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European elites have been annoyed or worse by the U.S. Inflation Reduction Act. Its name is misleading; this is the largest American industrial policy since the New Deal — one that intends not only to drastically reduce greenhouse gas emissions, but also to stand up a whole new industrial supply chain for green energy and manufacturing located in the U.S. and North America.
That project doesn’t sound great to many Europeans. French President Emmanuel Macron complained it was “super aggressive.” The French and German economic ministers traveled to Washington in February to lobby the Biden administration for exemptions from IRA rules (and actually got a receptive hearing). More recently Europe seems to have softened on the law; Bloomberg reports that elites are making their piece with EU businesses setting up shop in North America to be eligible for IRA subsidies. But this is still not ideal.
In the abstract, one can sympathize with European complaints over the U.S. flexing its still-unparalleled economic might to direct a greater share of cutting-edge economic production towards itself. But this isn’t merely a question of economics. As the recent IPCC report details, the world is still careening towards catastrophic global warming even given the fairly extensive climate policies most countries have enacted. Fighting that crisis trumps any possible complaint about economic unfairness.
But there’s a deeper problem here. The European Union taken together has economic heft not far off from the United States, with a population of 450 million and a price parity GDP of about $24 trillion. It absolutely has the capacity to enact an IRA-style industrial policy scheme — indeed, the continent has been crying out for one for over a decade. The IRA is a perfect opportunity to clear away the irrational and deeply harmful budget rules that have hamstrung the EU economy, return prosperity to the continent, and fight climate change to boot.
For the last 15 years most of the European Union, and especially the eurozone currency area, has been suffering a largely self-inflicted crisis of economic stagnation.
When the 2008 financial crisis hit, Europe barely avoided a galloping economic collapse, but it still faced a serious recession, particularly in the eurozone periphery of Greece, Spain, Italy, and Portugal. These countries were confronted with classic debt problems as revenues fell while spending on social benefits rose — a situation made worse because those nations did not control the European Central Bank and thus couldn’t rely on it to print money to prevent a self-perpetuating debt crisis. The EU eventually responded by essentially bailing out the banks that had lent to the ailing countries, but they disguised it as broader economic relief and then demanded punishing austerity measures in the rescued countries.
The austerity binge after 2010 pummeled the broader EU economy, and created a Great Depression-scale catastrophe in Greece and Spain. In the eurozone, unemployment had peaked and started to come down by mid 2010, but once the debt crisis and austerity poison took hold, it soared again to over 12 percent by 2012, where it remained for two years, and came down only with agonizing slowness. In Spain unemployment peaked at 26 percent, in Greece 28 percent.
Since 2009, eurozone growth has been dismal compared to America — which itself suffered a growth disaster during the 2010s, as I have previously argued. Yet the U.S. still managed inflation-adjusted growth per person of 19 percent between 2009 and 2021; the eurozone figure is 11 percent. In France the figure is just 8 percent; in Spain 1 percent, and in Greece negative 17 percent. Italy has not grown at all for more than 20 years. Adding insult to injury, all that austerity didn’t even help with Greece’s debt-to-GDP burden, because its economy shrank just as fast as the debt total.
This was a disaster for climate change and European energy security. European investment in renewable energy plummeted during the 2010s, from a high of about $30 billion in 2011 to just $10 billion in 2018. In sunny Spain and Italy investment virtually ceased during this period. Instead many European countries, particularly Germany, came to rely on cheap Russian natural gas for their core energy needs. That made them greatly vulnerable to Russia pressure when Vladimir Putin cut down gas supplies in an attempt to force Europe to stop supporting Ukraine’s effort to fight off Russian aggression.
To be fair, as I previously wrote here at Heatmap, Europe has been conducting a crash renewable investment program in response to Putin’s war that has been an amazing success, all things considered. But if it had spent the 2010s building out green energy, it would have been far less vulnerable to Russia coercion, its emissions would be much lower, European inflation today (driven by skyrocketing energy costs) would be considerably less, and Putin might even have thought twice about the invasion.
What is called for is a Europe-wide spending, borrowing, and investment policy to add to existing EU renewable subsidies. Rather than just decarbonization, the goal should be to restore full employment and production, and create a green energy and technology supply chain in Europe itself.
In other words, Europe needs its own Inflation Reduction Act. But still one hears austerity dogmatism from the highest European quarters. The EU is currently renegotiating its budget policies and German Finance Minister Christian Lindner recently published an article in the Financial Times arguing that “[s]ound public finances are a prerequisite for enabling economic growth in the EU,” and therefore the old strict rules about deficits and debt “must remain untouched.”
It would be hard to imagine a better disproof of this argument than the evidence cited above. The result of the old rules was the Greek crisis that threatened the structure of the EU itself. Europe’s lousy economic performance undoubtedly contributed to the decision of British voters to leave the EU in 2016. Yet Lindner has learned nothing.
The actual proposed reforms to the pact were released this week, and while they are a step in the right direction, they are mainly a loosening of the austerity straitjacket, not a removal of it — allowing countries more leeway as to how they will cut debt and deficits. That’s far short of what’s needed.
European commentators who aren’t austerity addicts often point to the political obstacles to doing Europe-wide industrial policy. But America has its own obstacles that are nearly as difficult to overcome. Thanks to our anachronistic Constitution, we had to get our climate bill past Joe Manchin, a literal coal baron. It’s frankly shocking that Democrats managed to pass anything with a zero-seat majority in the Senate, let alone the largest climate bill in history.
So for any Europeans who can see sense, the IRA should be seen as a golden opportunity. As noted above, the EU’s lunatic budget rules are most vulnerable in a crisis, and this can be such a crisis.
It may seem presumptuous for an American — coming from the land of suburban sprawl, four-ton SUVs that get eight miles to the gallon, and 3,000 square foot desert McMansions — to be lecturing Europe about what it needs to do about climate and economics. But I’m coming from a place of deep affection for the continent. I have been inspired by Europe’s welfare states, its city infrastructure, and even its tax authorities. America’s institutions in these areas are humiliating, pathetic failures by comparison.
That’s precisely why I want to see Europe strong, prosperous, and confident once more — so it can be the best version of itself, and provide an even better example for the rest of the world.
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The agency provided a list to the Sierra Club, which in turn provided the list to Heatmap.
Officials at the Environmental Protection Agency remain closed-lipped about which grants they’ve canceled. Earlier this week, however, the office provided a written list to the Sierra Club in response to a Freedom of Information Act request, which begins to shed light on some of the agency’s actions.
The document shows 49 individual grants that were either “canceled” or prevented from being awarded from January 20 through March 7, which is the day the public information office conducted its search in response to the FOIA request. The grants’ total cumulative value is more than $230 million, although some $30 million appears to have already been paid out to recipients.
The numbers don’t quite line up with what the agency has said publicly. The EPA published three press releases between Trump’s inauguration and March 7, announcing that it had canceled a total of 42 grants and “saved” Americans roughly $227 million. In its first such announcement on February 14, the agency said it was canceling a $50 million grant to the Climate Justice Alliance, but the only grant to that organization on the FOIA spreadsheet is listed at $12 million. To make matters more confusing, there are only $185 million worth of EPA grant cuts listed on the Department of Government Efficiency’s website from the same time period. (Zeldin later announced more than 400 additional grant terminations on March 10.)
Nonetheless, the document gives a clearer picture of which grants Administrator Lee Zeldin has targeted. Nearly half of the canceled grants are related to environmental justice initiatives, which is not surprising, given the Trump administration’s directives to root out these types of programs. But nearly as many were funding research into lower-carbon construction materials and better product labeling to prevent greenwashing.
Here’s the full list of grants, by program:
A few more details and observations from this list:
In the original FOIA request, Sierra Club had asked for a lot more information, including communications between EPA and the grant recipients, and explanations for why the grants — which in many cases involved binding contracts between the government and recipients — were being terminated. In its response, EPA said it was still working on the rest of the request and expected to issue a complete response by April 12.
Defenders of the Inflation Reduction Act have hit on what they hope will be a persuasive argument for why it should stay.
With the fate of the Inflation Reduction Act and its tax credits for building and producing clean energy hanging in the balance, the law’s supporters have increasingly turned to dollars-and-cents arguments in favor of its preservation. Since the election, industry and research groups have put out a handful of reports making the broad argument that in addition to higher greenhouse gas emissions, taking away these tax credits would mean higher electricity bills.
The American Clean Power Association put out a report in December, authored by the consulting firm ICF, arguing that “energy tax credits will drive $1.9 trillion in growth, creating 13.7 million jobs and delivering 4x return on investment.”
The Solar Energy Industries Association followed that up last month with a letter citing an analysis by Aurora Energy Research, which found that undoing the tax credits for wind, solar, and storage would reduce clean energy deployment by 237 gigawatts through 2040 and cost nearly 100,000 jobs, all while raising bills by hundreds of dollars in Texas and New York. (Other groups, including the conservative environmental group ConservAmerica and the Clean Energy Buyers Association have commissioned similar research and come up with similar results.)
And just this week, Energy Innovation, a clean energy research group that had previously published widely cited research arguing that clean energy deployment was not linked to the run-up in retail electricity prices, published a report that found repealing the Inflation Reduction Act would “increase cumulative household energy costs by $32 billion” over the next decade, among other economic impacts.
The tax credits “make clean energy even more economic than it already is, particularly for developers,” explained Energy Innovation senior director Robbie Orvis. “When you add more of those technologies, you bring down the electricity cost significantly,” he said.
Historically, the price of fossil fuels like natural gas and coal have set the wholesale price for electricity. With renewables, however, the operating costs associated with procuring those fuels go away. The fewer of those you have, “the lower the price drops,” Orvis said. Without the tax credits to support the growth and deployment of renewables, the analysis found that annual energy costs per U.S. household would go up some $48 annually by 2030, and $68 by 2035.
These arguments come at a time when retail electricity prices in much of the country have grown substantially. Since December 2019, average retail electricity prices have risen from about $0.13 per kilowatt-hour to almost $0.18, according to the Bureau of Labor Statistics. In Massachusetts and California, rates are over $0.30 a kilowatt-hour, according to the Energy Information Administration. As Energy Innovation researchers have pointed out, states with higher renewable penetration sometimes have higher rates, including California, but often do not, as in South Dakota, where 77% of its electricity comes from renewables.
Retail electricity prices are not solely determined by fuel costs Distribution costs for maintaining the whole electrical system are also a factor. In California, for example,it’s these costs that have driven a spike in rates, as utilities have had to harden their grids against wildfires. Across the whole country, utilities have had to ramp up capital investment in grid equipment as it’s aged, driving up distribution costs, a 2024 Energy Innovation report argued.
A similar analysis by Aurora Energy Research (the one cited by SEIA) that just looked at investment and production tax credits for wind, solar, and batteries found that if they were removed, electricity bills would increase hundreds of dollars per year on average, and by as much as $40 per month in New York and $29 per month in Texas.
One reason the bill impact could be so high, Aurora’s Martin Anderson told me, is that states with aggressive goals for decarbonizing the electricity sector would still have to procure clean energy in a world where its deployment would have gotten more expensive. New York is targetinga target for getting 70% of its electricity from renewable sources by 2030, while Minnesota has a goal for its utilities to sell 55% clean electricity by 2035 and could see its average cost increase by $22 a month. Some of these states may have to resort to purchasing renewable energy certificates to make up the difference as new generation projects in the state become less attractive.
Bills in Texas, on the other hand, would likely go up because wind and solar investment would slow down, meaning that Texans’ large-scale energy consumption would be increasingly met with fossil fuels (Texas has a Renewable Portfolio Standard that it has long since surpassed).
This emphasis from industry and advocacy groups on the dollars and cents of clean energy policy is hardly new — when the House of Representatives passed the (doomed) Waxman-Markey cap and trade bill in 2009, then-Speaker of the House Nancy Pelosi told the House, “Remember these four words for what this legislation means: jobs, jobs, jobs, and jobs.”
More recently, when Democratic Senators Martin Heinrich and Tim Kaine hosted a press conference to press their case for preserving the Inflation Reduction Act, the email that landed in reporters’ inboxes read “Heinrich, Kaine Host Press Conference on Trump’s War on Affordable, American-Made Energy.”
“Trump’s war on the Inflation Reduction Act will kill American jobs, raise costs on families, weaken our economic competitiveness, and erode American global energy dominance,” Heinrich told me in an emailed statement. “Trump should end his destructive crusade on affordable energy and start putting the interests of working people first.”
That the impacts and benefits of the IRA are spread between blue and red states speaks to the political calculation of clean energy proponents, hoping that a bill that subsidized solar panels in Texas, battery factories in Georgia, and battery storage in Southern California could bring about a bipartisan alliance to keep it alive. While Congressional Republicans will be scouring the budget for every last dollar to help fund an extension of the 2017 Tax Cuts and Jobs Act, a group of House Republicans have gone on the record in defense of the IRA’s tax credits.
“There's been so much research on the emissions impact of the IRA over the past few years, but there's been comparatively less research on the economic benefits and the household energy benefits,” Orvis said. “And I think that one thing that's become evident in the last year or so is that household energy costs — inflation, fossil fuel prices — those do seem to be more top of mind for Americans.”
Opinion modeling from Heatmap Pro shows that lower utility bills is the number one perceived benefit of renewables in much of the country. The only counties where it isn’t the number one perceived benefit are known for being extremely wealthy, extremely crunchy, or both: Boulder and Denver in Colorado; Multnomah (a.k.a. Portland) in Oregon; Arlington in Virginia; and Chittenden in Vermont.
On environmental justice grants, melting glaciers, and Amazon’s carbon credits
Current conditions: Severe thunderstorms are expected across the Mississippi Valley this weekend • Storm Martinho pushed Portugal’s wind power generation to “historic maximums” • It’s 62 degrees Fahrenheit, cloudy, and very quiet at Heathrow Airport outside London, where a large fire at an electricity substation forced the international travel hub to close.
President Trump invoked emergency powers Thursday to expand production of critical minerals and reduce the nation’s reliance on other countries. The executive order relies on the Defense Production Act, which “grants the president powers to ensure the nation’s defense by expanding and expediting the supply of materials and services from the domestic industrial base.”
Former President Biden invoked the act several times during his term, once to accelerate domestic clean energy production, and another time to boost mining and critical minerals for the nation’s large-capacity battery supply chain. Trump’s order calls for identifying “priority projects” for which permits can be expedited, and directs the Department of the Interior to prioritize mineral production and mining as the “primary land uses” of federal lands that are known to contain minerals.
Critical minerals are used in all kinds of clean tech, including solar panels, EV batteries, and wind turbines. Trump’s executive order doesn’t mention these technologies, but says “transportation, infrastructure, defense capabilities, and the next generation of technology rely upon a secure, predictable, and affordable supply of minerals.”
Anonymous current and former staffers at the Environmental Protection Agency have penned an open letter to the American people, slamming the Trump administration’s attacks on climate grants awarded to nonprofits under the Inflation Reduction Act’s Greenhouse Gas Reduction Fund. The letter, published in Environmental Health News, focuses mostly on the grants that were supposed to go toward environmental justice programs, but have since been frozen under the current administration. For example, Climate United was awarded nearly $7 billion to finance clean energy projects in rural, Tribal, and low-income communities.
“It is a waste of taxpayer dollars for the U.S. government to cancel its agreements with grantees and contractors,” the letter states. “It is fraud for the U.S. government to delay payments for services already received. And it is an abuse of power for the Trump administration to block the IRA laws that were mandated by Congress.”
The lives of 2 billion people, or about a quarter of the human population, are threatened by melting glaciers due to climate change. That’s according to UNESCO’s new World Water Development Report, released to correspond with the UN’s first World Day for Glaciers. “As the world warms, glaciers are melting faster than ever, making the water cycle more unpredictable and extreme,” the report says. “And because of glacial retreat, floods, droughts, landslides, and sea-level rise are intensifying, with devastating consequences for people and nature.” Some key stats about the state of the world’s glaciers:
In case you missed it: Amazon has started selling “high-integrity science-based carbon credits” to its suppliers and business customers, as well as companies that have committed to being net-zero by 2040 in line with Amazon’s Climate Pledge, to help them offset their greenhouse gas emissions.
“The voluntary carbon market has been challenged with issues of transparency, credibility, and the availability of high-quality carbon credits, which has led to skepticism about nature and technological carbon removal as an effective tool to combat climate change,” said Kara Hurst, chief sustainability officer at Amazon. “However, the science is clear: We must halt and reverse deforestation and restore millions of miles of forests to slow the worst effects of climate change. We’re using our size and high vetting standards to help promote additional investments in nature, and we are excited to share this new opportunity with companies who are also committed to the difficult work of decarbonizing their operations.”
The Bureau of Land Management is close to approving the environmental review for a transmission line that would connect to BluEarth Renewables’ Lucky Star wind project, Heatmap’s Jael Holzman reports in The Fight. “This is a huge deal,” she says. “For the last two months it has seemed like nothing wind-related could be approved by the Trump administration. But that may be about to change.”
BLM sent local officials an email March 6 with a draft environmental assessment for the transmission line, which is required for the federal government to approve its right-of-way under the National Environmental Policy Act. According to the draft, the entirety of the wind project is sited on private property and “no longer will require access to BLM-administered land.”
The email suggests this draft environmental assessment may soon be available for public comment. BLM’s web page for the transmission line now states an approval granting right-of-way may come as soon as May. BLM last week did something similar with a transmission line that would go to a solar project proposed entirely on private lands. Holzman wonders: “Could private lands become the workaround du jour under Trump?”
Saudi Aramco, the world’s largest oil producer, this week launched a pilot direct air capture unit capable of removing 12 tons of carbon dioxide per year. In 2023 alone, the company’s Scope 1 and Scope 2 emissions totalled 72.6 million metric tons of carbon dioxide equivalent.