News - American Energy Alliance

One Big Beautiful Loophole Is Allowing Big Solar To Fleece Taxpayers

August 9, 2026 by IER Leave a Comment

The One Big Beautiful Bill Act (OBBBA) of 2025 phased out hefty solar and wind tax credits created under former President Biden’s Inflation Reduction Act (IRA) passed in 2022. But instead of phasing out battery storage tax credits along with the wind and solar tax credits, the OBBBA phases them out much later — in 2036—which solar developers are now capitalizing on by adding battery storage components to new builds, allowing them to keep earning lucrative clean energy tax credits despite the phaseout. Warren Buffett pointed out more than a decade ago: “For example, on wind energy, we get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit.”

Under the OBBBA, solar and wind projects that have not started construction no longer qualify for the IRA tax credits. Because of lucrative tax credits, wind and solar projects have made up a majority of the energy sector’s growth since 2019. According to the Energy Information Administration, new solar and wind capacity through June 30, just before the end of their phase-out, exceeded the total added to date in 2025 and will likely outpace prior years. This result is similar to what happened when the OBBBA ended the tax credit for electric vehicles last year, with sales of electric vehicles rising sharply just before the tax credit expired on September 30.

Because of tax credits for battery storage and battery procurement mandates in 13 states, battery storage facilities are being built despite their high costs and land requirements. Batteries do not generate electricity; they store excess electricity that may be available on the grid for later release when generators are no longer producing, such as when the wind is not blowing or the sun is not shining. Thus, they are an extra expense that ratepayers and taxpayers must pay because federal and state governments are incentivizing them.

For the 24 states, the District of Columbia, and Puerto Rico that in 2025 have 100% clean or carbon-free energy goals, battery storage is their answer to providing firm power on the grid since they expect most of that carbon-free power to be supplied by wind and solar. According to industry data, total installed U.S. battery storage capacity is projected to approach 40 gigawatts by the end of 2026—almost double the 20.7 gigawatts in mid-2024. The United States added approximately 10.9 gigawatts of energy storage capacity in the third quarter of 2025–the largest quarterly addition on record. Industry forecasts project that the United States could install more than 90 gigawatts of additional storage capacity between 2025 and 2030, driven by load growth, renewable penetration, and grid reliability needs.

The 13 states that have storage procurement targets are: California, Connecticut, Illinois, Maine, Maryland, Massachusetts, Michigan, Nevada, New Jersey, New York, Oregon, Rhode Island, and Virginia. California was the first state to adopt a procurement target, initially mandating that the state’s investor-owned utilities procure 1,325 megawatts of energy storage by 2020, then adding 500 megawatts of distributed storage for a total of 1,825 megawatts by 2020. As of July 2025, California has far exceeded the goal, installing a total of 16,942 megawatts of battery storage capacity. In August 2024, California set another target to achieve long-duration energy storage of 1 gigawatt of 12-hour storage and 1 gigawatt of multiday storage resources to be deployed between 2031 and 2037. To help reach these goals, California implemented the largest financial incentive policy of the states and followed that with a number of grants.

A recent report, Batteries and the Grid: Hype, Hope, and Economic Reality, co-authored by one of the “Energy Bad Boys,” Mitch Rolling, and Jonathan Lesser for the National Center of Energy Analytics (NCEA) modeled how much battery capacity it would take to maintain reliability on PJM, the nation’s largest regional transmission operator, using primarily wind and solar to power the grid. They indicate that the enthusiasm surrounding battery storage—and what many people believe it can achieve—is creating a “Battery Bubble.”

The modelers considered three scenarios: renewables only; a natural gas and nuclear scenario with no new renewables; and a scenario that added batteries to the natural gas and nuclear scenario. Because wind and solar have low capacity factors and need batteries to firm the grid, the renewables-only scenario required the most capacity additions and was the most expensive to implement. The current PJM grid has just under 225,000 megawatts of capacity. The renewables-only scenario would require a massive overbuilding of the grid, with the total capacity on the system at 2,058,337 megawatts in 2045 for an increase of over 800%. The natural gas and nuclear scenario would require 333,023 megawatts, and adding batteries would require 362,828 megawatts—an increase of 48 to 62% in 2045.

The renewables-only scenario would cost over $4 trillion through 2045 due to the massive buildout of wind, solar, and batteries required to maintain reliability. Because these facilities must be repowered every 15 to 25 years, these costs will remain high. The natural gas and nuclear scenario would cost just under $668 billion—or 83% less than the renewables-only scenario—because it utilizes firm, dispatchable generators to meet demand. Adding batteries to the natural gas and nuclear scenario reduced the amount of new natural gas capacity needed and was substantially more affordable than the renewables-only scenario, which would have cost almost $770 billion—15% more than using natural gas peaking plants.

Conclusion

As the modelers indicate, wind and solar intermittency is too frequent, battery storage duration is too limited, and the cost is too prohibitive to achieve the capacity buildout required using wind and solar to power the grid—something that Europeans still do not understand with their increasingly expensive climate policies and extremely high electricity rates. Unfortunately, these facts have not kept U.S. states, particularly blue states, from passing legislation to enforce their use. The modelers predict that the Battery Bubble will eventually pop, but how much money American ratepayers and taxpayers will spend—or be on the hook for—before reality sets in remains the issue.

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

Filed Under: Blog Tagged With: batteries, energy subsidies, ITC, PTC, Reconciliation, renewable energy, solar investment tax credit, solar power

AEA Joins With 20 Free Market Groups In Opposition To Section 12501 Of The Agricultural Act Of 2026

August 7, 2026 by AEA Leave a Comment

On Thursday, August 6, 2026 the American Energy Alliance joined with 20 other free market advocacy groups in sending a letter to the Chairman and Ranking Member of the Senate Committee on Agriculture, Nutrition, and Forestry in opposition to Section 12501 of the Agricultural Act of 2026. More information regarding the harms of Section 12501, which would permanently authorize year-round E15, can be found in a recent brief prepared by the Institute for Energy Research. The full text of the letter is available below:

Dear Chairman Boozman and Ranking Member Klobuchar:

The undersigned organizations write to oppose Section 12501 of the Agricultural Act of 2026. This provision would make the Renewable Fuel Standard permanent, lock small refineries into a government-backed compliance structure that penalizes growth, and raise the cost of transportation fuel for every American consumer. It should be removed from the bill. Section 12501 permanently authorizes year-round E15 — not because the market demands it, but because ethanol cannot compete without federal mandates, seasonal waivers, RIN credit schemes, and now an Act of Congress making its sale permanent. After twenty years of mandates and subsidies, the ethanol industry still cannot stand on its own. Section 12501 doubles down on that dependency rather than ending it.

The bill’s Small Refinery Exemption (SRE) provisions are more damaging still, and more deceptively drafted. While the bill nominally terminates new SRE petitions after 2027, it simultaneously creates a permanent “Small Refinery Certainty” compliance reduction — a guaranteed, automatic, perpetual carveout equal to a qualifying refinery’s peak production during 2023–2025. Unlike current SREs, which require annual petitions and must demonstrate disproportionate economic hardship, this new mechanism has no sunset, no hardship test, and no accountability. It is a permanent exemption disguised as a reform.

This structure also caps growth. Any small refinery that expands beyond the statutory size threshold loses its permanent compliance reduction entirely. Section 12501 therefore punishes the most ambitious small refineries — the ones that invest, hire, and grow — by eliminating their benefit the moment they succeed. It is an anti-growth provision written in plain sight. The reallocation mechanism compounds the damage to consumers. Exempted volumes get redistributed to every other obligated party, minus only a 500-million-gallon buffer. That raises compliance obligations — and RIN purchase costs — for every refiner and importer without a carveout, costs that flow directly to the pump. The RFS compliance burden already exceeds 32
cents per gallon on obligated gasoline. Section 12501 would drive that figure higher.

Section 12501 is the product of an alliance between agricultural commodity interests seeking to lock in ethanol demand and a narrow class of small refineries seeking permanent government insulation from the market. The cost of that alliance is paid by consumers, by refiners without political cover, and by any small refinery ambitious enough to want to grow. Congress should remove Section 12501 from the Agricultural Act of 2026.

Thank you for your consideration.

American Energy Association
Americans For Prosperity
American Energy Alliance
AMAC
AMAC Action
American Energy Institute
American Energy Works
American Commitment
American Lands Council
Consumers’ Defense
Committee For A Constructive Tomorrow (CFACT)

Competitive Enterprise Institute
Heartland Impact
Life:Powered
National Center for Energy Analytics
National Taxpayers Union
Taxpayers Protection Alliance
Texas Public Policy Foundation
The Heartland Institute
The Energy & Environment Legal Institute
Truth in Energy & Climate

Filed Under: Blog Tagged With: coalition letter, Department of Agriculture, ethanol, Renewable Fuel Standard, rfs

Can President Trump End U.S. Reliance On Chinese Rare Earth Minerals?

August 5, 2026 by IER Leave a Comment

President Trump wants to end U.S. reliance on Chinese critical minerals by January 1, 2027, but it is unlikely American miners and processors will be ready by then. The Trump administration has spent tens of billions of dollars on nearly 150 minerals companies to loosen China’s hold on supply chains for weapons and other strategic products essential for the nation. The January 1, 2027, deadline is the date under federal regulations to ‌stop purchasing rare earths, magnets, tungsten, molybdenum, and tantalum from China, Russia, Iran, or North Korea. The United States has been trying to limit critical mineral imports for years but has had to grant companies waivers because U.S. industries involved have been unable to meet demand. Recently, President Trump signed an executive order making it even harder for defense contractors to obtain waivers. According to Trump’s executive order, waivers can only be issued if a contractor shows an “exhaustive effort” to avoid Chinese material and has a timeline for weaning itself off such supply.

The difficulty of weaning the U.S. off dependence on Chinese supplies can be seen in the following example. In 2025, U.S. demand for the most common type of rare earth magnet was about 48,000 metric tons while domestic sources supplied 300 metric tons. U.S. firms are now on track to have the capacity to produce 5,000 metric tons by year-end, but that is a far cry from the amount of demand. Rare earths, which are among the 60 minerals considered critical by the government, must be processed before they are turned into magnets used to make weapons, automobiles, computers and other products. That processing is resource-intensive and an area where China dominates, thanks to its cheap coal power and lax environmental regulations.

Further, U.S. firms have not produced tungsten since 2015 and ⁠tantalum since 1959. Guardian Metal Resources is working to open a U.S. tungsten mine by 2028, while Lion Rock Resources is developing a tantalum mine in South Dakota, with no timeline for opening, but both are beyond the 2027 date.

The United States has reserves of most critical minerals, but it lacks the capacity to mine and process many of them. China grew to dominate the minerals-refining industry in the late 20th century and controls more than 80% of the sector today. The International Energy Agency warned recently that $6.5 trillion of global manufacturing is at risk if China imposes export restrictions on rare earths, as it has done periodically in recent years. U.S. rare earths investment has been hindered by persistently low prices because China has been subsidizing its producers and flooding the market with cheap products, thus making American projects unprofitable. Control of markets allows China to respond to the opening of a U.S. mine or processing facility by flooding the market with its own material, which drives down world prices and renders the new facility uneconomic. Technological breakthroughs can help drive price drops when they occur.

Ucore Rare Metals, a minerals-refining startup backed by the War Department, has developed a processing technology known as RapidSX that is similar to, but faster, cleaner, and cheaper than, the industry-standard solvent extraction. Ucore had planned to start refining by 2025, but production will not begin until 2027 at the earliest, as it had to rework its plans due to changing demands from the War Department, according to the company.

In February, the Trump administration launched Project Vault, a $12 billion effort to stockpile critical minerals for American manufacturers. Later, officials acknowledged that they will need to initially buy minerals from abroad, including China. Defense contractor Lockheed Martin provided the Department of War with a list of minerals it would like stockpiled, as defense contractors need to place orders. Nick Myers, CEO of Massachusetts-based Phoenix Tailings, a minerals startup that recently received a $500 million loan from the War Department to build a processing facility, said, “Defense contractors have just assumed they can keep buying Chinese products. The defense industry is never going to stop if ⁠you keep giving waivers.”

The complexity of mineral refining has slowed U.S. projects. Among the biggest U.S. companies is MP Materials, which is financially supported by the War Department. The company spent years calibrating its solvent extraction processing equipment, part of what CEO Jim Litinsky described as a “painstaking” process. MP built a magnet ⁠facility in Texas and expects to have magnets approved for its first customer, General Motors, by the end of the year. A separate magnet facility that MP is building for the Department of War is slated to open in 2028.

In Marion, Indiana, ReElement Technologies plans to process minerals using a technology common in the pharmaceutical industry known as chromatography. The technology has never been used to process large volumes of minerals. ReElement is planning to build the capacity to process 10,000 metric tons of germanium or other minerals this year. According to ReElement CEO Mark Jensen, the company’s ⁠germanium production is “profitable at any volume.” ReElement received a $25 million investment from the Department of War.

Another company, USA Rare Earth, spent more than five years studying chromatography before pivoting to solvent extraction. USA Rare Earth is building a South Carolina magnet facility. Energy Fuels, which recently received a $725 million loan from the Department of War, plans to be processing small amounts of rare earths by the end of the year and 6,000 metric tons annually by 2029. It is buying an existing U.S. magnet producer. Ucore, Energy Fuels and ReElement have each agreed to supply rare earths to magnet maker Vulcan Elements, which is building a North Carolina manufacturing plant, slated to open by 2030.

Conclusion

President Trump wants the United States to mine and process its own critical minerals by January 1, 2027, and stop purchasing from China, Russia, Iran and North Korea. But U.S. miners and processors are not ready to supply the quantity needed to meet demand due to the complexity of processing and the challenges of getting mining operations of that magnitude up and running, particularly amid changing requirements. The United States will still need to rely on China, which has dominated the minerals industry by subsidizing its producers and undercutting American mineral prices.

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

Filed Under: Blog Tagged With: China, department of defense, Donald Trump, Mining, Rare Earth Minerals

Grounded: EU Targets Air Travel In Latest Climate Crusade

August 5, 2026 by IER Leave a Comment

The European Commission published proposals to start applying costs on emissions from international flights departing Europe and landing in countries up to 5,000 kilometers from the continent’s geographic center (Frankfurt, Germany) starting in 2029. This is part of the EU’s climate policy and would capture emissions from flights to hubs in Turkey and the Middle East but exclude direct flights from Europe to the United States and to key areas in Asia. Despite the United States being excluded, U.S. officials are still concerned about ⁠the proposal. The EU proposal also expands coverage to all incoming and departing flights by business and private jets, regardless of the travel distance or the geographic location of the origin or destination.

In 2012, the United States blocked a previous attempt by the European Union (EU) ⁠to expand its Emissions Trading System (ETS) to cover international flights. Congress authorized the Secretary of Transportation to ban U.S. carriers from complying with the ETS in response to the EU’s aviation mandate. It is estimated the ETS has added €260 billion ($297 billion) to energy costs since 2013.

According to the American Action Forum, beginning in 2032, the EU may expand the scope to include all flights departing from European countries, including all direct EU-U.S. commercial flights. That could lead to an annual compliance burden of at least €9 billion ($10.2 billion) for U.S. airlines. Some EU-North American flights could see an average increased cost of $48 per passenger, assuming a carbon price of €140 ($159) per metric ton of carbon dioxide in 2032. To avoid double carbon pricing, the EU proposal states that it would continue to support the UN’s international aviation emissions mitigation framework and introduce “a deduction mechanism for costs incurred.”

The UN’s International Civil Aviation Organization implemented a global framework, the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), to reduce emissions in the global aviation sector. CORSIA sets baseline emissions benchmarks for airlines, with any excess emissions above the threshold offset by purchases of eligible carbon credits. As of January 2026, 130 countries participated in CORSIA on a voluntary basis, including the United States. CORSIA’s voluntary phase runs from 2021 to 2026, and its mandatory phase begins in 2027, in which the Trump administration does not plan to participate.

The EU proposal states that if CORSIA is proving to be ambitious, efficient and successful, the scope of effective carbon pricing under the ETS will be reduced to flights within the European Economic Area (EEA) and departing to the UK, Switzerland, to and from Gibraltar, and other countries taking advantage of the Emissions Trading System. If CORSIA does not deliver, the Commission may consider extending the scope to full departing flights.

Thus, beginning in 2029, direct and long-haul commercial flights from the EEA to the United States would be exempt from the proposed 5,000-kilometer-radius rule, as the United States is well beyond the perimeter of the EU. Connecting flights, however, could be subject to the new rule. For example, on a Frankfurt-Istanbul-San Francisco itinerary, the initial Frankfurt-Istanbul leg would be subject to the new rule, and travelers on that leg would incur higher costs. Therefore, travelers would have an incentive to take a direct flight from the EEA to the United States to avoid incurring increased costs.

Leakage

According to the International Council on Clean Transportation’s (ICCT) latest report, there are 185 EU-to-U.S. flight routes that would be subject to carbon leakage, where travelers take alternative flights to avoid paying the higher costs of the EU’s Emissions Trading System. Among these potential leakage routes, flights from the EU to North America would incur an average additional cost of €21.4 ($24.30) per passenger, which is about 6.4% of a typical airfare. Some examples of leakage-prone routes are Frankfurt Airport to San Francisco International Airport, Paris Charles de Gaulle Airport to John F. Kennedy Airport, and Munich Airport to San Francisco International Airport.

The ICCT estimates that expanding the Emissions Trading System to all departing flights would generate approximately €9 billion annually, assuming a baseline carbon price of €70 ($80) per metric ton of carbon dioxide at 2023 levels. Transatlantic routes account for about 52% of the global leakage-prone flight volume, which the American Action Forum uses for market share. Applying this percentage, direct EU-U.S. flights would account for approximately €4.5 billion in gross annual compliance costs. By 2032, the carbon price could more than double to at least €140 per metric ton of carbon dioxide, based on the EU’s emissions-reduction targets, which would increase compliance costs for EU-U.S. flights to more than €9 billion, not accounting for growth in air traffic.

Analysis

The EU is planning to add aviation within a 5,000-kilometer radius to its Emissions Trading System beginning in 2029, which would exclude the United States based on distance. The EU is also considering expanding the program to all flights in 2032 if the UN aviation program, which becomes mandatory next year, fails to meet its emissions-reduction goals. If the EU were to include all flights in its emissions trading system, the United States could invoke the European Union Emissions Trading Scheme Prohibition Act, which Congress passed in 2011, to prohibit U.S. airlines from complying with the EU system. U.S. airlines operating within the EU would then be caught in a legal battle bound by EU law but legally prohibited from doing so by the U.S. government. Another issue is that the EU and the United States have signed an “Aviation Transport Services” agreement that aims at “opening access to markets and maximizing benefits for consumers, airlines, labor, and communities on both sides of the Atlantic.” It is unclear how adding aviation to the EU’s Emissions Trading System would affect this agreement.

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

Filed Under: Blog Tagged With: Aviation Fuel, cap and trade, carbon tax, Europe, European Union

Germany’s “Energiewende” Experiment Falling Apart

July 30, 2026 by IER Leave a Comment

Germany plans to scale back renewable-energy subsidies as the country overhauls its funding system, seeking to reduce energy transition costs and address growing pressure on the electricity grid. The government is proposing to limit financial support for new solar and wind projects in areas where electricity networks are already congested. Germany’s renewable energy expansion, driven by subsidies, has outpaced grid development, creating challenges for electricity transmission and distribution. The government’s plans attempt to align renewable growth with available grid capacity and make its energy transition policy more affordable. Germans are paying extremely high prices for their energy policies, which are tied to net-zero and climate goals. The reforms are part of changes to the Renewable Energy Act (EEG) that must be enacted before the current support framework expires at the end of 2026.

Power lines in Germany have failed to keep pace with the growth in renewable energy, creating bottlenecks and forcing operators to temporarily curtail production. Under the plan, new renewable projects in areas with grid bottlenecks will receive automatic grid connections if they agree to give up compensation payments during periods when electricity cannot be delivered to the network. Under the redispatch rules, operators would have to forgo up to 20% of their feed-in payments if their installations are curtailed for up to 6 years. Curtailment will only occur when grid utilization reaches 5%.

The government also plans to reduce support payments for small rooftop solar systems starting next year. Operators of solar systems with up to 25 kilowatts of installed capacity built from 2027 would be guaranteed payment for up to 36 months. After this transition phase, they would have to switch to direct marketing, meaning they would need to sell their electricity on power exchanges via a service provider, where prices fluctuate.

More specifically, from 2027, new private and commercial solar systems with a capacity below 25 kilowatts will no longer receive the traditional 20-year guaranteed feed-in tariff. Instead, during a three-year transition period, payments would consist of a base rate of 6.2 cents per kilowatt-hour plus a direct-marketing bonus of 1.5 cents, which is capped at four years. The plan also limits rooftop solar feed-in to 50% of the system’s rated capacity. The goal is to reduce overcompensation and encourage self-consumption and battery storage. Analysts expect the profitability of small solar to become increasingly dependent on home batteries or electric-vehicle charging.

The government is expected to spend about €16 billion ($18.3 billion) on renewable subsidies this year, with additional payments for curtailed generation of up to €3 billion ($3.4 billion), despite spending cuts in other areas, such as health, that have drawn criticism from constituents.

Critics of the reduced subsidy plan for renewables say the changes could slow investment in onshore wind and solar projects, as revenues fall amid increasingly negative power prices. Despite the reduced subsidies, Germany has kept its target to raise the share of renewables in its electricity consumption to 80% by 2030, up from about 58%. It is also planning additional auctions for renewable capacity. Onshore wind tenders are set at 15,000 megawatts for both 2027 and 2028, then decline to 12,000 megawatts in 2029 and eventually to 10,000 megawatts each year from 2030 to 2032. For ground-mounted solar, the volume remains flat at 14,000 megawatts per year, while biogas will see 1,000 megawatts auctioned in 2027 and 2028.

According to a draft law published by Germany’s Economy Ministry, from 2027, new renewable generators should receive support ‘in a way that benefits both the market and the system,’ which means rewarding projects that respond more closely to electricity demand and do not worsen grid congestion.

The cabinet is set to agree on the reforms on July 29, and then the plan will be sent to parliament to become law.

Conclusion

Germany is reducing subsidies for its renewable energy industry as wind and solar growth has outpaced the growth of the electric grid, causing bottlenecks. Renewable operators could lose up to 20% of their feed-in payments if their output is curtailed. And beginning in 2027, the government will reduce support payments for small rooftop solar systems, those less than 25 kilowatts, for three years. The government’s plans attempt to align renewable growth with available grid capacity and make the energy transition more affordable. The reforms are part of changes to the Renewable Energy Act, which must be updated before the current support framework expires at the end of 2026. Germany, however, is not reexamining the policy of increasing reliance upon renewable energy despite growing concern about the deindustrialization of Europe’s strongest industrial power due to high energy costs.

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

Filed Under: Blog Tagged With: energiewende, Energy prices, energy subsidies, Europe, Germany

Decarbonization Is Destroying Europe

July 28, 2026 by IER Leave a Comment

The European Union (EU) will slow the reduction to its carbon dioxide emission caps that are part of its Emissions Trading System (ETS) over the next decade, giving industry more time to develop and implement new technologies while keeping to its goal for reaching climate neutrality by 2050 and reaching an interim goal to reduce carbon emissions by 90% by 2040 from 1990 levels. The EU is overhauling its Emissions Trading System (ETS) to give industries like steel and cement more time to adapt. To protect these businesses from high energy costs and international competition, the bloc is also planning a longer phaseout of free permits. The commission is facing pressure from governments and industry groups over carbon costs after the Middle East conflict raised energy prices, exacerbating concerns about Europe’s declining competitiveness relative to China and the United States. The proposals still need to be approved by EU countries and lawmakers – a process that could take a year.

The European Commission proposed a 3.7% annual cut to the cap from 2031 to 2035, and a 1.7% annual cut from 2036 to 2040. The pace of the emissions cap reduction has become an issue, with some governments calling for the annual rate, known as the Linear Reduction Factor, to be kept at the planned 4.4%. Some others called for it to be cut even lower, below 3%. Countries that have had factories close and companies struggle under high energy costs have pushed for the EU to lower their energy transition costs. According to Poland’s deputy climate minister, Krzysztof Bolesta, “What we don’t need is a mechanism bleeding the manufacturing sectors dry and making our continent a place of highest energy prices.”

From 2031, industries that commit to decarbonization investments can receive free emissions allocations until 2038, rather than the originally planned 2034. Companies would receive 80% of free allowances if they submit plans to invest in decarbonization, with the remainder released upon completion of the investment. As a guideline, the ⁠decarbonization investments should at least be equivalent to the financial value of the free carbon dioxide permits the company receives. Since 2013, the EU has given industries free carbon dioxide permits worth around €255 billion ($291 billion). Failure to draft a credible plan or miss milestones could result in the EU withdrawing the permit(s).

The ETS was introduced in 2005 and is the EU’s main tool for reducing greenhouse gas emissions. The ETS requires Europe’s industries and power plants to buy a permit, or allowance, for every ton of carbon dioxide they emit. Companies can buy extra permits if they emit more carbon dioxide than the free permits they receive or sell them to other companies if they have more than they need to meet the target. The EU sets a cap on total emissions that is reduced each year, making it more difficult for companies to meet the target and thereby raising the price of a permit. The extra costs companies accrue are added to the prices consumers pay for energy and other products, thereby being a de facto tax that has contributed to higher energy prices. Even before the Iran war spiked energy prices, Europe was at risk of deindustrializing in many of its key industries due to its climate policies.

Around 57% of the allowances in the EU are bought by companies at auctions. The remaining 43% of allowances are given to companies free of charge to cover some or all of their emissions. The EU generated around €43 billion ($49 billion) in revenue from the auctions in 2025.

Other EU Proposals

Alongside the EU changes to the ETS, the Commission announced a new target for electricity to make up 46% of energy consumption by 2040, doubling the current rate of 23%. The EU estimated that the new target would cut spending on imported fossil fuels by €260 billion ($297 billion) annually and would cut oil demand by 40% and natural gas demand by 70%. Since the escalation of the conflict in the Middle East, the EU has spent more than €50 billion ($57 billion) extra on fossil fuel imports. The EU’s phase-out of fossil fuels and increased electrification would require more electric vehicles, more heat pumps, and greater industrial electrification, with higher costs for consumers in member nations.

The EU is also planning to adopt guidelines to postpone penalties for energy imports that do not align with the bloc’s methane emissions regulations. The guidelines will urge member states not to apply penalties for a certain period, providing room for the market to adjust. The United States, Qatar and other gas-producing nations urged the EU to revise the rules, warning that they could jeopardize critical energy shipments, particularly LNG, that the EU needs as it reduces its imports from Russia.

Conclusion

The EU is making changes to its Emissions Trading System that will slow reductions in emissions caps and provide more free allowances to eligible companies, amid concerns about high energy prices caused by the Middle East conflict and Europe’s declining global competitiveness. Under the changes, industries that commit to decarbonization investments can receive free emissions allocations beginning in 2031 through 2038. There is considerable controversy within the bloc over the changes to the ETS, with some member states seeking no change and others calling for an even slower rate of reductions.

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

Filed Under: Blog Tagged With: carbon emissions, carbon tax, electricity prices, Europe

The Unregulated Podcast #279: Dog Days of Summer

July 28, 2026 by AEA Leave a Comment

On this episode of The Unregulated Podcast Mike McKenna and Alex Stevens cover the wide range of news stories that have a arisen during Tom’s summer sabbatical.

Links:

• The Pacific Premium: Why Gasoline Costs More In Democratic-Controlled States, from the Institute for Energy Research

• The DSA’s Communist Turn

• Hochul Signed Data Center Moratorium July 14

• Trump plugs states, utilities into pledge for Big Tech to pay for data centers’ energy bills

• Pennsylvania Republican eyes Energy and Natural Resources gavel

• Democrat Push To Hike Taxes On Energy Companies Will Help No One, Analysts Warn

Filed Under: Podcast Tagged With: Data Centers, electricity prices, New York, Senate

Europe’s Climate Hysteria Creating Financial Woes For Working Families

July 24, 2026 by IER Leave a Comment

The European Union (EU) is planning to adopt guidelines to delay penalties on energy imports that do not comply with the bloc’s methane emissions regulations. The guidelines will urge member states not to apply penalties for a certain period, giving the market room to adjust. The United States, Qatar and other gas-producing nations urged the EU to revise the rules, warning that they could jeopardize critical energy shipments. The United States has become Europe’s largest LNG supplier due to conflicts in Iran and between Russia and Ukraine. The United States has warned the EU that its LNG supplies will be exported elsewhere if the bloc refuses to ease the regulations. EU members the Czech Republic, Slovakia, Belgium, Italy, Poland and Sweden called on the commission to consider options to ease barriers to oil and gas purchases, including a three-year delay to the importer requirements.

Beginning in 2027, the regulations require fossil-fuel imports into the EU to comply with monitoring, reporting and verification requirements to reduce methane emissions. By 2030, imports exceeding a methane-intensity threshold would face penalties, with the fine amounting to up to 20% of their annual turnover. Over the past few months, companies in the chemical, oil and gas, and energy trading sectors have called for a delay in the requirements, warning that importers risk being pushed into non-compliance. They cited verification as a major bottleneck, with too few recognized protocols and verification bodies. ⁠No EU country has established a verification body to enforce the legislation, so companies currently have no way to certify compliance.

The International Energy Agency (IEA) has warned that the EU’s methane emissions rules could limit the oil supplies available ‌to the bloc. According to the IEA, around 22.5 million barrels per day of global oil production ⁠is expected to comply with the criteria in 2027, but not all of it would be available to the EU. Reuters reports that the EU imported 9.3 million barrels per day of oil in 2025. According to the IEA, the oil that EU refiners can import legally could decline by more than 50% because some grades of oil cannot easily be substituted and certain producers may prefer to sell into more profitable markets outside Europe. For example, heavy oil used in asphalt production is supplied largely by countries such as Mexico and Venezuela, which do not meet the EU methane standard.

The EU methane regulation could also be difficult for American LNG exporters to comply with. The EU requires importers to provide data “at the level of the producer,” which is likely to be particularly challenging for American LNG exporters. Unlike most of the world, U.S. LNG export facilities source natural gas from a vast pipeline network. Supplies are commingled, including volumes sourced from different production basins from many different companies with varied methane intensities.

According to the Energy Information Administration, in 2025, U.S. LNG exports to Europe reached a record 10.3 billion cubic feet per day, up from 6.3 billion cubic feet per day in 2024, and accounted for 68% of LNG export volumes. Exports to Italy and Poland rose the fastest in Europe.

Halfway through 2026, the United States remains the EU’s dominant LNG supplier, shipping it about 31.6 million metric tons, or 59% of the EU’s imports of LNG so far this year. By the same point in 2025, the U.S. had met about 55% of the EU’s year-to-date LNG imports.

Conclusion

Although 17 of the 27 EU member states requested specific adjustments to the import-related clauses of the methane rule, the European Commission has refused to change the regulations and is instead offering non-binding recommendations. The regulations target methane emissions within the EU and impose new requirements on fossil fuel importers. It highlights the difficulties the EU encounters when applying more rigorous environmental regulations to products from non-EU nations. As Europe moves to be free of Russian gas imports by 2027, it will become more dependent on imports from the United States and other countries, and how the methane regulation gets implemented will determine the future of LNG flows to Europe and oil as well. These regulations could have a detrimental effect on Europe’s ability to supply natural gas and oil to its people in the future, threatening EU energy security. The EU’s continued adherence to its climate change and net-zero orthodoxy is creating significant problems as EU economies are confronted with policy-driven energy costs and limits to availability.

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

Filed Under: Blog Tagged With: energiewende, Energy Price, Europe, natural gas

Trump Administration Unleashes Alaska’s Energy Potential

July 22, 2026 by IER Leave a Comment

Based on a draft settlement agreement, the federal government has agreed to permanently loosen rules for oil and gas lease sales in the Arctic National Wildlife Refuge (ANWR). The document would settle lawsuits filed by the state of Alaska and its investment bank over the January 2025 Arctic National Wildlife Refuge oil lease sale, which received no bids because the Biden administration restricted the available acreage. The lease sale was mandated by a 2017 law. The Alaska Industrial Development and Export Authority (AIDEA) and the state of Alaska sued over the Biden-era limits.

The settlement states, in part, that the federal government will not limit oil and gas leasing in ANWR by artificially reducing the amount of surface disturbance permitted. Under the 2017 Act, surface disturbance is limited to 2,000 acres in the 19.3-million-acre ANWR. The settlement makes “a clear admission that the … Lease Sale ‘violated the 2017 Tax Act by preventing meaningful leasing, exploration, and development of oil and gas on the Coastal Plain, as Congress mandated.’” The Alaska Beacon notes that the new settlement agreement increases the odds that ANWR will stay open to drilling even when a new president is elected.

The Biden administration did everything it could to shut down energy development in ANWR despite federal law requiring it. It canceled leases under a 2021 ANWR lease sale and then attempted to resell the affected land during the 2025 sale. AIDEA had bought the leases in the 2021 sale and, along with the state, is still suing over the result of that lease sale. The 1002 Area in ANWR has a mean estimate of 7.8 billion barrels of technically recoverable oil and encompasses the northern reaches of the area.

National Petroleum Reserve-Alaska

More focus has been on the National Petroleum Reserve-Alaska (NPR-A), due to interest from oil companies and existing infrastructure. The NPR-A consists of approximately 23.5 million acres, about the size of Indiana. It is located to the west of Alaska’s Prudhoe Bay oil fields, while the Arctic National Wildlife Reserve lies to the east and is about the size of South Carolina. NPR-A holds an estimated 8.8 billion barrels of oil. Under the Trump administration, nearly 82% of the reserve has been reopened for oil and gas leasing.

ConocoPhillips’ Willow Project, approved during the Biden administration, was the first major project to take place in the reserve, and others are planned. The Willow project could produce about 180,000 barrels of oil per day by 2029 and inject more oil into the Trans-Alaska Pipeline System (TAPS)—a system that needs more oil throughput to remain operational. To move the oil southward from the Arctic Ocean, Alyeska Pipeline Company operates the 800-mile Trans-Alaska Pipeline System (TAPS), which terminates at the ice-free port of Valdez. The pipeline is only transporting about one-quarter of its capacity, and as throughput declines, costs increase. During 2024, ConocoPhillips’ Nuna project became operational and contributed to higher oil proved reserves in Alaska.

President Trump Encourages Energy Development in Alaska

Under President Trump, federal policy changes aim to increase Alaskan production. On January 20, 2025, President Trump issued an Executive Order, Unleashing Alaska’s Extraordinary Resource Potential, which expedites the permitting and leasing of energy and natural resource projects in Alaska and prioritizes the development of Alaska’s liquefied natural gas (LNG) potential. The order highlights the sale and transportation of Alaska’s LNG to other regions of the United States and allied nations within the Pacific region. The North Slope is rich in natural gas produced alongside oil but cannot be transported to markets because no pipeline exists. On March 18, 2026, the Bureau of Land Management awarded 1.3 million acres in a National Petroleum Reserve lease sale. The One Big Beautiful Bill Act of 2025 requires the Bureau of Land Management to hold at least four more lease sales in the NPR-A over the next 10 years, offering a minimum of 4 million acres at each sale.

Conclusion

The federal government under President Trump has agreed to permanently loosen rules for oil and gas lease sales in ANWR as part of a lawsuit over the 2025 oil lease sale, which drew no bids because the Biden administration restricted the available acreage. The Alaska Industrial Development and Export Authority (AIDEA) and the state of Alaska sued over the Biden-era limits. The draft settlement agreement indicates that the federal government will not artificially limit oil and gas leasing in ANWR to levels below those allowed by law. The settlement agreement increases the odds that ANWR will remain open to drilling, even after a new president is elected. President Trump has encouraged energy development in Alaska and has reopened nearly 82% of the National Petroleum Reserve for oil and gas leasing that the Biden administration had effectively removed from exploration.

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

Filed Under: Blog Tagged With: Alaska, ANWR, Domestic Energy Production, Energy prices

President Trump Saves American Truckers Thousands By Eliminating Onerous Biden Mandates

July 21, 2026 by IER Leave a Comment

The Trump administration is proposing changes to Biden-era environmental rules regarding heavy-duty vehicles, including buses and large trucks. Trump’s Environmental Protection Agency (EPA) is scaling back and postponing two provisions regarding emissions-reducing technology: one related to warranties and another related to the useful life of emissions technology. The Biden EPA had extended the useful life of emissions technology from 435,000 miles or 10 years to 650,000 miles or 11 years, with a warranty period from 100,000 miles or 5 years to 450,000 miles or 10 years. The change would cut the warranty period for emissions-control components from 10 years to 5 years and delay the current useful-life rules from 2027 to 2030.

EPA will also remove the requirement that truck engines automatically operate at reduced power, down to 5 miles per hour, if their emissions-reduction systems are not working, which is disruptive to truckers and other heavy-duty vehicle operators. Under the Biden rule, if a failure in the diesel exhaust fluid (DEF) system is detected, whether it is an actual failure or a sensor problem, the equipment would lurch to a speed of 5 miles per hour. The EPA proposes to replace that requirement with an alert to drivers via visual and audible warnings, allowing them to reach a repair shop while retaining the truck’s normal power. With more than 200 possible failure codes, the deratements could leave truckers stranded on the side of the road, farmers losing hours or days of productivity during critical work like harvesting, and even create safety issues. The new system attempts to more rationally address emissions reductions and balance them with safety and other considerations.

The EPA estimated that the combined changes could save the trucking industry up to $12 billion, including as much as $6,000 off the sticker price of a new vehicle. The proposal provides some near-term cost relief for manufacturers and buyers. It would also reduce supply chain costs, making goods more affordable for Americans.

The proposal is now open for public comment. EPA plans to hold a virtual public hearing on Zoom for the proposed rule, scheduled for Wednesday, July 29th through Thursday, July 30th. An additional session may be held on Friday, July 31st, if necessary to accommodate the number of commenters who register by July 22, 2026.

According to the American Trucking Association, the Biden policies would require “a premature rollout of commercial motor vehicles with unproven engine technologies onto our highways.” The group requested that the EPA allow truck manufacturers to pay penalties instead of complying with the rules, as long as the industry was working to develop compliant engines, a provision the EPA included in the proposal. Allowing that option avoids supply disruptions during the transition to newer vehicles with more environmental controls. Heavy-duty trucks make up only about 5% of vehicles on the road.

This proposal regarding heavy-duty trucks follows a May proposal delaying emissions standards for model year 2027 light- and medium-duty vehicles. In April 2023, the Biden EPA proposed — and in 2024 finalized — what it called “multi-pollutant emission standards” for model year 2027 and later light-duty and medium-duty vehicles. The rules were designed to be so stringent that the only practical path to compliance was mass electrification of the vehicle fleet. Biden’s Energy Secretary even suggested that the United States could transition to an all-electric military fleet by 2030. The Biden EPA projections assumed that electric vehicles would account for between 56% and 67% of new car sales by 2030-2032. That projection is not materializing. As of 2025, electric vehicles accounted for less than 10% of new U.S. vehicle sales — well short of the trajectory the agency assumed when setting these standards.

Conclusion

Trump’s EPA is scaling back or postponing Biden-era rules regarding heavy-duty trucks, including buses, large trucks and farm equipment. The change would cut the warranty period for emissions-control components from 10 years to 5 and delay the Biden-era useful-life rules from 2027 to 2030. The Trump EPA also proposes replacing the deratement requirement with an alert to drivers, giving them time to make repairs while retaining the truck’s normal operating power, thereby allowing truckers and farmers to remain productive. EPA is also granting the American Truckers Associations’ recommendation to allow non-conformance penalties to give heavy-duty manufacturers additional time to conduct real-world testing on their new emission control systems. According to the EPA, the changes would save the trucking industry between $4,130 and $6,152 per affected diesel engine, thereby helping keep goods more affordable for Americans.

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

Filed Under: Blog Tagged With: Donald Trump, EPA, EVs, Joe Biden, regulations