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

October 9, 2019 by 19 Comments

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.

Filed Under: Blog, Electric Vehicles Tagged With: , , , , , , , ,

AEA to Senate: Highway Bill is Highway Robbery

July 30, 2019 by Leave a Comment

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

Filed Under: Press Releases Tagged With: , , , , , , ,

Big Green, Inc. Slush Fund Slashed Thanks To President Trump

February 19, 2025 by Leave a Comment

The Trump administration has frozen federal grants for everything from battery factories to electric school buses and issued executive orders that have halted federal approvals for wind and solar projects. The freeze has not come a minute too soon as “clean” energy companies funded by Obama and Biden administration grants are dying on the vine. The latest is Canadian electric bus company Lion Electric, which was given almost $160 million to manufacture battery-powered buses for school districts. Recently, Lion initiated bankruptcy proceedings, laid off all employees tasked with building its buses, and paused manufacturing operations. Another recent example is the Ivanpah solar plant in California, which closed after operating for ten years. Obama’s Department of Energy (DOE) provided a $1.6 billion loan guarantee, and his Treasury Department provided a $535 million grant to Ivanpah. The loan guarantee and grant were on top of the investment tax credit, the accelerated depreciation (an assumed plant life of five years), and a depreciation bonus of 50 percent in the first year.

In Illinois, Senator Dick Durbin is worried that the Trump administration will cut funding to the “Solar for All” program, locking the state out of more than $100 million for solar energy projects. To replace the state’s coal generation, about 670 square miles of expensive and unreliable solar panels would be needed on almost 500,000 acres of productive farmland. So, rather than grow crops the world needs, the state would use the land for solar panels that mainly come from China, which produces them and the polysilicon they need with cheap coal-powered electricity. China continues to add coal plants every week while Biden regulations no longer allow them to be built in the United States unless equipped with unproven and expensive carbon capture and sequestration technology.

One of the most notorious solar company failures was Obama-backed Solyndra. The Obama administration backed solar panel maker Solyndra with a $535 million taxpayer-guaranteed loan from the DOE in September 2009. The funding was allocated as part of a $787 billion stimulus package. Obama’s DOE backed the company because a number of major Obama fundraisers had substantial investments in the firm despite concerns raised within his administration about the company’s viability. The plant was visited numerous times by Obama administration luminaries, including Obama himself, yet in 2011, Solyndra filed for bankruptcy.

Unfortunately, these “green” energy companies, because they depend on government funding, often fail even after winning lucrative government contracts. That is because the federal government does not have a good track record at picking winners over losers, which the market should do through private investment funding.

Electric Buses

According to the World Resources Institute, 67 percent of the planned electric school buses in the United States have been funded by the federal government through EPA’s Clean School Bus Program created by the 2021 infrastructure bill, funding over 8,000 electric buses in 49 states, four U.S. territories, Washington DC, and 55 Tribal school districts. EPA has spent $5 billion over five years underwriting electric buses for schools that could not afford them otherwise. The funding requires low-income and rural school districts, school districts in areas most affected by air pollution, and other environmental justice factors to be prioritized in allotting the funds while also requiring them to scrap older diesel buses to qualify. Priority districts are eligible for funding up to the full cost of 25 buses and the necessary chargers. A year ago, the EPA had spent $1.84 billion from the fund on 5,103 electric buses, which averaged to more than $360,000 per bus — 3 to 6 times more than diesel buses that cost between $65,000 and $100,000 each and which can use existing infrastructure for refueling.

Lion Electric, whose loan is part of the Clean School Bus funding, is on the hook to deliver $95 million worth of electric buses to 55 districts nationwide. Since 2020, Lion reported net losses totaling $301.6 million. Last year, Lion also received a letter from the Securities and Exchange Commission for misreporting several key figures in its financial disclosures. In March 2024, a group of investors filed a class action suit against Lion, alleging the company withheld the truth about supply chain problems it faced and misled investors with “grossly unrealistic financial projections.” Lion was also getting funds from EPA’s $3 billion clean port program.

In December, Lion filed for bankruptcy protection in Canada, initiated bankruptcy proceedings in Illinois federal court, and weeks after that, laid off all its employees, excluding 150 tasked with customer service and maintenance duties. Lion also halted production at its 900,000-square-foot manufacturing facility in Joliet, Illinois, which opened less than 18 months earlier.

Lion is not the only electric bus company to fail. In August 2023, Proterra filed for bankruptcy protection. Proterra was a favorite of Biden, Vice President Harris, and Secretaries Buttigieg and Granholm. Harris praised the Proterra’s electric buses, calling them “very user-friendly” and marveling at how quietly the brakes work. President Biden also praised Proterra’s products, and his administration has featured the green energy company at events. DOE Secretary Granholm had financial positions in Proterra, on whose board she used to sit, and maintained them when she assumed her post as DOE Secretary and began to direct policies that could have favored her own financial interests. Granholm eventually closed her position in the firm late in May 2021, after the House Oversight Committee opened an investigation into the apparent conflict of interest earlier that month.

The Proterra bankruptcy filing came weeks after Lordstown Motors — a company building electric pickup trucks — filed for bankruptcy protection and put itself up for sale. Other failed EV startups include Electric Last Mile Solutions and bus manufacturer Arrival, which both declared insolvency. Fisker Automotive went bankrupt twice. Its first EV venture went bankrupt in 2013, following problems with a battery supplier and losing 300 of the company’s $100,000 plug-in hybrid Karmas in a hurricane. Its second bankruptcy filing was on June 17, 2024, after months of cash spent rapidly trying to deliver its Ocean SUVs to U.S. and European customers and after it failed efforts to secure investments, including from Nissan.

Conclusion

“Clean or green” energy requires massive federal loan guarantees, and much of the funding has proven to be lost as company after company has filed for bankruptcy protection. The massive loans, particularly for electric school and transit buses, have resulted in poor equipment, much of which cannot be repaired due to company failure and bankruptcy. Range, reliability, and expenses of EV buses have turned out to be much different than advertised, idling many of them even as they transport passengers. EV buses also cost multiple times more than their diesel counterparts, and their performance is marred by expensive and frequent repairs, charging equipment costs, and much lower range than existing buses — factors that the market would quickly flesh out had it the ability to function.

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

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The Unregulated Podcast #217: Musky Moo Moo

February 18, 2025 by Leave a Comment

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the unfolding “constitutional crisis” in which President Trump and his administration carry out exactly what they campaigned on.

Links:

Stay Connected With The Show:

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Solar Industry In Dire Straits Without Endless Subsidies

February 13, 2025 by Leave a Comment

In its Short-Term Energy Outlook, the Energy Information Administration (EIA) is projecting 26 gigawatts of solar capacity to be added to the power grid this year and another 22 gigawatts of solar additions in 2026. That expected growth is down from the record 37 gigawatts of solar power capacity that was added in 2024 and may dwindle further as some analysts believe that solar power may face Trump administration policies that will stagnate project development or continue it at a slower pace. Like wind, solar is an intermittent technology operating only about 25% of the time because it needs the sun to shine to energize it. Also, like wind power, it needs backup power from coal, natural gas, or nuclear generators or stored energy from expensive batteries that climate activists and some politicians are pushing. The massive batteries do not generate energy; they store excess energy from wind, solar units, or other generation sources if excess power exists. Battery facilities in California and Arizona have also had fires, with one at a facility in Monterey, California, causing evacuations and raising concerns about air quality.

Similar to wind power, solar power is promoted by large federal subsidies and state mandates for renewable energy. Solar projects get a 30% investment tax credit from the Democrat-passed Inflation Reduction Act — President Biden’s signature climate bill. That is, taxpayers essentially pay 30% of the capital costs for solar projects. According to EIA, federal support for renewable energy cost taxpayers upwards of $15.6 billion in FY 2022 — more than double the cost in 2016. With record additions in 2024, taxpayers are subsidizing solar power at even higher levels — a technology that can supply power roughly 25% of the time. On a per unit of production basis, its federal subsidies in FY 2022 cost $38.18 per megawatt hour — a subsidy value over 76 times greater than nuclear power received. While solar’s costs have dropped with its deployment over the last several decades, it still requires backup power, which adds costs for consumers — essentially a redundancy in capital expenditure made necessary by solar’s intermittency. According to EIA, its capital costs are 23% higher than the natural gas combined cycle, but its generating costs are 46% less after considering federal subsidies and fuel costs for natural gas.

Not only does solar power receive tax subsidies, but it has also garnered sizable federal loans, particularly during the Obama-Biden administration. Solar plants are touted to operate for around 25 years — half the time or less that fossil fuel or nuclear plants operate. The Ivanpah solar plant in California — touted to be the largest of its kind — shut down after ten years of operation. Obama’s Department of Energy (DOE) provided a $1.6 billion loan guarantee, and his Treasury Department provided a $535 million grant. The plant owners did not pay the usual credit subsidy cost (the expected default liability for the federal government) under the DOE section 1705 loan program. The $535 million grant under the Section 1603 program was to pay back part of the loan guaranteed at no charge by the DOE. The loan guarantee and grant were on top of the investment tax credit, the accelerated depreciation (an assumed plant life of five years), and a depreciation bonus of 50 percent in the first year that the plant received.

Furthermore, California utilities were forced to buy the power produced by Ivanpah due to the state’s “renewable portfolio standard.” The price the utilities were committed to paying for the project’s electricity was five times the going electricity rate, which was passed on to consumers. The Ivanpah plant was not only a financial boondoggle but an environmental disaster. It allegedly killed 6,000 birds a year and raised concerns about its impact on the habitat of the threatened desert tortoise. It destroyed desert habitats and numerous rare plant species. The Ivanpah solar plant is a good example of government waste that Trump’s Department of Government Efficiency is to flesh out.

Solar power also requires great swathes of land — far more than a traditional coal, natural gas, or nuclear power plant —that must come from cutting down trees that absorb carbon dioxide or from farmland. In 2021, Iowa’s largest solar facility, the Wapello Solar project, began operation, covering 1000 acres, 900 of which had previously been used to grow row crops such as corn and soybeans. The Illinois crop budget estimated non-land costs of $815 per acre for corn in 2024. A 100-megawatt plant like Wapello cost about $155 million to build and $2.16 per megawatt hour to operate in 2024, which translates to a levelized cost of $47 per megawatt hour, based on cost numbers for solar from the National Renewable Energy Laboratory. Using this information, an Energy Institute blog comparing the profitability of corn vs. solar found that solar panels are not profitable without government subsidies. That is precisely what Warren Buffet told us years ago about wind power. Subsidies are supposed to be used to help get new technologies “off the ground.” As such, they should no longer be provided to wind and solar power, which have had decades to prove their worth. Today, wind and solar power represent about 16% of the nation’s electricity and less than 3% of the nation’s energy supply due to the enormous subsidies and state mandates forcing utilities to purchase their output.

Conclusion

President Trump has issued an executive order on wind energy, withdrawing U.S. offshore areas from leasing wind and reviewing the federal government’s leasing and permitting practices for wind energy. Little has been said about other renewable energy technologies, including solar power, except for geothermal, which is receiving favor because it can produce energy 24/7. Solar power produces energy less often than wind power, which has an average capacity factor of about 10 percentage points higher than solar.

Solar also has a lot of the same issues as wind power in that it is as unreliable as it is intermittent, requires backup power that is either redundant or an investment in expensive batteries, requires massive amounts of land compared to coal, natural gas, and nuclear-generating technologies; operates at a life that is half or less than half that of the traditional generating technologies; and requires large federal subsidies to be economical. These are just a few of its problems. Another major one is that China dominates solar manufacturing and polysilicon production due to its cheap coal-fired power. The United States imports most of its solar panels, many of which come from China or factories in other Asian countries that China supports to avoid U.S. tariffs on Chinese solar panels.

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

Filed Under: Blog Tagged With: , , , , ,

AEA Joins Coalition Urging Congress To End Inflation Reduction Act’s Subsidies

February 13, 2025 by Leave a Comment

WASHINGTON DC (2/14/25) – This week the American Energy Alliance joined with over 50 free-market groups and organizations to urge Congress to scrap the Inflation Reduction Act’s (IRA) Green New Deal provisions.

Our letter warns that IRA subsidies will push the U.S. away from reliable energy (natural gas, oil, and coal) toward unreliable sources (wind, solar), threatening grid stability and driving up costs.

The coalition makes clear that these policies undermine energy security, limit consumer choice—especially in car markets—and hit the poor hardest. With a price tag exceeding $1 trillion, our coalition calls for a full repeal of IRA’s “green” subsidies to restore affordability, reliability, and energy freedom.

The full text of the letter is available below.

Dear Members of Congress:

In 2022, President Joe Biden and congressional Democrats pushed through one of the most extreme pieces of legislation in recent memory: the so-called Inflation Reduction Act (IRA). Not a single Republican in either the House or Senate supported this bill.

The IRA was a reconciliation bill that helped the political left advance its Green New Deal. Now, because Republicans have control of both chambers of Congress, they can now use the reconciliation process and other means to dismantle the “green” subsidies contained in the IRA.

The undersigned organizations strongly urge all legislators, regardless of party, to make it a priority to get rid of the IRA’s Green New Deal provisions. Many conservative policymakers have made undoing the Green New Deal a priority. This is impossible without undoing the IRA “green” subsidies, which are the heart of the Green New Deal.

The spotlight will be on Republicans and more specifically on whether they can come through for the American people by getting rid of these IRA subsidies. If the subsidies are not repealed in reconciliation, this will be a devastating result. It will be characterized as a major failure and an ominous sign for the 119th Congress, as well as a failure to advance President Donald Trump’s Unleashing American Energy agenda. Those characterizations would be fair.

This is a critical moment that will require Republicans and other legislators to overcome far left efforts to maintain the IRA and the Biden administration’s harmful anti-energy legacy. There have been recent reports of some Republicans wavering in their opposition to the IRA subsides. IRA boosters cynically predicted Republicans would change their tune on the IRA once money started flowing into their districts. It appears that may be happening. That is unacceptable and ignores the harm subsidies will cause to Americans, including those living in all congressional districts.

The IRA is filled with numerous subsidies that were designed to shift our country away from reliable electricity generation (coal and natural gas) to unreliable electricity sources (e.g. wind and solar). This comes at a time of concern about the reliability of the nation’s electricity grid, in large part because of misguided corporate welfare policies that undermine reliable baseload generation.

There are also IRA subsidies that work in conjunction with other policies, such as the Environmental Protection Agency’s de facto electric vehicle mandate, to kill off gas-powered vehicles – undermining the freedom of Americans to choose their cars.

These examples capture just some of the problems with the IRA “green” subsidies. In general, the subsidies will drive up prices, diminish grid reliability, compromise mobility, and disproportionately impact the poor. Not to mention, the subsidies are expected to cost over $1 trillion, and this may be a low-ball estimate.

There is another excuse for maintaining IRA subsidies that was predicted after the law’s passage. Some big businesses claim they made decisions relying on those subsidies. Any business that bet on the IRA subsidies continuing, especially given the wide opposition to the IRA, is a poorly led business. Congress needs to put the interests of the American people over the interests of wealthy special interests who are trying to keep their handouts flowing at the expense of taxpayers.

All IRA “green” subsidies should be in the sights of policymakers. They work together as a central plan to achieve a radical and harmful shift in how our country produces and uses electricity, among other things. Given that they work together to achieve this Green New Deal, they should be eliminated together to restore freedom and ensure our country can reliably and affordably meet its energy needs.

Our organizations believe that this is a pivotal moment for our country. Will we go down the path of the Green New Deal, as pushed by Biden and the far left, or will Republicans and common- sense legislators get our country back on course to meeting our energy needs now and in the future? This is what is at stake.

Therefore, our organizations again urge you to eliminate the IRA’s “green” subsidies. We are available to work with you to ensure that when Congress passes reconciliation legislation this year, these harmful subsidies are repealed. If there is such an outcome, then this would be a major victory for conservatives, and more importantly, for the nation.

Sincerely,

Thomas Pyle
President
American Energy Alliance

Daren Bakst
Director, Center for Energy and
Environment
Competitive Enterprise Institute

James L. Martin
Founder/Chairman
60 Plus Association

Paul Teller
Executive Vice President
Advancing American Freedom

John Droz
Founder and Physicist
Alliance for Wise Energy Decisions

Amy O. Cooke
President, Board Chairman
Always On Energy Research

Saulius “Saul” Anuzis
President
American Association of Senior Citizens

Phil Kerpen
President
American Commitment

Hon. Jason Isaac
CEO
American Energy Institute

Myron Ebell
Chairman
American Lands Council

Margaret Byfield
Executive Director
American Stewards of Liberty

Richard Manning
President
Americans for Limited Government

Faith Burns
Energy Policy Fellow
Americans for Prosperity

Rea S. Hederman Jr.
Vice President of Policy
The Buckeye Institute

David T. Stevenson
Director, Center for Energy & Environment
Caesar Rodney Institute

Ryan Ellis
President
Center for a Free Economy

Daniel J. Mitchell
President
Center for Freedom and Prosperity

Jeffrey Mazzella
President
Center for Individual Freedom

John Hinderaker
President
Center of the American Experiment

Craig Rucker
President
Committee for a Constructive Tomorrow
(CFACT)

E. Calvin Beisner, Ph.D.
President
Cornwall Alliance for the Stewardship of
Creation

Kristen A. Ullman
President
Eagle Forum

Craig Richardson
President
Energy & Environment Legal Institute
(E&E Legal)

Malon Wilkus
President
The Foundation Supporting Climate
Science

George Landrith
President
Frontiers of Freedom

Mark Krebs
Principal
Gas Analytics & Advocacy Services LLC
(GAAS)

Larry Hart
President
Hartco Strategies


Cameron Sholty
Executive Director
Heartland Impact

James Taylor
President
The Heartland Institute

Ryan Walker
Executive Vice President
Heritage Action for America

Mario H. Lopez
President
Hispanic Leadership Fund

Gabriella Hoffman
Director, Center for Energy & Conservation
Independent Women’s Voice

Tom Harris, B. Eng., M. Eng. (Mech.)
Executive Director
International Climate Science Coalition
(ICSC)

Annette Olson
Chief Executive Officer
The John K. MacIver Institute for Public
Policy, Inc.

Jon Sanders
Director of the Center for Food, Power, and
Life
John Locke Foundation

Seton Motley
President
Less Government

Charles Moran
President
Log Cabin Republicans

Jason Hayes
Director of Energy and Environmental
Policy
Mackinac Center for Public Policy

Paul Craney
Executive Director
Massachusetts Fiscal Alliance

Brandon Arnold
Executive Vice President
National Taxpayers Union

Daniel C. Turner
Founder and Executive Director
Power the Future

Tim Barton
President
ProFamily Legislative Network by
Wallbuilders

Donna Jackson
Director of Membership Development
Project 21 Black Leadership Network

Paul Gessing
President
Rio Grande Foundation

James E. Enstrom, PhD, MPH
President
Scientific Integrity Institute

David Williams
President
Taxpayers Protection Alliance

Jenny Beth Martin
Honorary Chairman
Tea Party Patriots Action

Greg Sindelar
Chief Executive Officer
Texas Public Policy Foundation

Derrick Max
President and CEO
Thomas Jefferson Institute for Public Policy

Frank Lasee
President
Truth in Energy and Climate

Todd Myers
Vice President for Research
Washington Policy Center

Carol Platt Liebau
President
Yankee Institute

Benjamin Zycher
Senior Fellow
American Enterprise Institute (affiliation for
identification purposes only)

The full text of the letter is available to download below.

Download Letter
Filed Under: Press Releases Tagged With: , , , , , , , ,

Automakers Look to Pass Gambling Debts on to Taxpayers

February 12, 2025 by Leave a Comment

WASHINGTON DC (2/12/25) – On the heels of President Trump’s announcement aimed at eliminating the $7,500 federal tax credit for electric vehicle purchases, news broke last night that automakers have hit Capitol Hill to lobby against the tax credit’s termination. 

 AEA President Thomas Pyle issued the following statement: 

“Automakers took a risk on electric vehicles that ultimately didn’t pay off, relying on government regulations and mandates to create a market that never materialized, as we predicted. When federal pressure failed to force consumers into unwanted products, the industry doubled down, trying to use California’s regulatory power to push EVs even harder.

“In the process, they ignored the interests of their workers, American consumers who ended up paying more for the cars they actually wanted, and their shareholders who expected returns. Now, they want American taxpayers to help cover their debts.

“These companies made their choice to partner with the government. It’s time they faced the consequences of putting politics ahead of the people.”

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Trump’s Energy Picks Already Acting To Unleash American Energy

February 11, 2025 by Leave a Comment

Department of Interior (DOI) Secretary Doug Burgum and Department of Energy (DOE) Secretary Chris Wright have advised their staff to institute President Trump’s energy dominance program. DOE Secretary Wright prioritizes expanding energy production rather than pursuing Biden’s net-zero climate policies, stating, “net-zero policies raise energy costs for American families and businesses, threaten the reliability of our energy system, and undermine our energy and national security.” DOI Secretary Burgum issued orders reversing Biden’s Outer Continental Shelf (OCS) and Alaskan oil drilling bans, directing the review of monuments for energy potential, speeding up permitting of energy projects, and unwinding environmental protections that are burdensome. Burgum states, “we are committed to working collaboratively to unlock America’s full potential in energy dominance and economic development to make life more affordable for every American family while showing the world the power of America’s natural resources and innovation.” Their agencies will follow President Trump’s direction to eliminate at least 10 regulations for every new one introduced.

Energy Department Directive

Energy Secretary Chris Wright called energy “the essential ingredient that enables everything we do” and ordered changes to how the agency will approach home appliances, nuclear power, gas exports, and more. His order said the department would pursue plans President Trump has outlined to speed up energy permitting, strengthen grid resilience, expand nuclear power capacity, and refill the nation’s strategic oil stockpiles by resupplying the Strategic Petroleum Reserve (SPR) — a crucial national security entity. President Biden used a substantial portion of the nation’s SPR to lower oil and gasoline prices before the midterm election 2022. During parts of Biden’s term, the SPR level was below half of its capacity, with much of the remaining oil a type that U.S. refineries no longer use. During Trump’s first term, a Democrat Congress denied him $3 billion to fill the reserve to capacity when oil sold at about $24 a barrel during Covid lockdowns.

Wright also ordered new attention be paid to the U.S. nuclear stockpile to meet Cold War-era waste cleanup commitments and modernize atomic weapons as a tool for peace. According to the order, Energy Department Research & Development (R&D) efforts will prioritize affordable, reliable, and secure energy technologies, including fossil fuels, advanced nuclear, geothermal, and hydropower. Wright also ordered a cost-benefit analysis for any new standards imposed that considers the upfront cost of purchasing new products and reflects actual cost savings for American families. The Energy Department will also exercise its legal authorities going forward to aid in approving and constructing new, reliable energy infrastructure.

Interior Department Directives

Interior is using President Trump’s executive order declaring a national energy emergency to “immediately identify all emergency and legal authorities available” to promote energy development on federal land. Burgum plans to allow more land for energy development, which Biden had restricted or placed under conservation. Toward the end of his term, President Biden ordered 625 million acres of federal waters withdrawn from future oil and gas leasing, or more than 1/3 of the OCS, using authority under the Outer Continental Shelf Lands Act. During Trump’s first administration, he tried to reverse similar actions but smaller actions by the Obama administration to protect offshore areas, though a court rejected Trump’s effort in 2019. The ruling was never contested at a higher court, and the incoming Biden Administration supported the court’s decision. Burgum also revoked a 2021 order that halted oil and gas activity in the Arctic National Wildlife Refuge, and he reinstated a mandate from the first Trump administration to rewrite the land and energy management plan for the National Petroleum Reserve in Alaska. The Biden administration had taken multiple actions restricting vast areas in the Petroleum Reserve from petroleum development.

Burgum’s “Unleashing American Energy” order sets the stage for the Trump administration to reopen and potentially revise the public lands rule, the Conservation and Landscape Health Rule, that the Biden administration finalized in May. Interior’s assistant secretaries are directed to develop “action plans” and to suggest “steps that, as appropriate, will be taken to suspend, revise, or rescind” a list of rules and orders, including the public lands rule that seeks to place conservation-only on par with energy development, grazing, and other multiple uses of bureau rangelands. DOI cannot just revoke the rule; instead, it can restart the rulemaking process by opening it up for new public comment and conducting an in-depth analysis that would result in a revised rule. Bureau of Land Management lands have long been managed for “multiple uses,” allowing for coexisting uses with many public benefits.

Under Burgum’s order, the Interior Department will have until February 18 to review 157 national monuments across 33 states for potential boundary revisions that could open areas to oil and natural gas drilling and mining. The order instructs assistant secretaries to “review and, as appropriate, revise all withdrawn public lands, consistent with existing law,” listing the law that gives presidents the power to designate national monuments and withdraw them from mineral development. Presidents have used the Antiquities Act of 1906 to establish national monuments and their boundaries and some believe that that authority has been abused, wanting it to revert to Congress with the repeal of the Antiquities Act. Presidential authority to alter monument boundaries is uncertain and is being debated in court. Monument declarations have been banned by Congress in Wyoming and limited to 5,000 acres absent Congressional approval in Alaska.

Utah’s Bears Ears and Grand Staircase-Escalante National Monuments, rich in coal, oil, gas, and uranium, are likely among the monuments under review. And so are the recently-designated Chuckwalla National Monument and Sattitla National Monument in California. California has more monuments than any other state, with more than 4 million acres likely under review. They include Mojave Trails, Sand to Snow, Carrizo Plain, Muir Woods, Devils Postpile, Cabrillo, Lava Beds, California Coastal, Sequoia NF, Cesar Chavez, Fort Ord, San Gabriel Mountains, Berryessa Snow Mountain, and Castle Mountains. The Carrizo Plain monument in central California has been the subject of previous attempts to open the land for oil and gas drilling, which has resulted in lawsuits and no new energy production.

Trump reduced the size of the two Utah monuments during his first term, calling them a “massive land grab,” and lifted fishing restrictions within a marine monument off the New England Coast to aid small business fishermen. A rules change approved by Trump allowed commercial fishing at the Northeast Canyons and Seamounts National Monument in the Atlantic Ocean, a nearly 5,000-square-mile area southeast of Cape Cod. It was the first time in a half-century that a president modified the size of designated monuments. Biden, however, reversed Trump’s actions on these three monuments during his term in office.

Conclusion

Achieving net-zero emissions by 2050 by primarily using subsidies to encourage an expansion of renewable energy and electric vehicle deployment is no longer the American government’s goal. Instead, President Trump and his energy team’s goal is American energy dominance, which promotes energy development, national security, and lowers prices for the American people. According to Chris Wright, Trump has a “simple vision” that “energy is good and that we need more” domestically sourced energy. Producing more at home will create additional direct and induced jobs, and increasing supplies will benefit consumers.

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

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The Unregulated Podcast #216: I Apologize for Nothing

February 10, 2025 by Leave a Comment

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna catch up on another busy week in America’s golden age. Later, they are joined by Tyler O’Neil, the managing editor of The Daily Signal, for a discussion of his latest book The Woketopus, and where D.O.G.E. should look next.

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Key Vote YES on H.R. 26

February 7, 2025 by Leave a Comment

The American Energy Alliance supports H.R. 26 the Protecting American Energy Production Act.

The process of hydraulic fracturing is a key production process for oil and gas development. It should not be subject to arbitrary, unilateral restrictions from a presidential administration. Any restrictions must be determined through the full constitutional legislative process. This legislation ensures that Congress will have its say on any such restrictions.

A YES vote on H.R. 26 is a vote in support of free markets and affordable energy. AEA will include this vote in its American Energy Scorecard.

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Can America’s Electric Grid Survive The A.I. Revolution?

February 7, 2025 by Leave a Comment

Chinese artificial intelligence (AI) company DeepSeek is challenging conclusions about future electricity demand from AI data centers. DeepSeek has produced an AI model that appears to use a smaller amount of energy than U.S. models, which has made some analysts indicate that the surging predictions of electricity demand from AI should be reevaluated. Since AI is set to drive the majority of electricity demand growth in the next decade, lower demand predictions from AI could affect the number of new power plants in the United States.

DeepSeek is owned by the Chinese stock trading firm High-Flyer, and its app appears to have similar functionality as OpenAI’s ChatGPT chatbot. According to DeepSeek, its model uses roughly 10 to 40 times less energy than similar U.S. AI technology, depending on the task. A Nature paper also reported that DeepSeek required about 11 times fewer computing resources than a similar one from Meta. The company also claims it uses about an eighth of the computer chips needed to power other AI systems. It is also cheaper for users, costing some 95% less than OpenAI and its competitors. Some of these claims have yet to be substantiated. Meanwhile, the claims have significantly impacted the stock values of various companies in industries such as tech, AI, energy, and others.

The Lawrence Berkeley National Laboratory has predicted that AI-driven data centers could account for 12 percent of U.S. electricity demand by 2028. However, projections vary depending on assumptions about the underlying technology. For DeepSeek to cause a significant change in future electricity demand, there would have to be a mass switching away from existing AI models, including by major corporations, and they would need to be willing to tie their private data to a Chinese company. Experts have noted that data provided to DeepSeek could be stored and subject to surveillance under Chinese law. Deepseek’s models are also constrained by China’s restrictive policies regarding criticism of the ruling Chinese Communist Party (CCP).

Further, as technology becomes more efficient and requires less energy to run, people want more of it, which keeps overall demand higher than would otherwise be expected. This phenomenon is known as the “Jevon’s Paradox” and is well known in energy circles. And, while DeepSeek’s computer system appears to use less energy than other models, it still uses similar amounts of energy as competitors when the chatbot is queried, which suggests that the energy reductions could be less than expected.

Other major drivers, including U.S. manufacturing and cryptocurrency, will still affect U.S. electricity demand. President Donald Trump’s tariffs could increase U.S. manufacturing and domestic power demand. Biden’s push toward more electrification of appliances and use of electric vehicles that Democratic states still champion is also likely to increase power demand.

A large number of U.S. data center projects are already in the pipeline, so there will continue to be a large number of U.S. data centers tied to new or refurbished nuclear, gas, and renewable generating facilities. For example, a deal between Microsoft and Constellation Energy to reactivate a unit at the Three Mile Island nuclear reactor in Pennsylvania is already in progress. And President Trump is supporting Stargate, whose data centers will be power intensive. The fuel mix that will be used to power these data centers will be dependent upon where they are built, as utility fuel use varies regionally.

Conclusion

President Trump has called DeepSeek a “wake-up call” to the U.S. AI industry. According to his press secretary, his administration is looking into the national security implications of DeepSeek. AI systems have the potential to exacerbate significant national security risks, including enabling the development of weapons of mass destruction, supporting powerful offensive cyber operations, and aiding human rights abuses, such as mass surveillance. While DeepSeek reportedly uses much less energy than its U.S. AI counterparts, many questions remain regarding whether its issuance will result in less power demand from U.S. AI data centers, including whether companies want to use a Chinese product and how it will be used. China has a growing fleet of cheap coal-fired plants with more capacity than the entire generating fleet of the United States, which can help underpin its AI development.

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

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Trump Acts To Protect Ratepayers From Offshore Wind Boondoggles

February 5, 2025 by Leave a Comment

President Trump’s executive order on offshore wind, “Temporary Withdrawal of All Areas on the Outer Continental Shelf from Offshore Wind Leasing and Review of the Federal Government’s Leasing and Permitting Practices for Wind Projects,” is just one part of offshore wind’s troubles. According to Carboncredits.com: “over the past two years, the average cost of offshore wind projects has risen by 30% to 40%, reaching $230 per megawatt hour.” While it was already one of the most expensive technologies being considered, its costs have grown even higher than the increase in inflation due to high interest rates and supply chain problems. Unless companies can get higher-priced contracts for their wind energy, they are canceling projects. Norway’s Equinor, a leading developer in renewable energy, recently withdrew from offshore wind projects in Vietnam, Spain, and Portugal, citing unsustainable costs. Similarly, Shell has sold its stakes in projects across Massachusetts, South Korea, Ireland, and France. It has also announced the cancellation of its $1 billion stake in a wind farm off the New Jersey shore.

In its recent quarterly earnings report, Shell disclosed a $996 million write-off related to an offshore wind farm called Atlantic Shores, for which it no longer sees fruitful returns. The company has been developing the project in a joint venture with the renewables part of the utility company Electricite de France SA (EDF). The joint venture agreed to pay around $780 million to lease an area in a federal offshore wind auction in 2022. Since then, rising interest rates and supply-chain issues have driven up industry costs, making investing harder. While Shell is no longer active in the project, EDF expects the Atlantic Shores project to continue. President Trump wants the New Jersey wind farm to be “dead and gone,” as he sees its power as being expensive and unreliable since it is based on the wind blowing and taxpayer subsidies. The president worked with New Jersey Congressman Jeff Van Drew to draft the executive orders that targeted the offshore wind industry on his first day in office.

Over a year ago, Danish wind developer Ørsted canceled its Ocean Wind 1 and Ocean Wind 2 projects off the New Jersey shore, citing rising interest rates, high inflation, and supply chain bottlenecks. The projects would have added about 2.2 gigawatts of intermittent power to the New Jersey grid. Besides being expensive, offshore wind is also unreliable and needs backup power in the form of expensive batteries or through coal, natural gas, or nuclear generators. Either way, the cost of electricity would escalate. Ørsted was able to write off $4 billion, primarily due to the cancellation of these two large offshore wind projects.

Dominion Energy’s gigantic 2.6-gigawatt, 176 turbine, Coastal Virginia Offshore Wind project is about halfway to its planned completion expected for year-end 2026. The project’s costs have risen by about $900 million (9%) to $10.7 billion.

Chinese Dominance in Wind Energy Manufacture

Another problem for wind energy, as in other parts of a green energy transition, is China’s growing dominance in its manufacturing. China is a global leader in the manufacturing of wind turbines, and European countries are heavily reliant on Chinese-made parts. By the end of 2023, China controlled 43.2% of the world’s installed wind energy capacity, making it a dominant player in the market. The U.K.’s dependence on China for offshore wind supplies has become a growing national security concern for the country, as its former MI6 Director pointed out. Rare earth permanent magnets are a critical component in offshore wind turbine generators. These rare earth magnets are predominantly produced in China, putting Europe’s energy infrastructure and national security at risk. Without a significant shift toward domestic production, which will not be easy as substantial processing is needed to obtain the minerals, Europe’s energy future will be beholden to China. The dependency on China creates a national security challenge as geopolitical tensions over resources could disrupt supply chains. For example, in 2010, China placed a two-month embargo on rare earth metal exports to Japan during a territorial dispute between the two nations, and recently, it banned exports of “dual-use items” related to gallium, germanium, antimony, and superhard materials to the United States.

The United States is Also Dependent on China’s Critical Minerals

China’s dominance in critical minerals is also a problem for the United States as President Biden revoked leases, delayed permits, and labeled fauna and flora endangered,  which canceled and slowed the development of critical mineral mines in the United States. For example, the Biden administration revoked the federal leases for the Twin Metals mine in Minnesota that contains copper, nickel, cobalt, and platinum-group elements and followed that decision by withdrawing more than 225,000 acres of the Superior National Forest from consideration for mining operations for 20 years, thereby ensuring the Twin Metals project’s demise for the foreseeable future.

Another example is that the Biden administration blocked the State of Alaska’s application to build a 211-mile road through northwestern Alaska to reach an area known for its mineral richness. The road-building project is needed to access major copper and zinc deposits needed for transmission lines, wind turbines, and photovoltaic cells. The proposed 211-mile-long Ambler Road was initially approved under the Trump administration, which issued a 50-year right-of-way permit to build the road just days before President Trump left office during his first term. Biden’s action also broke commitments made at statehood in 1959 by denying Alaskans access to resources.

Conclusion

Offshore wind energy is expensive and is getting even more expensive due to supply chain issues and high interest rates. Wind development companies are canceling projects not only in the United States but also around the world. President Trump is not enamored with offshore wind energy due to its cost and unreliability, as it produces energy only when the wind blows. The refrain of intermittent renewable energy supporters that wind facilities are cheaper ignores that they are usually unavailable, requiring backup power to be built and paid for by consumers to accommodate their intermittency. The result is higher prices for consumers and businesses trying to compete globally.

Concerns are also raised as China has become a dominant force in manufacturing wind energy components, which leads to energy security and national security concerns for nations that rely on it. China does not have the oil and gas resource base that the United States has, so it has used the green energy transition to become dominant in supplying the energy needs of Western countries that want to stop using fossil fuels because they supposedly cause climate change.

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

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