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On striking down the California waiver, the tax bill, and BYD
Current conditions: Showers and thunderstorms in the South and cool weather in the Northeast will make Memorial Day weekend “more reminiscent of late March than late May”• At least four people are dead and 50,000 stranded in New South Wales, Australia, due to torrential rainfall that is expected to ease Friday evening• Evacuation orders are in place around Oracle, Arizona, to the north of Tucson, due to the growing Cody Fire.
It’s official: After weeks of speculation and run-up, the Senate voted 51 to 44 on Thursday to overturn California’s waiver from the Clean Air Act to set stricter-than-federal emissions limits on cars and trucks. The vote was along party lines, with the exception of Michigan Democrat Elissa Slotkin, who joined Republicans in passing the disapproval resolution under the Congressional Review Act. California required companies to stop selling new gas vehicles by 2035, which Republicans had criticized as an “electric vehicle mandate” due to the size of the state and its influence over the automotive market.
The Senate’s parliamentarian and the Government Accountability Office had determined that the Senate could not use the CRA to prevent California from setting stricter emissions standards, as it has done since 1967, because the waiver is not a federal rule and therefore not subject to a simple 50-vote threshold repeal vote. To get around the technicality, Republicans voted Wednesday night on what Rhode Island Democratic Senator Sheldon Whitehouse called the “double nuclear option” — essentially declaring they were “within their rights to skirt a filibuster and muscle through measures to deny” California its unique emissions-setting authority, The New York Times writes. But that also means the door is now open “to challenges against all sorts of other federal program waivers — without having to worry about the Senate filibuster,” Capitol Hill correspondent Jamie Dupree wrote in his newsletter Thursday, adding, “it certainly is a substantial change in the precedents of the Senate. And now it’s the new regular order.” California Governor Gavin Newsom called the vote “illegal” and vowed to “fight this unconstitutional attack on California in court.”
We’re continuing to track the repercussions of the House reconciliation bill that passed early Thursday morning, including its “full-frontal assault on the residential solar business model,” in the words of my colleague Matthew Zeitlin. Though an earlier draft of the bill shortened the availability of the Residential Clean Energy Credit, 25D, for people who purchased home solar systems from 2034 to expiring at the end of this year, Matthew explains that the new language says no credit “shall be allowed under this section for any investment during the taxable year” if the entity claiming the tax credit “rents or leases such property to a third party during such taxable year” and “the lessee would qualify for a credit under section 25D with respect to such property if the lessee owned such property.” That’s “how you kill a business model in legislative text,” Matthew continues. The repercussions were immediate: By midday, shares of Sunrun were already down $37.5%, an erasure of almost $1 billion.
For the first time, BYD has outsold Tesla in Europe. In April, the Chinese automaker sold 7,231 electric vehicles, up 169% from the year prior, while Tesla sold 7,165 EVs, down 49% in the same period, Bloomberg reports based on market research by Jato Dynamics.
As we covered in AM earlier this month, the first quarter of 2025 was the second-best month ever for BEV sales in the European Union, despite “the name Tesla [becoming] toxic for so many, limiting its appeal,” Clean Technica wrote at the time. But while BYD marked a milestone in beating the American automaker, it remained in the 10th spot overall for electric vehicle sales, with Volkswagen the clear winner for the month with 23,514 sales. But BYD is “about to reinforce its EV lineup in Europe with the Dolphin Surf, a fully electric hatchback that will sell for” around $22,700 in Germany until the end of June, Bloomberg writes.
NOAA
The National Oceanic and Atmospheric Administration released its forecast for the 2025 Atlantic hurricane season, with a higher estimated upper limit for named storms than earlier predictions from private forecasters. According to NOAA, we can expect between 13 and 19 named storms this year, of which six to 10 could become hurricanes and three to five could develop into major Category 3 or higher hurricanes. That puts the season on track to be more active than the average Atlantic hurricane season, when 14 named storms, seven hurricanes, and three major hurricanes can be expected.
Private forecasters also rely on NOAA data to inform their predictions, but arrived at slightly different conclusions. Colorado State University’s Department of Atmospheric Sciences forecasts 17 named storms for 2025, while AccuWeather predicts 13 to 18 named storms. Though the Atlantic has cooled slightly from its historic highs last year, it is still warmer than usual — part of what is spurring the above-average estimates for the season. Still, as I’ve reported, there are lingering concerns about the reliability of NOAA’s data in future years as the agency hemorrhages the personnel who repair the sensors that monitor sea temperatures or run quality control on the data.
Microsoft announced its commitment to purchase nearly 623,000 metric tons of low-carbon cement from the startup Sublime Systems on Thursday. The contract, which runs over a six- to nine-year period, is intended to “reduce emissions — both at Microsoft and globally,” Jeff Leeper, the vice president of global datacenter construction at Microsoft, said in a press release about the deal. The company aims to use the cement on its construction projects “when geographically possible,” including incorporating it in data centers, office buildings, and other infrastructure. The companies declined to share how much the deal was worth, Bloomberg writes.
My colleague Emily Pontecorvo profiled Sublime earlier this year, noting that cement is a significant source of carbon emissions — 8% of the global total — due to a chemical reaction with limestone kilns required for production. But Sublime has “developed a new way to make reactive lime that does not require limestone,” Emily explains. “Instead of heating up rocks in a kiln, they drive the chemical process with electric currents. This enables the company to avoid limestone and use a variety of other raw materials that do not contain carbon to produce lime.” The company is working to construct its first 30,000-ton commercial plant, which is expected to be completed in 2027.
Pakistan imported 22 gigawatts of solar panels in 2024, more than the entire country of Canada. “That’s not a typo or a spreadsheet rounding error. That’s the kind of number that turns heads at IEA meetings and makes policy analysts double-check their databases,”Clean Technica writes.
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Rob and Jesse talk with John Henry Harris, the cofounder and CEO of Harbinger Motors.
You might not think that often about medium-duty trucks, but they’re all around you: ambulances, UPS and FedEx delivery trucks, school buses. And although they make up a relatively small share of vehicles on the road, they generate an outsized amount of carbon pollution. They’re also a surprisingly ripe target for electrification, because so many medium-duty trucks drive fewer than 150 miles a day.
On this week’s episode of Shift Key, Rob and Jesse talk with John Henry Harris, the cofounder and CEO of Harbinger Motors. Harbinger is a Los Angeles-based startup that sells electric and hybrid chassis for medium-duty vehicles, such as delivery vans, moving trucks, and ambulances.
Rob, John, and Jesse chat about why medium-duty trucking is unlike any other vehicle segment, how to design an electric truck to last 20 years, and how President Trump’s tariffs are already stalling out manufacturing firms. Shift Key is hosted by Jesse Jenkins, a professor of energy systems engineering at Princeton University, and Robinson Meyer, Heatmap’s executive editor.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, YouTube, or wherever you get your podcasts.
You can also add the show’s RSS feed to your podcast app to follow us directly.
Here is an excerpt from our conversation:
Robinson Meyer: What is it like building a final assembly plant — a U.S. factory — in this moment?
John Harris: I would say lots of people talk about how excited they are about U.S. manufacturing, but that's very different than putting their money where their mouth is. Building a final assembly line, like we have — our team here is really good, that they made it feel not that hard. The challenge is the whole supply chain.
If we look at what we build here in-house at Harbinger, we have a final assembly line where we bolt parts together to make chassis. We also have two sub-component assembly lines where we take copper and make motors, and where we take cells and make batteries. All three of those lines work pretty well. We're pumping out chassis, and they roll out the door, and we sell them to people, which is great. But it’s all the stuff that goes into those, that's the most challenging. There's a lot of trade policy at certain hours of the day, on certain days of the week — depending on when we check — that is theoretically supposed to encourage us manufacturing.
But it's really not because of the volatility. It costs us an enormous amount to build the supply chain, to feed these lines. And when we have volatile trade policy, our reaction, and everyone else's reaction, is to just pause. It’s not to spend more money on U.S. manufacturing, because we were already doing that. We were spending a lot on U.S. manufacturing as part of our core approach to manufacturing.
The latest trade policy has caused us to spend less money on U.S. manufacturing — not more, because we're unclear on what is the demand environment going to be, what is the policy going to be next week? We were getting ready to make major investments to take certain manufacturing tasks in our supply chain out of China and move them to Mexico, for example. Now we’re not. We were getting ready to invest in certain kinds of automation to do things in house, and now we're waiting. So the volatility is dramatically shrinking investment in US manufacturing, including ours.
Meyer: And can you just explain, why did you make that decision to pause investment and how does trade policy affect that decision?
Harris: When we had 25% tariffs on China, if we take content out of China and move it to Mexico, we break even — if that. We might still end up underwater. That's because there's better automation in China. There's much higher labor productivity. And — this one is always shocking to people — there’s lower logistics costs. When we move stuff from Shenzhen to our factory, in many cases it costs us less than moving shipments from Monterey.
Mentioned:
CalStart’s data on medium-duty electric trucks deployed in the U.S.
Here’s the chart that John showed Rob and Jesse:
Courtesy of Harbinger
It draws on data from Bloomberg in China, the ICCT, and the Calstart ZET Dashboard in the United States.
Jesse’s case for EVs with gas tanks — which are called extended range electric vehicles
On xAI, residential solar, and domestic lithium
Current conditions: Indonesia has issued its highest alert level due to the ongoing eruption of Mount Lewotobi Laki-laki • 10 million people from Missouri to Michigan are at risk of large hail and damaging winds today • Tropical Storm Erick, the earliest “E” storm on record in the eastern Pacific Ocean, could potentially strengthen into a major hurricane before making landfall near Acapulco, Mexico, on Thursday.
The NAACP and the Southern Environmental Law Center said Tuesday that they intend to sue Elon Musk’s artificial intelligence company xAI over alleged Clean Air Act violations at its Memphis facility. Per the lawsuit, xAI failed to obtain the required permits for the use of the 26 gas turbines that power its supercomputer, and in doing so, the company also avoided equipping the turbines with technology that would have reduced emissions. “xAI’s turbines are collectively one of the largest, or potentially the largest, industrial source of nitrogen oxides in Shelby County,” the lawsuit claims.
The SELC has additionally said that residents who live near the xAI facility already face cancer risks four times above the national average, and opponents have argued that xAI’s lack of urgency in responding to community concerns about the pollution is a case of “environmental racism.” In a statement Tuesday, xAI responded to the threat of a lawsuit by claiming the “temporary power generation units are operating in compliance with all applicable laws,” and said it intends to equip the turbines with the necessary technology to reduce emissions going forward.
Shares of several residential solar companies plummeted Tuesday after the Senate Finance Committee declined to preserve related Inflation Reduction Act investment tax credits. As my colleague Matthew Zeitlin reported, Sunrun shares fell 40%, “bringing the company’s market cap down by almost $900 million to $1.3 billion,” after a brief jump at the end of last week “due to optimism that the Senate Finance bill might include friendlier language for its business model.”
That never materialized. Instead, the Finance Committee’s draft proposed terminating the residential clean energy tax credit for any systems, including residential solar, six months after the bill is signed, as well as the investment and production tax credits for residential solar. SolarEdge and Enphase also suffered from the news, with shares down 33% and 24%, respectively. You can read Matthew’s full analysis here.
Chevron announced Tuesday that it has acquired 125,000 net acres of the Smackover Formation in southwest Arkansas and northeast Texas to get into domestic lithium extraction. Chevron’s acquisition follows an earlier move by Exxon Mobil to do the same, with lithium representing a key resource for the transition from fossil fuels to renewable energy sources “that would allow the company to pivot if oil and gas demands wane in the coming decades,” Bloomberg writes.
“Establishing domestic and resilient lithium supply chains is essential not only to maintaining U.S. energy leadership but also to meeting the growing demand from customers,” Jeff Gustavson, the president of Chevron New Energies, said in a Tuesday press release. The Liberty Owl project, which was part of Chevron’s acquisition from TerraVolta Resources, is “expected to have an initial production capacity of at least 25,000 tonnes of lithium carbonate per year, which is enough lithium to power about 500,000 electric vehicles annually,” Houston Business Journal reports.
The Federal Emergency Management Agency prepared a memo titled “Abolishing FEMA” at the direction of Homeland Security Secretary Kristi Noem, describing how its functions can be “drastically reformed, transferred to another agency, or abolished in their entirety” as soon as the end of 2025. While only Congress can technically eliminate the agency, the March memo, obtained and reviewed by Bloomberg, describes potential changes like “eliminating long-term housing assistance for disaster survivors, halting enrollments in the National Flood Insurance Program, and providing smaller amounts of aid for fewer incidents — moves that by design would dramatically limit the federal government’s role in disaster response.”
In May, FEMA’s acting administrator, Cameron Hamilton, was fired one day after defending the existence of the department he’d been appointed to oversee when testifying before the House Appropriations subcommittee. An internal FEMA memo from the same month described the agency’s “critical functions” as being at “high risk” of failure due to “significant personnel losses in advance of the 2025 Hurricane Season.” President Trump has, on several occasions, expressed a desire to eliminate FEMA, as recommended by the Project 2025 playbook from the Heritage Foundation. The March “Abolishing FEMA” memo “just means you should not expect to see FEMA on the ground unless it’s 9/11, Katrina, Superstorm Sandy,” Carrie Speranza, the president of the U.S. council of the International Association of Emergency Managers, told Bloomberg.
The Spanish government on Tuesday released its report on the causes of the April 28 blackout that left much of the nation, as well as parts of Portugal, without power for more than 12 hours. Ecological Transition Minister Sara Aagesen, who heads Spain’s energy policy, told reporters that a voltage surge in the south of Spain had triggered a “chain reaction of disconnections” that led to the widespread power loss, and blamed the nation’s state-owned grid operator Red Eléctrica for “poor planning” and failing to have enough thermal power stations online to control the dynamic voltage, the Associated Press reports. Additionally, Aagesen said that utilities had preventively shut off some power plants when the disruptions started, which could have helped the system stay online. “We have a solid narrative of events and a verified explanation that allows us to reflect and to act as we surely will,” Aagesen went on, responding to criticisms that Spain’s renewable-heavy energy mix was to blame for the blackout. “We believe in the energy transition and we know it’s not an ideological question but one of this country’s principal vectors of growth when it comes to re-industrialisation opportunities.”
Metrograph
“It seems that with the current political climate, with the removal of any reference to climate change on U.S. government websites, with the gutting of environmental laws, and the recent devastating fires in Los Angeles, this trilogy of films is still urgently relevant.” —Filmmaker Jennifer Baichwal on the upcoming screenings of the Anthropocene trilogy, co-created with Nicholas de Pencier and photographer Edward Burtynsky between 2006 and 2018, at the Metrograph in New York City.
Shares in Sunrun, SolarEdge, and Enphase are collapsing on the Senate’s new mega-bill draft.
The residential solar rescue never happened. Shares in several residential solar companies plummeted Tuesday as the market reacted to the Senate Finance Committee’s reconciliation language, which maintains the House bill’s restriction on investment tax credits for residential solar installers and its scrapping of the tax credit for homeowners who buy their own systems.
The Solar Energy Industries Association, a solar trade group, criticized the Senate text, saying that it had only “modest improvements on several provisions” and would “pull the plug on homegrown solar energy and decimate the American manufacturing renaissance.”
Sunrun shares fell 40% Tuesday, bringing the company’s market cap down by almost $900 million to $1.3 billion, a comparable loss in value to what it sustained the day after the passage of the House reconciliation bill. The stock price had jumped up late last week due to optimism that the Senate Finance bill might include friendlier language for its business model.
Instead the Finance Committee proposal would terminate the residential clean energy tax credit for any systems, including residential solar, six months after the bill is signed. The text also zeroes out investment and production tax credits for residential solar when “the taxpayer rents or leases such property to a third party,” a common arrangement in the industry pioneered by Sunrun.
Sunrun’s third party ownership model well predates the Inflation Reduction Act and is about as old as the company itself, which was founded in 2007. The company had been claiming investment tax credits for solar before the IRA made them tech neutral. The company began securitizing solar deals in 2015 and in a 2016 securities filling, the company said that it had six deals where investors would be able to garner the lease payments and investment tax credits.
“Ain’t no sunshine for resi,” Jefferies analyst Julien Dumoulin-Smith wrote in a note to clients on Tuesday. “Overall, we view Senate's version as a negative” for Sunrun, as well as SolarEdge and Enphase, the residential solar equipment companies, whose shares are down by about 33% and 24% respectively.
“If this language is not adjusted before the bill passes the Senate floor,” Morgan Stanley analyst Andrew Perocco wrote in a note to clients, “we believe Sunrun, SolarEdge, and Enphase will trade towards our bear cases.”
Morgan Stanley had earlier estimated that cutting off home solar from tax credits would lead to a “85% contraction in residential solar volumes” due, in many cases, to solar products no longer resulting in savings on electricity bills.
That’s because the ability to lease solar equipment (or have homeowners sign power purchase agreements) and then claim tax credits sits at the core of the contemporary residential solar model.
“Our core solar service offerings are provided through our lease and power purchase agreements,” the company said in its 2024 annual report. “While customers have the option to purchase a solar energy system outright from us, most of our customers choose to buy solar as a service from us through our Customer Agreements without the significant upfront investment of purchasing a solar energy system.”
This means that to claim tax credits for the projects, they have to be investment tax credits, not home energy credits. These credits play a role in Sunrun’s extensive business raising money from investors to finance solar projects, which can then be partially monetized via tax credits.
Fund investors “can receive attractive after-tax returns from our investment funds due to their ability to utilize Commercial ITCs,” the company said in its report. The financing then “enables us to offer attractive pricing to our customers for the energy generated by the solar energy system on their homes.”
Without the ability to claim investment tax credits, Sunrun could be left having to charge higher prices to homeowners and face a higher cost of capital to raise money from investors.
“Last night’s draft text confirms the Senate intends to abruptly repeal tax credits available to homeowners who want to go solar – effectively increasing costs and limiting choice for countless Americans,” Chris Hopper, chief executive of Aurora Solar, said in an emailed statement.