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On costly payouts, soaring air travel, and EV sales
Current conditions: Los Angeles is bracing for a massive rain storm that could trigger landslides in areas recently charred by severe wildfires • About 90% of districts in India have received little or no rainfall since the start of the year • Schools are closed in Kansas City, Missouri, where up to 6 inches of snow is expected today.
California’s state-backed insurance plan of last resort is short on funds to pay out claims from the Los Angeles wildfires. As a result, California Insurance Commissioner Ricardo Lara is asking private insurers that operate in the state to give the program, known as the FAIR Plan, $1 billion. The FAIR Plan is for people who can’t get private insurance coverage because their properties are considered high risk. As weather disasters get worse and private insurers pull back from the state, more people are relying on the FAIR Plan, and its policy load has doubled since 2020 to more than 452,000. The plan has received some 4,700 claims related to last month’s devastating fires, and paid out more than $914 million. But that’s not enough. The program expects a loss of $4 billion from the fires. This is the first time in 30 years that the program has needed to ask for more money. The fee will be divided between the private companies according to market share, and they’ll have 30 days to pay. Up to half of the cost can be passed on to their own policyholders. Even so, there are concerns that this will push private insurers to leave California to avoid further losses, exacerbating the state’s insurance crisis. State Farm, the state’s largest insurer, recently asked regulators to approve a 22% rate increase.
The U.S. added nearly 50% more clean energy capacity last year than in 2023, according to a new report from energy data company Cleanview. Most of the 48.2 gigawatts of new capacity came in the form of batteries and solar, with solar additions rising by 65%, mostly in southern states like Texas and Florida. As for battery storage, four states (California, Texas, Arizona, and Nevada) accounted for 70% of new capacity. Meanwhile, wind power missed out on growth, with capacity additions dropping by nearly a quarter year-over-year. The report says solar growth will likely slow down in 2025, battery storage could grow by nearly 70%, and wind capacity could grow by 80% if all planned projects manage to reach completion. One interesting tidbit is that Indiana is emerging as a solar hot spot. It ranks third on the list of states with the most solar additions planned for 2025, below Texas and California, but above Arizona. Of course, a lot will depend on the Trump administration.
Cleanview
Global air traffic rose by 10% to an all-time high last year, according to recent data from the International Air Transport Association. This means more aviation pollution. Air travel already accounts for 2.5% of global energy-related carbon dioxide emissions, and has contributed an estimated 4% to global warming. As Ben Elgin at Bloombergnoted, the rise in air travel comes as airlines fail to adopt “sustainable” aviation fuel at meaningful levels, with SAF accounting for a paltry 0.3% of commercial jet fuel production in 2024. “SAF volumes are increasing, but disappointingly slowly,” the IATA said in December. “Governments are sending mixed signals to oil companies which continue to receive subsidies for their exploration and production of fossil oil and gas.” Airlines are relying on SAF to curb their emissions, with many pledging to consume 10% SAF by 2030. But “even if airlines can somehow replace 10% of their fuel with lower-emitting alternatives by the end of the decade, those climate benefits would be wiped out by the industry’s expected growth,” wrote Elgin. Yesterday the Trump administration released a $782 million loan for a plant in Montana to turn waste fats into biofuel. The loan was originally finalized under the Biden administration.
The CEO of Ford Motor yesterday warned that the company could be forced to lay off workers if President Trump raises tariffs on Mexico and Canada, and guts Biden-era legislation that supported electric vehicle production. “A 25% tariff across the Mexico and Canadian border will blow a hole in the U.S. industry that we have never seen,” Jim Farley said at a conference. He added that ending loans and subsidies for EV manufacturing projects would also put many Ford jobs at risk. The New York Times noted that his comments “offered a rare example of a corporate executive calling into question Mr. Trump’s policies or statements.”
Sales of electric vehicles were up 18% in January compared to the same time in 2024, but growth is slowing, according to research firm Rho Motion. Last month, 1.3 million EVs were sold worldwide. That’s down 35% from December’s numbers, and marks the third month in a row of slowing growth. China’s sales were down last month because of the Chinese New Year. Meanwhile, sales were up in Europe as new emissions standards came into effect. And in the U.S. and Canada, sales rose 22%. Rho Motion expects more than 20 million EVs will be sold this year.
$160 million – The amount raised in a Series B funding round by Chestnut Carbon. The startup focuses on planting trees and vegetation, and improving forest management practices to better remove carbon from the atmosphere. Chestnut will use this latest funding to build out afforestation projects — that is, planting trees in areas where, at least in modern times, forests have not existed.
Editor’s note: This story has been updated to clarify the nature of the Trump administration’s actions on funding for a Montana biofuels plant.
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If the Senate reconciliation bill gets enacted as written, you’ve got about 92 days left to seal the deal.
If you were thinking about buying or leasing an electric vehicle at some point, you should probably get on it like, right now. Because while it is not guaranteed that the House will approve the budget reconciliation bill that cleared the Senate Tuesday, it is highly likely. Assuming the bill as it’s currently written becomes law, EV tax credits will be gone as of October 1.
The Senate bill guts the subsidies for consumer purchases of electric vehicles, a longstanding goal of the Trump administration. Specifically, it would scrap the 30D tax credit by September 30 of this year, a harsher cut-off than the version of the bill that passed the House, which would have axed the credit by the end of 2025 except for automakers that had sold fewer than 200,000 electric vehicles. The credit as it exists now is worth up to $7,500 for cars with an MSRP below $55,000 (and trucks and sports utility vehicles under $80,000), and, under the Inflation Reduction Act, would have lasted through the end of 2032. The Senate bill also axes the $4,000 used EV tax credit at the end of September.
“Long story short, the credits under the current legislation are only going to be on the books through the end of September,” Corey Cantor, the research director of the Zero-Emissions Transportation Association, told me. “Now is definitely a good time, if you’re interested in an EV, to look at the market.”
The Senate applied the same strict timeline to credits for clean commercial vehicles, both new and used. For home EV chargers, the tax credit will now expire at the end of June next year.
While EVs were on the road well before the 2022 passage of the Inflation Reduction Act, what the new tax credit did was help build out a truly domestic electric vehicle market, Cantor said. “You have a bunch of refreshed EV models from major automakers,” Cantor told me, including “more affordable models in different segments, and many of them quality for the credit.”
These include cars produceddomestically by Kia,Hyundai, and Chevrolet. But of course, the biggest winner from the credit is Tesla, whose Model Y was the best-selling car in the world in 2023.
Tesla shares were down over 5.5% in Tuesday afternoon trading, though not just because of Congress. JPMorgan also released an analyst report Monday arguing that the decline in sales seen in the first quarter would accelerate in the second quarter. President Trump, with whom Tesla CEO Elon Musk had an extremely public falling out last month, suggested on social media Monday night that the government efficiency department Musk himself formerly led should “take a good, hard, look” at the subsidies Musk receives across his many businesses. Trump also said that he would “take a look” at Musk’s United States citizenship in response to reporters’ questions about it.
Cantor told me that he expects a surge of consumer attention to the EV market if the bill passes in its current form. “You’ve seen more customers pull their purchase ahead” when subsidies cut-offs are imminent, he said.
But overall, the end of the subsidy is likely to reduce EV sales from their previously expected levels.
Harvard researchers have estimated that the termination of the EV tax credit “would cut the EV share of new vehicle sales in 2030 by 6.0 percentage points,” from 48% of new sales by 2030 to 42%. Combined with other Trump initiatives such as terminating the National Electric Vehicle Infrastructure program for publicly funded chargers (currently being litigated) and eliminating California’s waiver under the Clean Air Act that allowed it to set tighter vehicle emissions standards, the share of new car sales that are electric could fall to 32% in 2030.
But not all government support for electric vehicles will end by October 1, even if the bill gets the president’s signature in its current form.
“It’s important for consumers to know there are many states that offer subsidies, such as New York, and Colorado,” Cantor told me. That also goes for California, New Jersey, Nevada, and New Mexico. You can find the full list here.
Editor’s note: This story has been edited to include a higher cost limit for trucks and SUVs.
Excise tax is out, foreign sourcing rules are in.
After more than three days of stops and starts on the Senate floor, Congress’ upper chamber finally passed its version of Trump’s One Big Beautiful Bill Act Tuesday morning, sending the tax package back to the House in hopes of delivering it to Trump by the July 4 holiday, as promised.
An amendment brought by Senators Joni Ernst and Chuck Grassley of Iowa and Lisa Murkowski of Alaska that would have more gradually phased down the tax credits for wind and solar rather than abruptly cutting them off was never brought to the floor. Instead, Murkowski struck a deal with the Senate leadership designed to secure her vote that accomplished some of her other priorities, including funding for rural hospitals, while also killing an excise tax on renewables that had only just been stuffed into the bill over the weekend.
The new tax on wind and solar would have driven up development costs by as much as 20% — a prospect that industry groups said would “kill” investment altogether. But even without the tax, the Senate’s bill would gum up the works for clean energy projects across the spectrum due to new phase-out schedules for tax credits and fast-approaching deadlines to meet complex foreign sourcing rules. While more projects will likely be built under this version than the previous one, the basic outcomes haven’t changed: higher energy costs, project delays, lost jobs, and ceding leadership in artificial intelligence and manufacturing to China.
"This bill will hit Americans hard, terminating credits that have helped families lower their energy and transportation costs, shrinking demand for American-made advanced energy technologies, and squeezing new domestic energy production at a time of rising demand and prices,” Heather O’Neill, the CEO and president of the trade group Advanced Energy United, said in a statement Tuesday. “The advanced energy industry will endure, but the downstream effects of these rollbacks and punitive policies will be felt by American families and businesses for years to come.”
Here’s what’s in the final Senate bill.
The final Senate bill bifurcates the previously technology-neutral tax credits for clean electricity into two categories with entirely different rules and timelines — wind and solar versus everything else.
Tax credits for wind and solar farms would end abruptly with no phase-out period, but the bill includes a significant safe harbor for projects that are already under construction or close to breaking ground. As long as a project starts construction within 12 months of the bill’s passage, it will be able to claim the tax credits as originally laid out in the Inflation Reduction Act. All other projects must be “placed in service,” i.e. begin operating, by the start of 2028 to qualify.
That means if Trump signs the bill into law on July 4, wind and solar developers will have until July 4 of 2026 to “start construction.” Otherwise, they will have less than a year and a half to bring their projects online and still qualify for the credits.
Meanwhile, all other sources of zero-emissions electricity, including batteries, advanced nuclear, geothermal, and hydropower, will be able to continue claiming the tax credits for nearly a decade. The credits would start phasing down for projects that start construction in 2034 and terminate in 2036.
While there are some potential wins in the bill for clean energy development, many of the safe harbored projects will still be subject to complex foreign sourcing rules that may prove too much of a burden to meet.
The bill requires that any zero-emissions electricity or advanced manufacturing project that starts construction after December of this year abide by strict new “foreign entities of concern,” or FEOC rules in order to be eligible for tax credits. The rules penalize companies for having financial or material connections to people or businesses that are “owned by, controlled by, or subject to the jurisdiction or direction of” any of four countries — Russia, Iran, North Korea, and most importantly for clean energy technology, China.
As with the text that came out of the Senate Finance committee, the text in the final bill would phase in supply chain restrictions, requiring project developers and manufacturers to use fewer and fewer Chinese-sourced inputs over time. For clean electricity projects starting construction next year, 40% of the value of the materials used in the project must be free of ties to a FEOC. By 2030, the threshold would rise to 60%. Energy storage facilities are subject to a more aggressive timeline and would be required to prove that 55% of the project materials are non-FEOC in 2026, rising to 75% by 2030. Each covered advanced manufacturing technology gets its own specific FEOC benchmarks.
Unlike the text from the Finance Committee, however, the final text includes a clear exception for developers who already have procurement contracts in place prior to the bill’s enactment. If a solar developer has already signed a contract to get its cells from a Chinese company, for example, it could exempt that cost from the calculation. That would make it easier for companies further along in the development process to comply with the eligibility rules.
That said, these materials sourcing rules come on top of strict ownership and licensing rules likely to block more than 100 existing and planned solar and battery factories with partial Chinese ownership or licensing deals with Chinese firms from receiving the tax credits, per a BloombergNEF analysis I reported on previously.
Once again, the details of how any of this will work — and whether it will, in fact, be “workable” — will depend heavily on guidance written by the Treasury department. That not only gives the Trump administration significant discretion over the rules, it also assumes that the nTreasury department, which is now severely understaffed after Trump’s efficiency department cleaned house earlier this year, will actually have the bandwidth to write them. Without Treasury guidance, developers may not have the cost certainty they need to continue moving forward on projects.
Up until today, the Senate and House looked poised to destroy the business model for companies like Sunrun that lease rooftop solar installations to homeowners and businesses by cutting them off from the investment tax credit, which can bring down the cost of a solar array by as much as 70%. The final Senate bill, however, got rid of this provision and replaced it with a much more narrow version.
Now, the only “leasing” schemes that are barred from claiming tax credits are those for solar water heaters and small wind installations. Companies that lease solar panels, batteries, fuel cells, and geothermal heating equipment are still eligible. SunRun’s stock jumped nearly 10% on Tuesday.
Other than the new FEOC rules, which will have truly existential consequences for a great many projects, there aren’t many changes to the advanced manufacturing tax credit, or 45X, than in previous versions of the bill. The OBBBA would create a new phase-out schedule for critical mineral producers claiming the tax credit that begins in 2031. Previously, critical minerals were set to be eligible indefinitely. It would also terminate the credit for wind energy components early, in 2028.
One significant change from the Senate Finance text is that the bill would allow vertically integrated companies to stack the tax credit for multiple components.
But perhaps the biggest change, which was introduced last weekend, is a twisted new definition of “critical mineral” that allows metallurgical coal — the type of coal used in steelmaking — to qualify for the tax credit. As my colleague Matthew Zeitlin wrote, most of the metallurgical coal the U.S. produces is exported, meaning this subsidy will mostly help other countries produce cheaper steel.
It looks like the hydrogen industry’s intense lobbying efforts finally paid off: The final Senate bill is the first text we’ve seen since this process began in May that would extend the lifespan of the tax credit for clean hydrogen production. Now, projects that begin construction before January 1, 2028 will still qualify for the credit. This is shorter than the Inflation Reduction Act’s 2033 cut-off, but much longer than the end-of-year cliff earlier versions of the bill would have imposed.
The tax credits for electric vehicles and energy efficiency building improvements would end almost immediately. Consumers will have to purchase or lease a new or used EV before September 30, 2025, in order to benefit. There would be a slightly longer lead time to get an EV charger installed, but that credit (30C) would expire on June 30, 2026.
Meanwhile, energy efficiency upgrades such as installing a heat pump or better-insulated windows and doors would have to be completed by the end of this year in order to qualify. Same goes for self-financed rooftop solar. The tax credit for newly built energy efficiency homes would expire on June 30, 2026.
The bill would make similar changes to the carbon sequestration (45Q) and clean fuels (45Z) tax credits as previous versions, boosting the credit amount for carbon capture projects that do enhanced oil recovery, and extending the clean fuels credit to corn ethanol producers.
The House Rules Committee met on Tuesday afternoon shortly after the Senate vote to deliberate on whether to send it to the House floor, and is still debating as of press time. As of this writing, Rules members Ralph Norman and Chip Roy have said they’ll vote against it.
On sparring in the Senate, NEPA rules, and taxing first-class flyers
Current conditions: A hurricane warning is in effect for Mexico as the Category 1 storm Flossie approaches • More than 50,000 people have been forced to flee wildfires raging in Turkey • Heavy rain caused flash floods and landslides near a mountain resort in northern Italy during peak tourist season.
Senate lawmakers’ vote-a-rama on the GOP tax and budget megabill dragged into Monday night and continues Tuesday. Republicans only have three votes to lose if they want to get the bill through the chamber and send it to the House. Already Senators Thom Tillis and Rand Paul are expected to vote against it, and there are a few more holdouts for whom clean energy appears to be one sticking point. Senator Lisa Murkowski of Alaska, for example, has put forward an amendment (together with Iowa Senators Joni Ernst and Chuck Grassley) that would eliminate the new renewables excise tax, and phase out tax credits for solar and wind gradually (by 2028) rather than immediately, as proposed in the original bill. “I don’t want us to backslide on the clean energy credits,” Murkowski told reporters Monday. E&E News reported that the amendment could be considered on a simple majority threshold. (As an aside: If you’re wondering why wind and solar need tax credits if they’re so cheap, as clean energy advocates often emphasize, Heatmap’s Emily Pontecorvo has a nice explainer worth reading.)
At the same time, Utah’s Senator John Curtis has proposed an amendment that tweaks the new excise tax to make it more “flexible.” The amendments are “setting up a major intra-party fight,” Politicoreported, adding that “fiscal hawks on both sides of the Capitol are warning they will oppose the bill if the phase-outs of Inflation Reduction Act provisions are watered down.” Senators have already defeated amendments proposed by Democrats Jeanne Shaheen of New Hampshire and John Hickenlooper of Colorado to defend clean energy and residential solar tax credits, respectively. The session has broken the previous record for most votes in a vote-a-rama, set in 2008, with no end in sight.
The Department of Energy on Monday rolled back most of its regulations relating to the National Environmental Policy Act, or NEPA, and published a new set of guidance procedures in their place. The longstanding NEPA law requires that the government study the environmental impacts of its actions, and in the case of the DOE, this meant things like permitting and public lands management. In a press release outlining the changes, the agency said it was “fixing the broken permitting process and delivering on President Trump’s pledge to unleash American energy dominance and accelerate critical energy infrastructure.” Secretary of Energy Chris Wright said the agency was cutting red tape to end permitting paralysis. “Build, baby, build!” he said.
Nearly 300 employees of the Environmental Protection Agency signed a letter addressed to EPA head Lee Zeldin declaring their dissent toward the Trump administration’s policies. The letter accuses the administration of:
“Going forward, you have the opportunity to correct course,” the letter states. “Should you choose to do so, we stand ready to support your efforts to fulfill EPA’s mission.” It’s signed by more than 420 people, 270 being EPA workers. Many of them asked to sign anonymously. In a statement to The New York Times, EPA spokesperson Carolyn Horlan said “the Trump EPA will continue to work with states, tribes and communities to advance the agency’s core mission of protecting human health and the environment and administrator Zeldin’s Powering the Great American Comeback Initiative, which includes providing clean air, land and water for EVERY American.”
At the fourth International Conference on Financing for Development taking place in Spain this week, a group of eight countries including France and Spain announced they’re banding together in an effort to tax first- and business-class flyers as well as private jets to raise money for climate mitigation and sustainable development. “The aim is to help improve green taxation and foster international solidarity by promoting more progressive and harmonised tax systems,” the office of Spanish Prime Minister Pedro Sanchez said in a statement. Other countries in the coalition include Kenya, Barbados, Somalia, Benin, Sierra Leone, and Antigua & Barbuda. The group said it will “work towards COP30 on a better contribution of the aviation sector to fair transitions and resilience.” Wopke Hoekstra, who heads up the European Commission for Climate, called for other countries to join the group in the lead-up to COP30 in November.
In case you missed it: Google announced on Monday that it intends to buy fusion energy from nuclear startup Commonwealth Fusion Systems. Of course, CFS will have to crack commercial-scale fusion first (minor detail!), but as The Wall Street Journal noted, the news is significant because it is “the first direct deal between a customer and a fusion energy company.” Google will buy 200 megawatts of energy supplied by CFS’s ARC plant in Virginia. “It’s a pretty big signal to the market that fusion’s coming,” CFS CEO Bob Mumgaard told the Journal. “It’s desirable, and that people are gonna work together to make it happen.” Google’s head of advanced energy Michael Terrell echoed that sentiment, saying the company hopes this move will “prove out and scale a promising pathway toward commercial fusion power.” CFS, which is backed by Bill Gates’ Breakthrough Energy Ventures, aims to produce commercial fusion energy in the 2030s.
All the public property owned by Britain’s King Charles earned a net profit of £1.15 billion ($1.58 billion) last year. The biggest source of income? Offshore wind leases.