financing toward green industries and away from oil and gas.  

On April 27, 2021,

  1. The Biden administration issued a Statement of Administration Policy in support of S.J. Res. 14 which rescinded a Trump-era rule that would have cut regulations on American energy production. 

On April 28, 2021, 

  1. Biden’s EPA issued a Notice of Reconsideration that would propose to revoke a Trump-era action that revoked California’s waiver for California’s Advanced Clean Car Program (Light-Duty Vehicle Greenhouse Gas Emission Standards and Zero Emission Vehicle Requirements).

On May 5, 2021,

  1. This proposed Fish and Wildlife Service Rule revokes a Trump administration rule and expands the definition of “incidental take” under the Migratory Bird Treaty Act (MBTA). The rule would impact energy production on federal lands, increasing regulatory burdens. 

On May 20, 2021,

  1. Biden issued an executive order on Climate-Related Financial Risk that would artificially increase regulatory burdens on the oil and gas industry by increasing the “risk” the federal government undertakes in doing business with them.

On May 28, 2021,

  1. Biden’s FY 2022 revenue proposals include nearly $150 billion in tax increases directly levied against the oil and gas energy producers. 

On July 28, 2021,

  1. This Department of Energy determination increases regulatory burdens on commercial building codes, requiring green energy codes to disincentivize natural gas and other energy sources. DOE readily admits they ignored efforts private industry is making on their own and utilized the questionable “social costs of carbon” to overstate the public benefit. 
  2. The Executive Order also kicked off the development of more stringent long-term fuel efficiency and emissions standards, a backdoor way to compel the electrification of vehicles. 

On August 11, 2021,

  1. The White House released a letter from Jake Sullivan begging OPEC+ (OPEC plus Russia) to produce more oil.

On September 3, 2021, 

  1. Biden’s Department of Transportation issued a proposed rule that would update the Corporate Average Fuel Economy Standards for Model Years 2024–2026 Passenger Cars and Light Trucks to increase fuel economy regulations on passenger cars and light vehicles. The modeling calculated “fuel savings” by multiplying fuel price with ‘avoided fuel costs’ to disincentivize gasoline by making it more costly to afford ICE cars and trucks.

On September 9, 2021,

  1. NASA and the FAA launched a partnership to reduce “fuel use and harmful emissions” by strong-arming industry to adopt elements of their green agenda. 
  2. Department of Education’s Climate Adaptation Plan (CAP) includes efforts to incorporate the green agenda into as many guidance and policies as possible, effectively leveraging the department as an anti-fossil fuel propaganda tool. 

On October 4, 2021,

  1. The FWS published its final rule revoking Trump-era actions which eased burdensome regulations on energy action. 

On October 7, 2021,

  1. The Council on Environmental Quality revoked Trump administration NEPA reforms that reduced regulatory burdens by reinstating tangential environmental impacts of proposed projects. 
  2. Biden announced plans to designate the Northeast Canyons and Seamounts Marine National Monument, a move counter to Trump’s reversal of a similar Obama-era proclamation. Trump aimed to allow energy exploration in the area to increase energy independence. 
  3. The U.S. Department of Agriculture’s (USDA) CAP includes efforts to switch fuel away from oil and natural gas and subsidize more costly, less efficient fuel sources. 
  4. As part of its CAP, EPA intends to incorporate Biden’s Green New Deal agenda throughout its rulemaking process. 

On October 21, 2021,

  1. This report paints climate change, and therefore oil and gas producers, as a “risk to financial stability.” The report recommended the “climate disclosures” later set forth by the Biden administration. 

On October 28, 2021,

  1. Rep. Rho Khanna interrogated oil CEOs about why they were increasing production as their ‘European Counterparts’ were lowering their own.

On October 29, 2021, 

  1. The Bureau of Land Management announced the use of social costs of carbon in decision-making for approving permits for oil and gas drilling. This devalues the economic benefits of energy production on federal lands.

On October 30, 2021, 

  1. The Department of Labor issued a final ESG Rule that would require fiduciaries to consider the economic effects of climate change and other so-called environmental, social and governance (ESG) factors when evaluating funds for retirement plans. The rule would strongly encourage fiduciaries to draw capital from domestic energy development in oil and natural gas to renewables.

On November 2, 2021, 

  1. The Biden administration led a “Global Methane Pledge” to reduce global methane emissions by 30 percent by 2030. Neither Russia nor China signed the pledge, increasing the world’s reliance on these two countries for energy-related imports and disadvantaging the U.S. oil and natural gas industry, as well as large consumers of energy such as industrial manufacturing and agriculture.

On November 4, 2021, 

  1. Biden committed to “ending fossil fuel financing abroad,” targeting the global fossil fuel industry, thereby disadvantaging them, which increases global oil and gas prices. Further, key countries, like China, did not sign the pledge, so the pledge harms signatories while empowering adversaries. This is another case of unilateral economic and energy disarmament. 

On November 5, 2021,

  1. Biden Energy Sec. Granholm laughed at questions about boosting oil production.

On November 12, 2021,

  1. New Source Review: These broad, overreaching regulations target new, modified, and reconstructed oil and natural gas sources, and would require states to reduce methane emissions from hundreds of thousands of existing sources nationwide for the first time. The Proposed Rule follows the President’s Day 1 Climate EO and the passage of the S.J. Res. 14, a CRA rescinding Trump-era energy independence policies. The proposed rule spends several paragraphs dismissing the effects of the rule on the oil and gas industry and misleadingly applies its effects on the industry to only the “140,000” (an underestimate of the over 220,000) employees directly involved in extraction. This means it ignores the nearly 10 million other people working in the oil and gas industry and the impacts to the oil and gas economy more broadly. 

On November 15, 2021, 

  1. Biden’s Interior Department announced plans to withdraw Chaco Canyon from oil and gas drilling for 20 years.
  2. The Biden administration nominated Saule Omarova to serve as Comptroller of the Currency. Omarova’s past comments speak for themselves: “A lot of the smaller players in [the fossil fuel] industry are going to, probably, go bankrupt in short order—at least, we want them to go bankrupt if we want to tackle climate change,” she said. 

On November 17, 2021,

  1. HUD’s CAP leverages the Community Development Block Grant to advance ‘environmental justice’ efforts. 
  2. Biden calls on FTC to probe “anti-consumer behavior” by energy companies.

On November 19, 2021, 

  1. Biden endorsed several oil and gas provisions in the Build Back Better Bill, including a new tax on methane, of up to $1500 per ton; 
  2. prohibiting energy production in the Arctic and offshore leasing on the Outer Continental Shelf (OCS) in the Atlantic, Pacific and Eastern Gulf of Mexico Planning Areas; 
  3. increased fees and royalties for onshore and offshore oil and gas production; 
  4. a new $8 billion tax on companies that produce, process, transmit or store oil and natural gas starting in 2023;  
  5. limited ability of energy producers to claim tax credits for upfront and royalty payments in foreign countries – amounting to a tax increase on domestic energy producers; 
  6. and a 16.4 cent tax on each barrel on crude oil – up from 9.7 cents – a $13 billion tax increase on oil production.

On November 26, 2021, 

  1. Biden’s Interior Department issued its report on the Federal Oil and Gas Leasing Program includes recommendations to raise rents and royalty rates on oil and gas producers, even though federal energy production already lags that from state and private lands.

On December 14, 2021,

  1. The EPA launched a revamp of its Office of Civil Rights to add so-called environmental justice enforcement as a key pillar in enforcing Title VI civil rights complaints. The agency’s announcements mean social justice claims against, among others, the oil and gas industry will increase costs and penalties that have specious connections to its environmental mission. 

On December 21, 2021, 

  1. Biden’s Department of Transportation issued its Final Rule revoking Trump-era actions which prevented California from arbitrarily becoming the national standard for fuel emissions. The rule set the stage for the administration to reinstate California’s waiver, and, since automakers do not make different cars for different states, the rule would allow California’s radical environmental policies to reach nationwide, forcing people nationwide to pay for vehicles meeting California’s standards. 

On December 30, 2021,

  1. Biden’s EPA issued its Final Rule for increased “fuel efficiency standards.” According to the Final Rule, “These standards are the strongest vehicle emissions standards ever established for the light-duty vehicle sector. The rule, in responding to comments, claims “energy security benefits to the U.S. from decreased exposure to volatile world oil prices” suggesting that decreasing oil and gas production in the U.S. will result in less exposure to the international oil and gas market because they will be disincentivizing vehicles that use oil and gas. The rule also claims that it will result in “fuel savings” entirely due to less use of fuel.

On January 13, 2022,

  1. DOE announced an initiative to hire 1,000 staffers for their Clean Energy Corps, a group of staff dedicated to Biden’s promise to destroy fossil fuels. 

On January 14, 2022,

  1. Biden nominated Sarah Raskin to serve as Vice Chair of the Federal Reserve. She was deemed so radical on her belief that fed policy should be dictated by environmental policy that she gained a bipartisan opposition and had to withdraw her nomination.

On February 9, 2022, 

  1. A proposed rule on Coal and Oil Power Plant Mercury Standards would revoke a Trump-era rule that cut red tape on coal and oil-fired power generators and followed the Supreme Court’s rejection of an earlier Obama administration rule. This would effectively reinstate Obama-era regulations which sought to increase regulations on coal and oil-fired power plants.

On February 18, 2022,

  1. FERC updated a 23-year-old policy for assessing proposed natural gas pipelines, adding new considerations for landowners, environmental justice communities, and other factors. In a separate but related decision, the commission also laid out a framework for evaluating projects’ greenhouse gas emissions.

On February 21, 2022, 

  1. The Biden administration paused working all new oil and gas leases on Federal land in response to a judge blocking their arbitrary use of social costs of carbon, unnecessarily hurting domestic oil and gas production.  

On February 28, 2022, 

  1. The Ozone Transport Proposed Rule would expand federal emissions regulations over a wider geographic region and over a wider array of sources, including the gathering, boosting and transmission segments of the oil and gas sector. Integral energy production states like Nevada, Utah and Wyoming would be required to jump through more red tape.

On March 1, 2022,

  1. Refusal To Appeal adverse leasing court decision: The Biden administration refused to appeal an unprecedented decision to vacate an offshore oil and gas leasing sale held in November 2021. This means under Biden, the U.S. has not held one successful lease sale offshore. 
  2. Certification of New Interstate Natural Gas Facilities: This policy statement increases climate change regulations for new interstate natural gas facilities. 

On March 8, 2022,

  1. President Biden tried to deflect from his anti-energy record saying there are 9,000 issued leases on federal lands without current drilling. This is true and it’s also true that this is the lowest percentage of unused leases in at least 20 years — in other words, lease utilization is at a multi-decade high.

On March 9, 2022,

  1. EPA Reinstates California Emissions Waiver: The EPA reinstated California’s emissions waivers, allowing the state to set its own greenhouse gas emissions standards, standards which will likely be adopted nationwide and are sure to make vehicles more expensive. The practical effect is that California is setting policy for people in all the other states despite their terrible record of energy inflation.

On March 11, 2022,

  1. Natural Gas Infrastructure Project Reviews: This interim regulation will increase the regulatory burden on natural gas facilities by, among other things, requiring climate change impacts be considered when determining whether a project is in the public interest.

On March 16, 2022,

  1. Doubling Down on Social Costs of Carbon: The 5th Circuit Court of Appeals reinstated the dubious social costs of carbon metric which had been rejected by another court by issuing a stay on the lower court’s ruling. The ruling itself cast doubt on the lower court’s ruling. The Biden administration argued against the lower court’s ruling to reinstate the SCC metric. The Social Cost of Carbon is a “made-up” number designed to make any hydrocarbon project in the U.S. more expensive. It is an “end-around” the politically difficult carbon tax most of the Green Establishment supports. 

March 21, 2022,

  1. SEC Proposed Rule on Mandatory Climate Disclosures: The SEC’s proposed rule would require public companies to disclose greenhouse gas emissions 
  2. and their exposure to climate change. This rule would massively increase so-called environmental costs of compliance and, in tandem with so-called social costs of carbon, artificially disincentivizing oil and gas production. 

March 28, 2022,

  1. Army Corps of Engineers’ Review of its Nationwide Permit 12 for Oil or Natural Gas Pipeline Activities: The corps announced it would be reviewing NWP 12 late last month as part of Biden’s day-1 executive order on climate change mandating all federal agencies ensure their work is in line with its climate and environmental objectives. The review is part of a long list of actions that confuse and delay permitting for critical infrastructure. This makes pipelines harder to build and improve in the U.S.

March 30, 2022

  1. Environmental Justice Advisory Council Meeting: The WHEJAC will hold its first two meetings to, among other things, advance Green New Deal priorities including “environmental justice and pollution reduction, energy, climate change mitigation and resiliency, environmental health, and racial inequity.”

March 31, 2022

  1. President Biden announces that he will sell one million barrels of oil a day from the Strategic Petroleum Reserve for the next six months. 
  2. Biden wants to penalize oil companies with unused leases: President Biden called on Congress to pass legislation enacting “use it or lose it” fines on wells that oil companies have leased from the federal government but have not used in years and “on acres of public lands that they are hoarding without producing… Companies that are producing from their leased acres and existing wells will not face higher fees.” The extra fees on federally leased land are on top of rents that the oil companies pay to hold the leases, “bonus bids” paid by the winning bidder at lease sales and the fact that 66 percent of federal leases are currently producing oil. This is simply a deflection from the Biden administration’s war on affordable North American energy supplies. 
  3. Biden’s Budget Contains More Anti-Oil Proposals: President Biden’s budget for the fiscal year 2023 is $5.8 trillion. It contains large amounts of climate spending and anti-oil and gas policies that did not get passed in his Build Back Better bill last year. 
  4. Biden is seeking $50 billion for programs to address climate change, 
  5. including $18 billion to build the U.S. government’s resilience to climate change, 
  6. $3.3 billion in funding for clean energy projects and at least $20 million for a new “Civilian Climate Corps.” 
  7. To help pay for the increased climate spending, Biden is asking Congress to eliminate tax provisions that aid domestic energy production, 
  8. including tax deductions for intangible drilling costs and low-production wells that enable small producers in the United States to produce oil. Removing these deductions will lower domestic output while further raising already high oil and gasoline prices.

April 5, 2022,

  1. Biden’s Department of Energy Office of Fossil Energy and Carbon Management releases a “Strategic Vision” with no discussion of increasing domestic fossil energy production: The Department of Energy is statutorily required to carry out research and development with “the goal of improving the efficiency, effectiveness, and environmental performance of fossil energy production, upgrading, conversion, and consumption.” (42 USC 16291) However, the Biden Department of Energy has no interest in increasing fossil energy production. Despite the requirements of the law, the Strategic Vision is only about “Advancing Justice, Labor, and Engagement; Advancing Carbon Management Approaches toward Deep Decarbonization; and Advancing Technologies that Lead to Sustainable Energy Resources.”  

April 12, 2022,

  1. Biden extended the availability of higher biofuels-blended gasoline during the summer to lower gasoline costs and to reduce reliance on foreign energy sources. The measure will allow Americans to buy E15, a gasoline blend that contains 15 percent ethanol from June 1 to September 15. Oil refiners are required to blend some ethanol into gasoline under a pair of laws, passed in 2005 and 2007, known as the Renewable Fuels Program, intended to lower the use of oil and greenhouse gas emissions and reduce dependency on foreign oil by mandating increased levels of ethanol in the nation’s fuel mix every year. However, since the passage of the 2007 law, the mandate has been met with criticism that it has contributed to increased fuel prices and has done little to lower greenhouse gas emissions. With looming food shortages already acknowledged by President Biden, turning his back on domestic energy production while dedicating even more food to make energy inefficiently is not wise.  

April 15, 2022,

  1. Biden announced 144,000 acres of the federal mineral estate opened for oil and gas leasing — just 0.00589 percent of the 2.46 billion acres the American people own.  White House Press Secretary Jen Psaki said, “Today’s action…was the result of a court injunction that we continue to appeal, and it’s not in line with the president’s policy, which is to ban additional leasing.”
  2. The administration announced it would resume leasing, but with a royalty rate almost 50 percent higher
  3. Withdrawal of M-37046 and 
  4. reinstatement of M37039: “The Bureau of Land Management’s Authority to Address Impacts of its Land Use Authorizations Through Mitigation” The Interior Department reversed a Trump administration decision which limited the scope of “compensatory mitigation” the Department could force upon projects on federal land as a condition of receiving a permit, which will hit energy and mining projects especially hard. Under the new guidance, opponents in the federal government could require mitigation located far from the project with little relevance, effectively giving bureaucrats a blank check to request whatever they wish of a permit seeker with little controls. This decision was made less than a week after the DOI Inspector General reported that there were no controls or apparent records justifying previous versions of this program, and warned they may have to review the overall program again. This is a “3rd world” approach giving government officials the latitude to effectively deny a project by assessing “compensatory mitigation” so expensive as to make it uneconomic, or to fund their pet projects by extorting additional funds from a permit-seeker.

April 19, 2022,

  1. Biden Restores Climate to NEPA: The Biden administration completed reforms on how agencies implement the National Environmental Policy Act, effectively undoing one of the Trump administration’s most important environmental regulatory rollbacks. This opens the door for officials to cook up whatever justification they desire to impede energy development under the guise of NEPA. 

April 20, 2022,

  1. White House Climate Advisor Gina McCarthy states on MSNBC that “President Biden remains absolutely committed to not moving forward with additional drilling on public lands.”

April 21, 2022,

  1. U.S. Climate Envoy John Kerry said the world’s reliance on natural gas should be limited to a decade. He said, “We have to put the industry on notice: You’ve got six years, eight years, no more than 10 years or so, within which you’ve got to come up with a means by which you’re going to capture, and if you’re not capturing, then we have to deploy alternative sources of energy.” Repeated statements like this from administration officials tell investors not to sponsor energy investments in the U.S., since it implies the use of those energy sources will be limited by the government. 

April 25, 2022,

  1. Biden reverses Trump’s Alaska oil plan: The Biden administration released a management plan for the National Petroleum Reserve Alaska, an Indiana-sized area reserved for oil and gas leasing. The final decision reverses a Trump-era plan that had opened most of the reserve to oil and gas leasing and withdraws some of the most prospective oil and gas areas from consideration.  

April 28, 2022,

  1. The Biden administration admitted to using faulty modeling which overestimated wildlife effects, delaying permitting on existing leases.

May 18, 2022,

  1. The Biden administration announced they were canceling a lease sale of over one million acres in the Cook Inlet in Alaska.
  2. At the same time, the Biden administration announced they were canceling a lease sale in the Gulf of Mexico.

May 19, 2022,

  1. HR. 7688 is named the “Consumer Fuel Price Gouging Prevention Act,” and it would give the President vast powers to set price controls by executive fiat. If passed, this legislation will cause even more harm to American energy consumers. Price controls don’t work, and our experience during the gas lines of the 1970s should remind us that price controls will lead to shortages
  2. S.4214 is a similar “price gouging” bill taken up in the Senate.

June 2, 2022,

  1. The Biden administration settled with environmental litigants to do what the Biden administration wanted to do and more thoroughly analyze the climate impacts of oil and gas leasing on 4 million acres of federal lands. This provides more delay, potential litigation about sufficiency, and more uncertainty about investment.
  2. Biden’s EPA announced they were allowing states greater power to stop roads, dams, shopping malls, housing developments, wineries, breweries, pipelines, coal terminals, and other projects using Section 401 of the Clean Water Act.  

June 7, 2022,

  1. Biden’s EPA deals a death blow to Pebble Mine in Alaska.  Citing its authority under the 1972 Clean Water Act, EPA proposed a legal determination that would ban the disposal of mining waste rock in the Bristol Bay watershed. Pebble is one of the world’s largest copper deposits –essential for electrification—and holds enormous quantities of additional minerals, including strategic ones. 

June 8, 2022,

  1. Biden reduces fees on renewables while raising them on oil and gas.  President Biden’s Interior Department announced it will reduce the fees on renewable projects on federal lands after announcing recently that royalty rates and rents would increase as much as 50% for oil and gas projects on federal lands.

June 28, 2022,

  1. President Biden considers new regulations that would hamper the largest oil-producing area in the world.  His latest consideration is EPA implementing new requirements that would curb drilling across parts of the Permian Basin—the world’s biggest oil field that straddles Texas and New Mexico.

July 6, 2022,

  1. President Biden releases his draft offshore lease plan.   The plan includes an option with zero lease sales. There is the potential for 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. The earliest Biden’s offshore lease program could be finalized is likely late fall.

July 7, 2022,

  1. The Biden administration proposes a strict appliance standard rule for furnaces, the goal of which is to increase the upfront cost of using natural gas furnaces so great that people will switch to electric heating.   

July 14, 2022,

  1. Biden sells oil to China from the SPR.  Biden has sold more than five million barrels of oil from the SPR to European and Asian nations instead of U.S. refiners, compromising U.S. energy security. Biden’s Energy Department in April announced the sale of 950,000 barrels from SPR to Unipec, the trading arm of the China Petrochemical Corporation, which is wholly owned by the Chinese government.  China purchased that oil from U.S. emergency reserves to bolster its own stockpile. China has been buying large amounts of oil for its reserves since the early COVID lockdowns when prices were low due to demand destruction.

July 15, 2022,

  1. Biden’s Federal Highway Administration, without authority to do so, proposed requiring all states to track and reduce on-road vehicle greenhouse gas emissions.

August 16, 2022,

  1. President Biden signs the Inflation Reduction Act (IRA), which includes new taxes on natural gas extraction and methane leaks, and 
  2. Superfund taxes on crude oil and its related products, and
  3. An extension of biofuel tax credits and a new tax credit for sustainable aviation fuel. These biofuel tax credits will encourage existing petroleum refining capacity to convert to biofuels, making it harder for Americans to get the petroleum fuel products they need for transportation and home heating. These incentives will make the United States import more petroleum products from countries with additional capacity such as China and the Middle East, while committing more agricultural products to fuel, rather than food.  
  4. IRA:  The law also encourages states to adopt California’s plan to phase out gas-powered vehicles by 2035.

August 17, 2022,

  1. A federal judge reinstated a moratorium on coal leasing from federal lands that had been implemented during the Obama administration and was lifted under President Donald Trump. The ruling from U.S. District Judge Brian Morris requires government officials to conduct a new environmental review prior to resuming coal sales from federal lands. According to the judge, the government’s previous review of the program had not adequately considered the impacts of climate change from coal’s greenhouse gas emissions, among other effects. 

August 18, 2022

  1. Secretary of Energy Jennifer Granholm sent a letter to refiners threatening “to deploy emergency actions” against the industry if they continue to export refined products or otherwise fail to build refined product inventories. This ignores the record of increasing exports of petroleum coinciding with rising production in the U.S.

August 22, 2022,

  1. U.S. Appeals Court reinstates Biden’s ban on oil and gas leasing 

September 6, 2022

  1. The Biden administration reached an agreement with environmental groups to and halt drilling permits on over 58,000 acres of land in a sue-and-settle case.

September 12, 2022,

  1. EPA announced they rejected Cheniere Energy’s LNG appeal to exempt two turbines at LNG export terminals from a hazardous pollution rule despite the needs of the Europeans and others for LNG and Biden’s promises to help allies with supplies. 

September 19, 2022

  1. The Department of Energy announces the sale of an additional 10 million barrels of oil from the SPR

September 20, 2022,

  1. The Biden administration is expected to soon finalize a rule banning oil and gas leasing near Chaco Culture National Historical Park opposition from local Indigenous leaders, who say the administration’s rule would prevent them from collecting royalties on their land.

September 30, 2022,

  1. Secretary of Energy Jennifer Granholm and senior White House officials met with U.S. refiners. The Biden administration officials threatened the refiners with an export ban

October 5, 2022,

  1. The Biden administration is reportedly working to wind down sanctions against Venezuela’s authoritarian government in exchange for oil production.  This ignores that Venezuelan crude oil is much more carbon intensive than the domestic oil the Biden Administration is restricting, or Canadian oil which would have been transported via the Keystone XL pipeline.  

October 7, 2022,

  1. The Securities and Exchange Commission announced that was reopening the comment period on the ESG rule because a “technological error” resulted in the deletion of some public comments. But the SEC only gave people 14 days to figure out if their comment was deleted and to submit a comment again.  

October 2, 2022,

  1. Biden administration officials lobbied the Saudis and other members of OPEC+ to hold off reducing oil output until after the mid-term elections.  

October 6, 2022,

  1. The Department of the Interior moves forward with some leasing but notes that they are “mandated” by the Inflation Reduction Act. In other words, DOI is trying not to lease unless mandated by an act of Congress. This ignores that current law requires them to lease periodically, which they are honoring in the breach.

November 2, 2023

  1. President Biden threatens oil companies with a windfall profits tax—again.  “Their profits are a windfall of war,” Mr. Biden said, referring to the Russian invasion of Ukraine as the reason for high prices for oil and gasoline. Biden could easily increase domestic oil production by changing his anti-oil and gas policies that began on his first day in office.

November 9, 2022

  1. California proposes banning new diesel trucks by 2040. The California Air Resources Board (CARB) proposed a regulation that would require manufacturers to sell only “zero-emission” medium and heavy-duty vehicles in the state by 2040.

November 16, 2022

  1. U.S. supports the phase-out of hydrocarbons at COP27.

November 17, 2022

  1. Biden releases more stringent requirements to EPA’s proposed methane rule at COP27.  At the Conference of the Parties (COP27) in Egypt, President Biden’s Environmental Protection Agency (EPA) released the text of a supplemental proposed rule regulating methane emissions from the oil and natural gas industries that is more stringent than the original proposed rule in 2021. The 2021 rule targets emissions from existing oil and gas wells nationwide, rather than focusing only on new wells as previous EPA regulations have done. The new rule released at COP27, however, includes all drilling sites, even smaller wells that emit less than 3 tons of methane per year.  Small wells currently are subject to an initial inspection but are rarely checked again for leaks. The new proposal also requires operators to respond to credible third-party reports of high-volume methane leaks. These more stringent requirements result in a near doubling of the economic costs, which are estimated to produce a 13 percentage point increase in reduced emissions from 2005 levels by 2030. Increasing costs will increase bills for consumers at a time when natural gas prices are already expected to climb.
  2. Federal government grants lesser prairie chicken ESA protections.

November 29, 2022

  1. EPA proposes exorbitant estimate for the social cost of carbon.  President Biden’s Environmental Protection Agency (EPA) has proposed a new estimate for the social cost of carbon emissions that nearly quadruples the interim figure from the Obama Administration. The Biden administration has been using the Interagency Working Group’s interim value of $51 per metric ton of carbon dioxide, but EPA has proposed increasing it to $190.

November 30, 2022

  1. Instead of relying on the scientific method, the Biden administration instructed regulatory agencies to apply “indigenous knowledge” to “research, policies, and decision making.”

December 7, 2022

  1. President Biden seeks fossil fuel-free federal buildings and bans natural gas.

December 8, 2022

  1. Bureau of Land Management piles its methane rule atop those set by EPA and Congress.  BLM’s proposal would tighten limits on gas flaring on federal land and require energy companies to better detect methane leaks. The rule would impose monthly limits on flaring and charge fees for flaring that exceeds those limits. 

December 23, 2022

  1. California’s regulators release their net zero plan.  Californian regulators approved a plan to reduce the state’s carbon-dioxide emissions by 85 percent from 1990 levels by 2045, thereby reaching carbon neutrality, meaning the state will remove as many emissions from the atmosphere as it emits. It aims to do so in part by reducing fossil fuel demand. 

January 10, 2023

  1. U.S. Interior Department names Elizabeth Klein to oversee offshore energy.  She had initially been nominated by the White House to be the Deputy Interior Secretary under current chief Deb Haaland but was withdrawn from consideration in March 2021 amid opposition from moderate Alaska Republican Senator Lisa Murkowski, whose vote was needed for her confirmation, over concerns that Klein was opposed to oil development.

January 12, 2023

  1. EPA’s proposed rule regarding the Clean Water Act. The rule would expand the EPA and Army’s regulatory oversight to include traditionally navigable waters, territorial seas, interstate waters and, “upstream water resources that significantly affect those waters.”  According to the two agencies, the revised rule is based on definitions that were in place before 2015. Farming groups, oil and gas producers, and real estate developers criticized the regulations as overbearing and burdensome to business, and, in particular, the ruling has the potential to affect natural gas infrastructure projects. It also would exert federal control over lands not owned by the federal government.

January 17, 2023

  1. Biden appointee proposes ban on gas stoves.  Richard Trumka Jr., a Biden commissioner on the CSPC, told Bloomberg the ban is justified because gas stoves increase respiratory problems such as asthma among children, which is a myth promoted by environmentalists whose real agenda is not to reduce asthma but to ban natural gas.  Gas stoves are used in about 35 percent of households nationwide, or about 40 million homes. The household figure is closer to 70 percent in some states, such as California and New Jersey. Other states where many residents use gas stoves include Nevada, Illinois, and New York.

January 31, 2023

  1. Biden administration blocks Minnesota’s Twin Metals Mine.  The Biden administration blocked plans for a major copper, nickel and cobalt mine in northern Minnesota that could have helped supply minerals for his “net-zero” plans. The “Twin Metals Project” would have tapped the Duluth Complex within the Superior National Forest, where 95 percent of the nation’s nickel reserves and 88 percent of American cobalt reserves are found.

February 3, 2023

  1. Biden administration blocks the development of Alaska’s Pebble Mine.  The U.S. Environmental Protection Agency blocked the development of the proposed Pebble mine–the most significant undeveloped copper and gold resource in the world–because of stated concerns about its environmental impact on Alaska’s aquatic ecosystem.

March 3, 2023

  1. Biden EPA approves Midwest governors’ request for year-round E15 sales.  The Biden administration is recommending for approval a rule that would allow expanded sales of gasoline with a higher ethanol blend (15 percent ethanol), based on a request from governors in Midwest states.

March 9, 2023

  1. Biden administration attacks oil and gas in FY24 budget proposal.

March 10, 2023

  1. Biden’s offshore oil and gas lease plan delayed by 18 months. 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. 

March 14, 2023

  1. Biden withdraws more areas of Alaska from oil exploration.  The Biden administration announced major restrictions on offshore oil leasing in the Arctic Ocean and across Alaska’s North Slope supposedly to temper criticism from environmentalists over a pending decision on an oil drilling project in Alaska’s National Petroleum Reserve known as Willow and to form a “firewall” to limit future oil leases in the region. The Interior Department said it would issue new rules to block oil and gas leases on more than 55 percent of the 23 million acres that form the National Petroleum Reserve-Alaska and bar drilling in nearly 3 million acres of the Beaufort Sea — closing it off from oil exploration.  The restricted area of over 16 million acres is about the size of West Virginia. The Willow project, if approved, would take place inside the petroleum reserve, which is located about 200 miles north of the Arctic Circle. The National Petroleum Reserve was established in 1912 as a backup source of oil for the federal government, originally for the Navy, as it was at one time referred to as the Naval Petroleum Reserve. Four sites in the country comprised the Naval Petroleum Reserve. The fourth site is on the North Slope of Alaska.

March 16, 2023

  1. Sen. Whitehouse introduces the “Clean Competition Act,” a carbon border tax.  One consequence of this policy would be a negative impact on trade relations with the rest of the world. A carbon border tax will likely lead to retaliatory tariffs with our trading partners and a trade war as increasing tariffs are applied back and forth. A carbon tax like this one would impact heavy industry the most, as it would raise prices on things like steel, aluminum, and other industrial inputs. Because the costs of tariffs are ultimately passed along to consumers, starting a trade war with the world’s largest producer of aluminum (China produced nearly 60 percent of world aluminum in 2021) is a far cry from supporting the American working class. Additionally, carbon border taxes are ripe for political gamesmanship because determining the true carbon intensity of products from a variety of countries with different regulatory systems and variations in how emissions are tracked is no simple task. The sheer complexity of rating products would impose massive compliance costs throughout global supply chains, the last thing that is needed with runaway inflation and supply chains that are still recovering from the dual shocks of the pandemic and Russia’s invasion of Ukraine.

March 17, 2023

  1. EPA’s “Good Neighbor” rule increases the costs of electricity for consumers.  The Biden administration announced tougher limits on emissions from power plants, factories and other industrial facilities that cross state boundaries. The new standards, announced by the Environmental Protection Agency (EPA), are intended to place tighter constraints on emissions from 23 Midwestern and Western states that have coal and natural gas power plants and facilities. This interstate regulation, known as the “good neighbor” rule, strengthens and expands an earlier interstate air pollution standard that was enacted during the Obama administration. In finalizing the rule, the EPA included three western states in the regulation — California, Nevada and Utah, due mainly to emissions from their industrial facilities. The new rule includes increased flexibilities, giving power plants emission allowances that will decrease over time. EPA was able to finalize the new standards as the U.S. Court of Appeals for the D.C. Circuit rejected a challenge to EPA’s proposed rule by coal companies and others this month. This rule is but one of many the Biden Administration is planning to roll out in pursuit of its quest to kill coal plants in the United States, as IER has detailed.

March 20, 2023

  1. Biden uses veto to preserve DOL Rule on ESG investing.

March 23, 2023

  1. U.S. Army Corp of Engineers slow walks Line 5 permitting process.

March 30, 2023

  1. California gasoline price gouging bill.  California Democratic lawmakers approved a bill that could provide a penalty for supposed price gouging at the gasoline pump, allowing regulators the power to fine oil companies for supposedly profiting from gas price spikes similar to those that California experienced last summer. Democratic Governor Gavin Newsom called for a special legislative session to pass a new tax on oil company profits after the average price of gas in California hit a record high of $6.44 per gallon, according to AAA. State regulators, however, did not pass a new tax because they were worried about supply shortages and higher prices as oil companies pass the new tax onto consumers.

March 31, 2023

  1. New York State to ban gas stoves in new buildings.  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.

April 12, 2023

  1. Biden Releases New rules to force electric Vehicles on Americans.  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 the 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.
  2. EPA announces new GHG emissions regulations rule for heavy-duty vehicles ((such as delivery trucks, refuse haulers, public utility trucks, transit, shuttle, school buses, etc.) and tractors (such as day cabs and sleeper cabs on tractor-trailer trucks) starting in model year 2027.

April 25, 2023

  1. EPA Proposes to Regulate Carbon Dioxide Emissions from Existing and New Power Plants.

May 12, 20223

  1. Department of Transportation Proposes Rules to Reduce Methane Emissions from pipelines.

May 15, 2023

  1. EPA proposes new regulations requiring power plants to reduce GHG emissions and require carbon capture and sequestration or hydrogen co-firing even though these are uneconomic technologies.

June 2, 2023

  1. Biden orders a 20-year ban on oil and gas leasing within 10 miles of Chaco Culture National Historical Park. In withdrawing the lands from development against the wishes of the Navajo Nation, the action prevents Navajo mineral owners from developing their oil and natural gas resources and realizing $194 million in royalty income over 20 years.

June 22, 2023

  1. The U.S. Fish and Wildlife Service (FWS) proposes three new ESA rules regarding interagency cooperation, listings, and critical habitat designation. Taken together, the Biden Administration is seeking to erode the standards with the goal of listing species that do not credibly meet the ESA’s definition of threatened or endangered species and designated critical habitat on such massive scales, including areas that are unoccupied. The result is reduced areas open to development, increased costs, unwarranted or unjustified permit requirements, delays, and a multitude of operational constraints that significantly impact the ability to responsibly develop energy resources.
  2. The U.S. Fish and Wildlife Service (FWS) along with the National Marine Fisheries Service (NMFS) propose new regulations on interagency cooperation with respect to the Endangered Species Act.
  3. The FWS and NMFS also propose new regulations on Listing Endangered and Threatened Species and Designating Critical Habitat.
  4. The FWS proposes an additional rule pertaining to endangered species. These three rules taken together seek to erode the standards with the goal of listing species that do not credibly meet the ESA’s definition of threatened or endangered species and designated critical habitat on such massive scales, including areas that are unoccupied. The result is reduced areas open to development, increased costs, unwarranted or unjustified permit requirements, delays, and a multitude of operational constraints that significantly impact the ability to responsibly develop energy resources.

June 30, 2023

  1. The U.S. Fish and Wildlife Service (FWS) proposes to list the Dunes Sagebrush Lizard as endangered under the Endangered Species Act (ESA). Despite extensive conservation efforts by oil and natural gas operators, the listing in the highly productive Permian Basin of Texas and New Mexico seems specifically designed to reduce development in one of the nation’s most prolific oil-producing regions.

July 20, 2023

  1. Biden Administration Proposes to Raise Drilling Costs on Federal Lands. The Interior Department’s Bureau of Land Management (BLM) has proposed a rule to implement the increased increasing royalty rates for oil and natural gas drilling production on federal lands from 12.5 percent to 16.67 percent—about a third higher–and increased leasing fees that Congress passed in the Inflation Reduction Act (IRA). BLM goes far beyond IRA by also raising the minimum bond paid upon purchasing an individual drilling lease from $10,000 to $150,000. To top it off, they propose raising the minimum bond required for a drilling lease on multiple public lands in a state from $25,000 to $500,000—a 20-fold increase. Developers must pay the bond before drilling begins. The agency also proposes limits designed to steer development away from wildlife and cultural sites. The Interior Department estimates that energy firms will incur $1.8 billion in additional costs by 2031.

July 26, 2023

  1. The White House holds a Methan Summit to reduce methane emissions, but doesn’t invite anyone from the industry.

July 28, 2023

  1. NHTSA proposes new fuel efficiency regulations requiring the average light-duty vehicle estimated to reach 58 miles per gallon by 2032.
  2. NHTSA proposes new fuel efficiency regulations for heavy-duty pickup trucks and vans (HDPUVs) for MYs 2030-2035.

August 1, 2023

  1. EPA proposes updated greenhouse gas reporting requirements for the oil and natural gas industry. Rather than recognizing that industry continues to decrease methane and other greenhouse gas emissions, the rule attempts to overcount GHGs as a means to eventually impose a carbon budget on the industry. By manipulating emissions factors that are used to calculate emissions, the rule could overestimate industry emissions nearly three-fold.

August 2, 2023

  1. The White House issues new guidance on valuing ecosystem services for use in calculating costs and benefits of proposed regulations.

August 3, 2023

  1. BLM proposes removing more than 1.6 million acres from oil and gas leasing in Colorado.

August 4, 2023

  1. BLM proposes to close 1.566 million acres to oil and natural gas leasing in the Grand Junction and Colorado River Valley field offices in the highly productive Piceance Basin on Colorado’s West Slope. The Energy Information Administration (EIA) considers the Piceance Basin to have five of the top 50 natural gas fields in the United States in proven reserves. The update to the Resource Management Plan and Supplemental Environmental Impact Statement is designed to cut off new development in the promising Mancos Shale formation.

August 7, 2023

  1. Biden proposed 236-pages of revisions to NEPA (National Environmental Policy Act) guidance to make it harder to permit any natural gas, oil, or coal project.

August 10, 2023

  1. EPA denies small refinery biofuel waivers and sets large future biofuel mandates.

August 24, 2023

  1. The Interior Department holds leases sale 261, but withdraws 6 million acres previously scheduled for leasing.

September 5, 2023

    1. The Department of Transportation banned the transportation of LNG by train.

    September 6, 2023

    1. The Biden administration canceled oil and gas leases held by the state of Alaska in the 1002 area of ANWR. This area was specifically set aside by Congress for oil and gas leasing and Congressionally-mandated lease sales.
    2. The Biden administration proposed new regulations to make it more difficult to produce oil and gas in the National Petroleum Reserve-Alaska by withdrawing almost half of the prospective area. 

    October 2, 2023

    1. The Biden administration’s five-year plan for offshore oil and gas leasing will not include any sales in 2024 and will feature just three in the final four years–the lowest number of auctions in the history of the program.
    2. Army Corps of Engineers continues “inexplicably lethargic” environmental review of Line 5.  Line 5 moves about 23 million gallons of oil and gas products daily between the United States and Canada. 

    October 18, 2023

    1. An E&E News analysis shows a 30 percent decrease in permits issued for new offshore oil and gas wells during the first two years of the Biden administration compared to the equivalent period under the Trump administration. Unfavorable policies are deterring companies from making long-term, capital-intensive investments in the U.S. Gulf of Mexico (GOM), where almost all U.S. offshore drilling occurs. The Bureau of Safety and Environmental Enforcement (BSEE) permitted 105 wells in Biden’s first two years, which compares to approving 148 during Trump’s first two years in office and 275 during Obama’s first two years. Oil companies face tougher regulations under Biden, uncertainty in oil prices, and higher expense as they move into drilling deeper waters.

    October 27, 2023

    1. A proposed Environmental Protection Agency (EPA) rule on hydrofluoric-acid-based alkylation could spur a round of refinery closures as the cost of replacing hydrofluoric acid based alkylation with alternatives is extremely high. EPA is considering adding amendments to its Risk Management Program (RMP) regulation that could effectively eliminate the use of hydrofluoric acid at U.S. refineries to make cleaner gasoline. Finalization of the rule would result in a loss of U.S. alkylation capacity that would reduce supplies of gasoline and aviation fuel, resulting in higher fuel prices for consumers. It could also shutter some refineries and impact U.S. energy and economic security.

    October 31, 2023

    1. Biden designates longtime political operative Laura Daniel-Davis as Acting Deputy Secretary for the Department of Interior. Biden previously nominated Daniel-Davis to serve as Assistant Secretary for Land and Minerals Management, but withdrew the nomination after it became clear it would not advance in the senate over concerns of her anti-production track record. This move bypasses congressional authority and places another politically motivated opponent of domestic energy production into the leadership of DOI.

    November 2, 2023

    1. Biden’s Department of Energy (DOE) has increased the time it takes to review a permit for exporting LNG from 7 weeks to a minimum of 11 months. The slowing of permit approval could mean that nearly-completed LNG projects are not able to supply European buyers in need of gas because they do not have  the permit. The drastic slowing of LNG export permits represents the most significant limit thus far on an industry planning to add 50 percent more to U.S. export capacity by 2026.

    November 6, 2023

    1. Biden-⁠Harris Administration Releases Final Guidance on OMB Circular A-4.  The 2003 version of Circular A4 advised agencies to use discount rates ranging from 3% to 7% to calculate present values of future costs and benefits. The updated 2023 Circular A4 advises agencies to use the rate of return to Treasury Inflation Protected Securities (TIPS), which currently are roughly 1.7%.  The rates reflect the weight given to future impacts of climate change. A higher rate means a lower dollar value is assigned to future impacts; a lower rate assigns more value to those impacts.

    November 11, 2023

    1. Biden’s Department of the Interior (DOI) announced a draft of the department’s Environmental Justice Strategic Plan. The plan calls for all DOI employees, including those responsible for permitting energy production on federal lands, to be “held accountable for advancing environmental justice.” The plan also calls for more of DOI’s resources to be used for the purposes of increasing employees’ ‘awareness and understanding of environmental justice” to be considered in all decision making. 

    November 17, 2023

    1. November 17, 2023 – U.S. Senate Majority Leader Charles Schumer and 22 other Democratic senators recently wrote to the U.S. Federal Trade Commission (FTC), alleging that multi-billion dollar acquisitions by Exxon Mobil and Chevron would lead to reduced competition and higher prices for consumers and asking regulators to launch antitrust probes. Exxon has proposed buying Pioneer Natural Resources for $60 billion and Chevron agreed to acquire Hess for $53 billion. The letter clearly shows, however, that these politicians do not understand much about the U.S. oil market: its players and their contributions to the nation’s energy security. First, it is hard to understand how competition would be reduced when Exxon and Pioneer combined produce only about 5 percent of U.S. oil, which is just a fraction of the oil OPEC members control–approximately 80 percent of the world’s proven oil reserves. The United States has roughly 9,000 small independent oil producers that produce 83 percent of total U.S. oil production and 90 percent of total U.S. natural gas production. In Texas, there were more than 5,700 oil and gas producers operating in 2022.

    December 1, 2023

    1. Buried within the Department of Interior’s extensive 200+ page proposal for updating the Fluid Mineral Leases and Leasing Process is a proposed rule that introduces a novel “preference criteria,” a potentially transformative mechanism that has garnered relatively little attention but could provide the Biden administration with an additional tool to impede responsible oil and natural gas development.  In essence, this would empower the Bureau of Land Management to integrate the “preference criteria” into its regulations governing oil and natural gas, enabling the BLM to preemptively exclude land parcels with “sensitive cultural, wildlife, and recreation resources” from potential leasing, even before conducting environmental analyses.

    December 4, 2023

    1. EPA issues new methane rule.  EPA’s new rule requires frequent monitoring and repair of methane leaks at well sites, centralized production facilities, and compressor stations using established inspection technologies or, at an operator’s election, novel advanced detection technologies. Similarly, storage vessels at production facilities are regulated in largely the same manner under this final rule as existing VOC requirements. However, storage vessels that previously were unaffected by regulation, including both new and existing facilities, may now be subject to NSPS based upon updated definitions and the addition of a new applicability trigger. Finally, the rule aims to phase out venting and flaring of gas coming from oil wells. 

    December 8, 2023

    1. The Environmental Protection Agency (EPA) updated its estimate of the “social cost” of carbon dioxide—a contrived way of increasing the cost of everything made from or using hydrocarbon resources to vilify those projects and keep them from becoming economic. The new estimate nearly quadruples the estimated cost of carbon dioxide to the world that the Biden administration is currently using — a change that will result in stronger climate rules and more stringent regulations that will increase costs for consumers as the least expensive materials will now cost more when projects are being considered and their costs estimated. The change could affect everything from “tiny rules” such as those concerning vending machines to more significant regulations. It is the Biden administration’s way to justify its present position, which as President Biden said, is to “end fossil fuels.”

    December 11, 2023

    1. December 11, 2023 –  The Interior Department announced new actions in support of “nature-based” solutions. The policy directs land managers and decision makers to use  guidance from “environmental justice and Indigenous Knowledge” to implement “nature-based” climate solutions into all operations on federal lands.

    December 14, 2023

    1. The U.S. Treasury Department’s Office of the Comptroller of the Currency (OCC) carried out its first climate risk assessment of more than two dozen banks in recent months, laying the groundwork for heightened scrutiny of Wall Street’s accounting for climate change.  The climate risk assessment will limit financing opportunities for oil and gas projects.

    January 5, 2024

    1. The Department of the Interior announces Deputy Assistant Secretary for Land and Minerals Management Steve Feldgus has been named Principal Deputy Assistant Secretary for Land and Minerals Management. Feldgus has been an outspoken opponent of domestic mineral production.

    January 12, 2024

    1. The Biden administration revealed its strategy for implementing a new methane emissions fee targeting the oil and gas sector, aimed at accelerating efforts to curb the release of this potent greenhouse gas. This fee, reaching up to $1,500 per metric ton by 2026, was stipulated by Congress under the 2022 Inflation Reduction Act. However, crucial aspects such as the calculation method for charges and criteria for exemptions have been delegated to the EPA for determination.

    January 26, 2024

    1. Biden halts permitting for new LNG export facilities.

    January 31, 2024

    1.  Interior halts New Mexico oil plan.

    February 7, 2024

    1.  A new round of political appointments at the Department of Energy places Alexandra Teitz in the office of the DOE’s general council. Teitz, a former Obama administration staffer, has written extensively about the federal government’s responsibility to prohibit the development of natural gas and oil on federal lands during her work with Climate 21.

    February 9, 2024

    1. A new round of political appointments at the Department of the Interior places Maryam Hassanein in the office of the DOI’s Land and Minerals Management. Prior to joining the administration, Hassanein worked for the League of Conservation Voters, an extreme environmentalist organization that promotes stopping energy production on federal lands in the name of the “climate crisis” among other radical environmental positions. 

    February 14, 2024

    1. The Environmental Protection Agency recently finalized a new rule to reduce the level of particulate matter (PM) by updating the national air-quality standards. Particulate matter is made up of microscopic solid particles such as dirt, soot or smoke and liquid droplets in the air up to 2.5 microns in diameter — far smaller than a human hair. Particulate matter comes from a variety of sources including power plants, cars, dust, construction sites and wildfire smoke. The new rule will lower the annual standard to 9 micrograms per cubic meter from 12 micrograms per cubic meter established by the Obama Administration. The 24-hour standard which is meant to account for short-term spikes will remain at 35 micrograms per cubic meter. Since 2000, particulate matter has declined by 42 percent, even as the U.S. gross domestic product has increased by 52 percent.  The new rule does not impose controls on specific industries; it lowers the annual standard for fine particulate matter for overall air quality, leaving states to force industries to comply or close their doors. The EPA plans to take samples of air across the country starting this year through 2026 to identify counties and other areas that do not meet the new standard. It will also tweak its air monitoring network to better capture the air pollution that communities living near industrial infrastructure face. States would then have 18 months to develop compliance plans for those areas. States that do not meet the new standard by 2032 could face penalties. While the standard itself would not force polluters to shut down, the EPA and state regulators could use it as the basis for other rules that target specific sources such as diesel-fueled trucks, refineries and power plants.  Opponents indicate that it will hamper American manufacturing and eliminate jobs and could shut down power plants and/or refineries. EPA officials, however, did not estimate the employment impact of the new rule because of the variety of industries affected.  Industry groups like the American Forest & Paper Association, American Wood Council and the group’s member company CEOs sent a letter to the White House in October expressing their opposition to the rule, saying the move, “threatens U.S. competitiveness and modernization projects in the U.S. paper and wood products industry and in other manufacturing sectors across our country.” “This would severely undermine President Biden’s promise to grow and reshore U.S. manufacturing jobs, and ultimately make American manufacturing less competitive.” “It also would harm an industry that has been recognized as an important contributor to achieving the Administration’s carbon reduction goals, including in future procurement for federal buildings.”
    2. Department of Energy announces its second annual equity action plan. Straying ever farther from the department’s statutory mission to “assist in the development of a coordinated national energy policy,” Secretary Granholm seeks to prioritize “environmental justice and inclusivity” in the agency’s rulemaking.  The plan complicates DOE procurement and R&D processes by introducing arbitrary political considerations.

    March 6, 2024

    1. SEC approves climate disclosure rule forcing public companies to report their greenhouse gas emissions and climate risks. 

    March 7, 2024

    1. John Podesta starts his first day as Biden’s “global climate boss.”

    The Unregulated Podcast #172: Fuel for Disruption

    On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the fallout of Super Tuesday and take bets on which will have a runner long time: this episode, or Biden’s State of the Union address.

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    EV Mandates Play To China’s Plans For Global Domination

    Western carmakers in the United States and Europe have been warning about the threat of Chinese rivals upending their markets. This threat exists because the politicians in these countries have forced automakers to go electric before they were financially and technically ready to do so. President Biden, who has elevated China’s dominant role in the renewable and EV energy markets through his push to reach unrealistic climate goals, called Chinese-made electric vehicles a national security threat and announced that the Commerce Department would open an investigation to assess the impact. The fear is that low-cost electric vehicles made in China, or assembled by Chinese companies in Mexico, could flood the U.S. market. While Chinese carmakers are subject to a Trump-era 25 percent tariff plus a 2.5 percent import duty, assembling those vehicles in Mexico would result in only the 2.5 percent import duty or none at all. Chinese-made electric vehicles are much cheaper than U.S.-made electric vehicles because of low-cost labor and the benefit of availability to parts and minerals that China produces. For example, currently many U.S. manufacturers depend on China for EV battery technology.

    THE THREAT IS LOOMING

    In February 2024, Chinese auto giant Build Your Dreams (BYD) unveiled a fully electric crossover sport utility vehicle priced at a very low $14,000 to $20,000. The BYD Yuan Up (see below) will be powered by a single electric motor and will be available in three different versions, all of which will deliver 249 miles of rangeBYD was able to produce the vehicle by keeping costs down and making many of its own components. This ultra-cheap electric vehicle could very well be the death of the U.S. auto industry. BYD beat Tesla in EV sales in the 4th quarter 2023 and poses a looming threat to EU and U.S. markets as it wants to extend its reach abroad. The company has been scouting locations in Mexico for a factory, from which it would consider exporting cars to the United States. Last year, China became the world’s biggest auto exporter, shipping an estimated 5.26 million domestically made vehicles overseas. Part of that growth came in the electric-vehicle market, where the country sold more than one million China-made electric vehicles overseas.

    Tesla Chief Executive Elon Musk said Chinese car companies have already had much success outside of China and that they are now the “most competitive” globally. “If there are not trade barriers established, they will pretty much demolish most other car companies in the world.” Clearly, China protects its own companies. In 2021, China restricted the use of Tesla vehicles by military staff and employees of key state-owned companies, saying the car’s cameras record images constantly and obtain data, including when, how and where the vehicles are used. Tesla’s privacy protection policy, however, complies with Chinese laws and regulations and, according to Musk, the company attaches “great importance” to securing user information.

    Biden’s investigation will also look at whether internet-enabled vehicles expose Americans’ data to Chinese authorities. “Connected vehicles from China could collect sensitive data about our citizens and our infrastructure and send this data back to the People’s Republic of China,” Biden said in a statement. “These vehicles could be remotely accessed or disabled.” The investigation could lead to restrictions on the use of certain parts in cars in the United States.

    According to the Alliance for American Manufacturing, a lobbying group for carmakers, and the United Steelworkers union, cheap Chinese electric vehicles pose an “existential threat” as Chinese rivals are building manufacturing capacity in Mexico to get around the Trump levies. Chinese manufacturers, led by SAIC’s MG and BYD, are about 5 years ahead of the rest of the world in making electric vehicles, and can do it up to 30 percent cheaper, according to investment bank UBS. Interestingly, Biden’s perception of climate change as an “existential threat” is his justification for pushing car sales of electric vehicles to two-thirds of models sold by 2032.

    European Carmakers Are Already Feeling the Pressure

    While U.S. auto industry has been somewhat insulated by the Trump tariffs, Chinese cars are being sold in the European Union in increasing numbers. For instance, China is making inroads in Germany where EV imports from China have more than tripled in the first quarter 2023 as China controls the lower-priced segment of the world’s EV market. Since EU and US electric vehicles are so much more expensive than internal combustion engine (ICE) vehicles, lower-priced Chinese electric models provide individuals looking for personal transportation an electric option amid political opposition to ICE vehicles. EU politicians have decided that electric cars must account for just over 20 percent of the new car market this year, about 80 percent by 2030 and 100 percent by 2035, making China’s entrance with low-cost electric vehicles a market contender.

    Last year China sold just over 350,000 sedans and SUVs in Europe, mainly electric ones. SAIC’s MG sold 239,000 vehicles, mainly electric, and BYD sold 16,000. With Hungary seemingly set as its location for EV production for the European market, BYD appears determined to break through the car market currently occupied by legacy EU automakers like Mercedes-Benz and Volkswagen while remaining price competitive with its most prominent rival, Tesla.

    The European Commission started an investigation into Chinese imports last year, but some manufacturers warn that it may not be enough. According to Luca de Meo, C.E.O. of Renault, governments may need to create a state-backed, pan-continental entity like Airbus to put the brakes on the Chinese threat. Airbus Industrie was set up in 1970 to help Europe compete with airliner market leader Boeing Co. of the United States. It consists of the German-French-Spanish-owned European Aeronautic Defense and Space company with 80 percent interest and Britain’s BAE Systems with 20 percent interest. However, there are probably too many barriers for this to be the solution to protect EU legacy automakers against Chinese competitors.

    Biden’s Tailpipe Emission Rule

    Even with this existential threat, Biden’s EPA is moving ahead with its tailpipe emissions rule, which is a de facto ban on new gasoline cars. Last year the EPA unveiled proposed emission standards for light-, medium- and heavy-duty vehicles starting with the model year 2027 to accelerate the transition to electric vehicles. Due to criticism from the United Auto Workers Union, EPA backed off on the rate of EV sales required through 2030, but retained the 2032 target, requiring 67 percent of new light-duty vehicle sales and 46 percent of new medium-duty vehicle sales to be electric. According to the American Petroleum Institute, “The mandate would restrict Americans’ freedom to drive how they choose and restrict continued innovation in the automotive sector to one technology primarily sourced from China”.

    Biden’s National Highway Traffic Safety Administration (NHTSA) has proposed a new corporate average fuel efficiency standard that has a similar EV sales outcome to that of EPA’s tailpipe emissions rule in 2032. NHTSA is proposing to raise the fuel economy standards for passenger cars at a rate of two percent a year and light trucks at a rate of four percent per year for models with year designations that fall under 2027–31. For heavy-duty pickup trucks and vans with model years 2030–35, the planned increase is 10 percent per year.

    Conclusion

    Biden’s climate policies are pushing the U.S. manufacturing industries in competition with China where its manufacturers have had years to gear up amid favorable government subsidies. China moved to EV manufacture because of its dependence on foreign oil which made it the largest importer, and because of its control of the supply chains for EV essential parts and minerals.

    Because of the speed that President Biden wants to implement his climate agenda, American industry is having a hard time being competitive with Chinese firms. While a Trump-era tariff is currently keeping Chinese-made electric vehicles out of the country, opening a factory in Mexico could mean that low-cost Chinese-made electric vehicles would flood the U.S. car market. And, with Biden’s regulations being a de facto ban on gasoline vehicles, where the United States has a step up from China, it is inevitable that the Chinese will have a major presence in the United States and that taxpayers will again have to rescue the U.S. automotive industry. All this could be avoided with the right policy changes by the Biden administration.


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

    The Unregulated Podcast #171: Learn to Mine

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

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

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

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

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

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

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

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

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

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

    Conclusion

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


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