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

The Unregulated Podcast #223: Hopeless Frodo

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the latest news from the White House and the flailing response from the Democrats.

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Save America’s Refrigerators

Congress is considering legislation that would end Biden era regulatory overreach designed to make refrigerators unaffordable for American families all in the name of stoping climate change.

Sign up for the campaign below and send a message directly to your congressional delegation demanding the stop these regulations using our one-click tool.

Key Vote YES on H.J. Res. 24 and H.J. Res. 75

The American Energy Alliance supports both H.J. Res. 24, providing for congressional disapproval of Department of Energy energy efficiency standards for walk-in coolers and freezers, and H.J. Res. 75, providing for congressional disapproval of EERE energy efficiency standards for commercial refrigerators and freezers.

Energy efficiency standards were created 50 years ago when politicians feared we were running out of domestic energy sources and dangerously reliant on the Middle East. That world is long past and the U.S. is the world’s leading natural gas, as well as leading oil, producer. Continued aggressive use of this outdated authority is not about saving consumers money, indeed standards in many cases have past the point of diminishing returns where the cost of new products cancels out theoretical cost savings. Under the previous administration energy efficiency rules were wielded not to save consumers money, but rather to try to force customers to stop using the energy sources that the previous administration disliked. Congress should take every opportunity to reject the abuse of this outdated authority.

A YES vote on H.J. Res. 24 and H.J Res. 75 are votes in support of free markets and affordable energy. AEA will include these votes in its American Energy Scorecard.

AEA Catalogs the Path to American Energy Abundance

WASHINGTON DC (3/25/25) – President Trump and the Republican-led Congress have quickly been making good on the promise to undo the Biden administration’s war on American energy. Already, the American Energy Alliance has cataloged over 50 actions taken to put America back on the path to energy prosperity.

Tom Pyle, President of the American Energy Alliance, issued the following statement:

“President Trump has wasted no time fulfilling his promise to unleash our country’s vast resources and undo the reckless policies of his predecessor, beginning with a flurry of executive orders and spending reductions. More recently, his agencies – especially the EPA – have formalized the process of rewriting or eliminating a host of harmful regulations. Congress has also acted with haste by nullifying a host of rules using the Congressional Review Act and has begun the process of eliminating the wasteful Inflation Reduction Act subsidies through the budget and reconciliation process.

“The Biden administration and the Democrats in Congress took over 250 specific actions against American energy production during his term. In just over 60 days, President Trump and Congress have already taken over 50 actions to reverse the damage. It is a great relief to see positive movement in the right direction, but there is much more to do. We look forward to rolling up our sleeves and helping to get the job done.”  

Some key actions the American Energy Alliance has recorded include:

  1. Executive order on international environmental agreements.
  2. Executive order allowing drilling and reversing restrictions placed by the Federal Government on Alaskan energy production.
  3. Lifted “pause” on LNG exports.
  4. House passed H.R. 26, the Protecting American Energy Production Act, which prohibits the President from banning hydraulic fracturing unless Congress authorizes a moratorium.

For the full list, click here.


AEA Experts Available For Interview On This Topic:

Additional Background Resources From AEA:

For media inquiries please contact: 

[email protected]

50 Actions the Trump Administration and Congressional Republicans Have Taken to Unleash Our Energy Potential

President Donald Trump and congressional Republicans ran on a plan for American energy: make it easier to produce and more affordable to purchase. Since President Trump took office, his administration and congressional allies have taken over 50 actions to unleash America’s energy potential. A list of those actions appears below.


January 20, 2025 

  1. President Donald J. Trump had a whirlwind first day in office on January 20 signing some 200 executive orders, many redirecting federal policies on energy such as: Executive order declaring a national energy emergency.
  2. Executive order revoking and rescinding the U.S. International Climate Finance Plan.
  3. Executive order pausing government agencies and departments from issuing new rules until a department head approves.
  4. Executive order reviewing agency activities that burden the production of U.S. energy.
  5. Executive order allowing drilling and reversing restrictions placed by the Federal Government on Alaskan energy production.
  6. Executive order resuming the processing of export permit applications for new liquefied natural gas (LNG) projects.
  7. An offshore wind moratorium and a 60-day stop of new wind and solar permits on federal lands.
  8. Withdrawal from the Paris Agreement and revoking any financial commitments under the UNFCCC.
  9. Rescinded previous executive actions, including: Executive Order 13990 of January 20, 2021 (Protecting Public Health and the Environment and Restoring Science To Tackle the Climate Crisis).
  10. Executive Order 14013 of February 4, 2021 (Rebuilding and Enhancing Programs To Resettle Refugees and Planning for the Impact of Climate Change on Migration).
  11. Executive Order 14027 of May 7, 2021 (Establishment of the Climate Change Support Office).
  12. Executive Order 14057 of December 8, 2021 (Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability).
  13. Executive Order 14082 of September 12, 2022 (Implementation of the Energy and Infrastructure Provisions of the Inflation Reduction Act of 2022).
  14. The Presidential Memorandum of March 13, 2023 (Withdrawal of Certain Areas off the United States Arctic Coast of the Outer Continental Shelf from Oil or Gas Leasing).
  15. The Presidential Memorandum of January 3, 2025 (Designation of Officials of the Council on Environmental Quality to Act as Chairman).
  16. The Presidential Memorandum of January 6, 2025 (Withdrawal of Certain Areas of the United States Outer Continental Shelf from Oil or Natural Gas Leasing).
  17. The Presidential Memorandum of January 6, 2025 (Withdrawal of Certain Areas of the United States Outer Continental Shelf from Oil or Natural Gas Leasing).

January 31, 2025

  1. The Bureau of Land Management issued leases effective Feb. 1 for 17 oil and gas parcels totaling 6,259 acres in the Farmington and Rio Puerco field offices in New Mexico.

February 3, 2025

  1. Announced attempt to open up federal lands and waters to production, including in ANWR.

February 7, 2025

  1. The House passed H.R. 26, the Protecting American Energy Production Act, which prohibits the President from banning hydraulic fracturing unless Congress authorizes a moratorium.

February 14, 2025

  1. Announced the creation of the National Energy Dominance Council.
  2. The U.S. Department of Transportation’s Maritime Administration (MARAD) announced the issuance of the Texas Gulflink LLC (TGL) Record of Decision (ROD) to Sentinel Midstream, LLC, which will own, construct, and operate a deepwater port for the export of domestically produced crude oil.
  3. Secretary Wright issues first LNG export approval since Biden-era freeze for Commonwealth LNG.

February 21, 2025

  1. Waivers to allow the year-round sale of E15.

February 25, 2025

  1. The Council on Environmental Quality (CEQ) removes the regulations implementing the National Environmental Policy Act (NEPA) from the Code of Federal Regulations.

February 26, 2025

  1. The House of Representatives and the Senate voted to overturn a Biden-era rule imposing progressively higher fees on oil and natural gas companies for excess methane emissions, advancing the bill to President Trump for his signature.

February 28, 2025

  1. The Department of Energy announced an order that removes barriers for the use of liquefied natural gas (LNG) as marine fuel to power vessels. The order issued by DOE modifies a prior order issued to JAX LNG under the previous administration that asserted new oversight for the use of LNG to power marine vessels, also known as LNG bunkering.

March 5, 2025

  1. U.S. Secretary of Energy Chris Wright approved an LNG export permit extension for Golden Pass LNG Terminal LLC, currently under construction in Sabine Pass, Texas.
  2. The Bureau of Land Management approved the Nevada North Lithium Exploration Project near Montello in Elko County. With this approval, Surge Battery Metals USA, Inc., is authorized to conduct lithium mineral exploration activities through phased exploration over the course of three years. The plan proposes disturbance of up to 250 total acres across 7,819 acres of public lands.

March 6, 2025

  1. The House of Representatives and the Senate passed S.J. Res. 11 to repeal Biden’s BOEM rule requiring archeological reports for oil and gas exploration or development plans on the OCS. (Signed by President Trump on March 13, 2025.)

March 10, 2025

  1. U.S. Secretary of Energy Chris Wright approved a liquefied natural gas export permit extension for Delfin LNG LLC, granting additional time to commence exports from the project proposed for offshore Louisiana.

March 12, 2025

  1. Environmental Protection Agency (EPA) Administrator Lee Zeldin announced the agency will undertake 31 historic actions in the greatest and most consequential day of deregulation in U.S. history, to advance President Trump’s Day One executive orders and Power the Great American Comeback including: Reconsideration of regulations on power plants (Clean Power Plan 2.0).
  2. EPA reconsideration of regulations throttling the oil and gas industry (OOOO b/c).
  3. EPA reconsideration of mandatory Greenhouse Gas Reporting Program that imposed significant costs on the American energy supply (GHG Reporting Program). 
  4. EPA reconsideration of limitations, guidelines and standards (ELG) for the Steam Electric Power Generating Industry to ensure low-cost electricity while protecting water resources (Steam Electric ELG). 
  5. EPA reconsideration of wastewater regulations for oil and gas development to help unleash American energy (Oil and Gas ELG). 
  6. EPA reconsideration of Biden-Harris Administration Risk Management Program rule that made America’s oil and natural gas refineries and chemical facilities less safe (Risk Management Program Rule). 
  7. EPA reconsideration of light-duty, medium-duty, and heavy-duty vehicle regulations that provided the foundation for the Biden-Harris electric vehicle mandate (Car GHG Rules). 
  8. EPA reconsideration of the 2009 Endangerment Finding and regulations and actions that rely on that Finding (Endangerment Finding). 
  9. EPA reconsideration of technology transition rule that forces companies to use certain technologies that increased costs on food at grocery stores and semiconductor manufacturing (Technology Transition Rule). 
  10. EPA reconsideration of Particulate Matter National Ambient Air Quality Standards that shut down opportunities for American manufacturing and small businesses (PM 2.5 NAAQS). 
  11. EPA reconsideration of multiple National Emission Standards for Hazardous Air Pollutants for American energy and manufacturing sectors (NESHAPs). 
  12. EPA restructuring the Regional Haze Program that threatened the supply of affordable energy for American families (Regional Haze). 
  13. Overhauling Biden-Harris Administration’s “Social Cost of Carbon.” 
  14. Redirecting enforcement resources to EPA’s core mission to relieve the economy of unnecessary bureaucratic burdens that drive up costs for American consumers (Enforcement Discretion). 
  15. EPA terminating Biden’s Environmental Justice and DEI arms of the agency (EJ/DEI). 
  16. EPA ending so-called “Good Neighbor Plan” which the Biden-Harris Administration used to expand federal rules to more states and sectors beyond the program’s traditional focus and led to the rejection of nearly all State Implementation Plans. 
  17. EPA is working with states and tribes to resolve massive backlog with State Implementation Plans and Tribal Implementation Plans that the Biden-Harris Administration refused to resolve (SIPs/TIPs). 
  18. EPA reconstituting Science Advisory Board and Clean Air Scientific Advisory Committee (SAB/CASAC). 
  19. EPA prioritizing coal ash program to expedite state permit reviews and update coal ash regulations (CCR Rule). 

March 13, 2025

  1. The Department of the Interior announced the approval of a federal mining plan modification by the Office of Surface Mining Reclamation and Enforcement for the Spring Creek Mine in Big Horn County, Montana, operated by the Navajo Transitional Energy Company. This decision extends the mine’s operational life by 16 years, enabling the production of approximately 39.9 million tons of federal coal and supporting 280 full-time jobs. 

March 20, 2025

  1. Executive Order taking immediate measures to increase American mineral production. The United States possesses vast mineral resources that can create jobs, fuel prosperity, and significantly reduce our reliance on foreign nations.  Transportation, infrastructure, defense capabilities, and the next generation of technology rely upon a secure, predictable, and affordable supply of minerals.

Chinese Firms Overtaking European EV Makers Despite Massive Subsidies

Northvolt, an electric vehicle (EV) battery maker that was once one of Europe’s best-funded start-ups, filed for bankruptcy in its home country, Sweden. The company had contributed 76 gigawatt hours to the region’s gigafactory pipeline. Its failure reduces European-owned cell production capacity to 30% of Europe’s 2030 pipeline, benefiting Asian producers and raising doubts about the viability of Europe’s own battery sector. The company, which appeared to be Europe’s best chance to compete against China’s battery dominance, filed for Chapter 11 bankruptcy protection in the United States last year to buy it more time to raise money, but to no avail.

Northvolt was founded in 2015 by two former Tesla executives and has been struggling for months, cutting jobs and restructuring operations even before it pursued bankruptcy protection. A Swedish court-appointed trustee will oversee the company’s bankruptcy process, including the sale of the business and its assets and the settlement of outstanding obligations. The company’s subsidiaries, Northvolt Germany and Northvolt North America are not part of the bankruptcy proceedings in Sweden. Northvolt has plans to build factories in Germany and Canada.

Background

European carmakers get their batteries from South Korea’s LG Energy Solution and Samsung, and China’s world-leading producer, CATL. Northvolt’s goal was to capture 25 percent of the European battery market by 2030. Last year, the company secured a $5 billion loan from the European Union to expand its production. However, it was still not enough to counteract the company’s challenges, from accidents at a plant in Sweden to losing a contract with BMW worth $2.15 billion.

Northvolt’s main business was lithium-ion batteries, but in 2023, it said it had made a “fundamental breakthrough” in sodium-ion battery technology. The company likely tried to move too quickly — making battery cells is complex and expensive. New factories can take years to increase production and often have high failure rates because of problems during this process. Cells must be manufactured without impurities on automated assembly lines in dust-free environments using highly processed metals and chemicals. Furthermore, battery factories cost billions of dollars to build, and there is a shortage of engineers with the required expertise.

Northvolt’s Plans for a Factory in Canada

The company has plans to build a $7-billion factory in Quebec, Canada. The electric vehicle battery plant would be located in the Montérégie region on Montreal’s South Shore. The Quebec government pledged $2.9 billion in financing to secure the deal with Northvolt in 2023 and the Canadian government committed up to $1.34 billion to build the plant and another $3 billion worth of other incentives. So far, the Quebec government has invested $270 million in the project alongside $200 million from the provincial pension investor. Quebec granted Northvolt a further $240 million for the purchase of land in the Montérégie region.

Northvolt’s Germany Factory

Operations for Northvolt’s German subsidiary are to continue, but because the Swedish parent company wholly owns the factory project, its viability after bankruptcy proceedings is questionable. Construction work on the Northvolt factory near the northern German town of Heide began last year. The first cell assembly at Heide is scheduled to start in the second half of 2027 before the factory ramp-up begins. Early last year the European Commission approved funding and guarantees of $984 million for the Schleswig-Holstein plant.  German government subsidies for construction are expected to total around $765 million, with possible further guarantees of $220 million. Northvolt has already received around $656 million from the German state-owned development bank KfW, half guaranteed by the federal government and half by Schleswig-Holstein. Decisions regarding Northvolt assets and its future in Sweden and its subsidiaries will be made by an insolvency administrator appointed by the court.

China’s Battery Dominance

China leads the global EV production and battery manufacturing market, with CATL being the world’s largest battery producer by a wide margin. Chinese battery manufacturers are thriving, largely due to the surge in EV sales within China, where electric vehicles make up about half of all new car purchases. This market size gives Chinese battery makers a significant edge over international competitors.

Decades ago, China made a strategic decision to prioritize the development of electric vehicles and to support its domestic battery industry with substantial subsidies, which has put Western nations at a disadvantage. China’s focus on electric vehicles is partly driven by its limited domestic oil and gas resources, which it must import. It has turned a weakness into a strength, which Western nations have played to under the guise of climate policies. China expects most Western countries to become major importers of electric vehicles and their components as they progressively shift away from fossil fuels due to political policies, mandates, and subsidies stemming from their adherence to the UN’s Paris Accord. China, however, uses its massive fleet of coal-fired power plants to provide inexpensive energy to its manufacturing sector.

Conclusion

Northvolt’s bankruptcy is a significant blow to Europe’s desire to become self-sufficient and build its own EV battery supply chain to catch up to China, which has the world’s largest market for electric vehicles and dominates EV battery manufacturing. The company faced numerous challenges, including rising capital costs, geopolitical instability, supply chain disruptions, and shifts in market demand. Northvolt still has two subsidiaries in Germany and North America that have factories either under construction or on the drawing board, and the future of these factories is questionable. Decisions regarding its subsidiaries will be made by an insolvency administrator appointed by the court. The bankruptcy of Northvolt should alert Western lawmakers rushing to reach net-zero emissions regarding the implications of those policies upon the economic and national security of their countries.


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

The Unregulated Podcast #222: Shutdown Showdown

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the shakeout of the shutdown showdown, what Greenpeace’s legal defeat means for the future of Big Green, Inc. sponsored terrorism, and the latest news from the world of electricity.

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Trump’s EPA To Embark On Largest Deregulation Effort In American History

Lee Zeldin, President Trump’s Administrator of the Environmental Protection Agency (EPA), announced the biggest deregulation in U.S. history to rescind the onerous regulations from the Obama and Biden administrations. The agency is reviewing regulations with the intent of reversing 31 of the costliest regulations the agency has previously imposed, including backdoor electric vehicle (EV) mandates, the greenhouse gas endangerment finding, the Clean Power Plan, the social cost of carbon, and the mercury and air toxicity standards. These moves help fulfill President Trump’s promise to unleash American energy, revitalize the U.S. auto industry, restore the rule of law and give power back to the States. Zeldin called it “the most consequential day of deregulation in U.S. history,” pointing to Trump’s promise to make energy more affordable for American families and businesses. Zeldin is also terminating $20 billion in grants awarded to politically connected non-governmental organizations under sketchy circumstances by the Biden administration, ostensibly for climate and clean-energy projects.

The Biden administration finalized its Clean Power Plan rule in April 2024 to essentially shutter existing coal-fired plants and severely limit new gas-fired plants as part of its climate agenda. The plan requires existing coal-fired power plants and new baseload natural gas-fired power plants to install carbon capture technology by 2032 — a technology that is not yet commercially available — or shutter the plant in the case of existing coal plants. The Biden administration had also considered applying the requirements to existing natural gas plants in the future.

Biden’s Clean Power Plan was more onerous than the 2015 Clean Power Plan under the Obama administration, which set national standards for carbon emissionsThe Supreme Court in 2022 struck down Obama’s Clean Power Plan in the case of West Virginia v. EPA, which curbed the EPA’s ability to broadly regulate carbon emissions. The Supreme Court held that the major questions doctrine barred EPA from misusing the Clean Air Act to shift the nation’s generating fuel mix from fossil fuels to renewables. Conservative lawmakers saw the rule as having a “catastrophic” effect on the nation’s electric grid because it could have severely hurt reliability as the favored renewables were intermittent and weather-driven wind and solar power. The EPA will also look at rules that further restrict emissions of mercury and other air toxins, as well as a “good neighbor” rule intended to restrict emissions from blowing downwind to other states.

Zeldin is also rolling back greenhouse gas emissions standards for heavy- and light-duty vehicles for model year 2027 and later, which was essentially an EV mandate since it restricted the availability of gasoline and diesel vehicles for sale. Under the tailpipe emission rule, the auto industry would need 56% of new vehicle sales to be electric by 2032, along with at least 13% of sales to be plug-in hybrids or other partially electric cars, which would have been a huge increase over current EV sales, particularly with slowing demand for these vehicles.

The agency also said it will take steps to undo EPA’s 2009 finding that greenhouse gas emissions endanger public health, a provision that forms the bedrock of the EPA’s greenhouse-gas regulations for motor vehicles and power plants. The so-called “endangerment finding” came as a result of a Supreme Court ruling in the 2007 Massachusetts v. EPA case that greenhouse gases are covered by the Clean Air Act. The Supreme Court left it up to the EPA whether it wanted to expand its authority by controlling carbon dioxide emissions, and the EPA did. The EPA, under former President Barack Obama, finalized the finding in 2009.

The EPA also announced measures that would dial back regulations for the oil and gas industry, including the reporting of methane emissions from oil and gas infrastructure. It would also consider allowing the reuse of drilling wastewater, potentially for agriculture and industry.

The EPA also targeted a clean water law interpretation that expanded federal power to regulate the nation’s lakes, rivers, streams, and wetlands. EPA officials will listen to concerns from farmers and other groups worried about federal interference in how they use their land and then set limited, predictable, and lasting rules defining which waterways the Clean Water Act protects. In 2023, the Supreme Court justices, in Sackett v. EPA, sided with industry and agricultural interests that sought more flexibility around wetlands, finding that federal regulators had long wielded too much authority. Conservatives believe that the rule still protects too many wetlands and improperly limits private property rights.

The Zeldin changes will not take effect immediately, with nearly all requiring a long rulemaking process. Environmental groups said they would fight the rollbacks, while industry groups expressed support for the announcements. States are likely to be divided.

Conclusion

EPA Administrator Lee Zeldin is taking a hatchet to Obama and Biden’s regulatory agenda, looking to revise or rescind 31 onerous regulations that add costs to Americans for goods and energy. The regulations range from regulating emissions from power plants, which could shutter existing coal power plants, to limiting the type of cars available for purchase in favor of electric vehicles. Limiting consumer choice seemed to be a reoccurring theme of the Biden administration. These limitations not only took away options for Americans but could have been disastrous for the sustainability of the U.S. power grid as base load plants were attacked in favor of intermittent solar and wind plants. The regulatory changes will be fought in the courts and argued in Congress. Still, the direction from the EPA Administrator’s actions is clear: significant deregulation that will make it easier to build and make things in America is coming.


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

The Unregulated Podcast 221: Intractable

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the Continual Resolution battle in Congress, review the history of government shutdowns, and review the reviews of Gavin Newsom’s adventure into podcasting.

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Congress, Not the GAO, Gets to Decide on the California Waiver

WASHINGTON DC (3/7/25) – President Trump has vowed to end the Biden administration’s electric vehicle mandate, which is driven by three key regulatory actions: the EPA’s tailpipe emissions standards, the CAFE standards, and California’s Advanced Clean Cars II (ACC II) regulation. The ACC II regulation, which was granted a waiver from Clean Air Act preemption during Biden’s lame duck period, is crucial, as it allows California to enforce stricter rules that influence other states. This creates a de facto EV mandate, with federal agencies relying on California’s program to justify their own regulations. 

On Thursday, the Government Accountability Office (GAO) released a memo about overturning California’s Clean Air Act waiver under the Congressional Review Act (CRA). Some media outlets misreported the memo as blocking Congress from voting to disapprove of the waiver. This misinterprets both the CRA and the role of the GAO.

The CRA grants Congress, not GAO, the power to approve or disapprove agency actions once submitted for review. GAO’s role is purely advisory and does not affect Congress’s authority to act. The California waiver, which includes a ban on internal combustion engine vehicles, was a clear overreach by the Biden administration. The law is clear – Congress gets to decide whether to validate or overturn the rule. The CRA offers Congress the opportunity to reassert control over regulatory policy and prevent this overreach from disrupting the market.

Tom Pyle, President of the American Energy Alliance, issued the following statement:

“Despite misleading reports, the Congressional Review Act is crystal clear: once an agency action is submitted to Congress, it is Congress—and Congress alone—that holds the unassailable power to approve or disapprove that action. The GAO’s role is purely advisory, with no legal authority to block Congress from exercising its constitutional duty. The California waiver, which seeks to impose a nationwide electric vehicle mandate, is a prime example of why the CRA exists: to ensure that Congress retains control over regulatory actions that significantly affect the American public. It is time for Congress to step in and put a stop to California’s electric vehicle mandate. Doing so will protect consumer choice and prevent unelected agencies from dictating the future of American transportation.”

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