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Here’s where Biden’s climate law is having the biggest impact on the automotive industry — and where it’s falling short.
Around this time last summer, it seemed more apparent than ever that 2023 would be the year the gasoline-free automotive future was set to begin. After a decade that included electric vehicle fits and starts, Volkswagen’s diesel cheating scandal, the rise of Tesla, the EV boom in China, and a whole new generation of car buyers more aware of their personal impact on the climate than ever, it felt like the dawn of an EV-focused tomorrow was just around the corner. All it needed was a spark.
The Inflation Reduction Act, an admittedly poorly named piece of legislation packed with climate and green energy provisions, was meant to be exactly that. On the automotive front, the Biden administration’s signature legislation package included massive subsidies for EV battery plants, strict rules around where cars are produced and batteries are sourced, and a reset on America’s outdated EV tax incentive scheme for car buyers. It seemed grand on a scale not seen since the Johnson years: thousands of jobs, some $100 billion in funding, and a chance for America to kneecap China in the EV arms race.
So a year after the IRA’s passage, is all this investment working? The definitive answer is this: mostly, kinda.
While it’s highly questionable that the IRA has successfully Reduced Inflation, the effect of the legislation on America’s automotive manufacturing landscape has already been palpable. A recent report from the Environmental Defense Fund shows EV industry investments in the U.S. rising in 2021 around the passage of the Bipartisan Infrastructure Law, before taking off in a near-vertical fashion after the IRA was passed.
I decided to grade the IRA’s impact on America’s automotive sector — not just the Big Three U.S. automakers, but all companies who make cars here and support them — in a few key areas.
What I found is that a year in, the IRA feels like it could permanently reset our car industry. But in some key areas, its effects aren’t even close to being seen, and on other fronts, the IRA has caused a number of unintended consequences that will play out for years to come.
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This is arguably the biggest shift we’ve seen thanks to the IRA, and it’s certainly working.
Making batteries for tomorrow’s EVs won’t be as simple as turning car engine plants into battery plants; the supply chain, manufacturing process, and labor needs are entirely different. And so new facilities are springing up left and right to meet this moment.
The Electrification Coalition, a nonprofit policy organization that advocates for EV adoption, identified more than a dozen battery manufacturing and recycling factories that have been announced or are under construction thanks to IRA incentives. These projects are, on average, $3 billion or more, and they’ll provide batteries for future cars from General Motors, Rivian, Hyundai, Tesla, Volkswagen’s new electric Scout brand, and more.
Would this new battery ecosystem have happened without the IRA? Maybe. But certainly not this quickly or at this scale. The automakers may be moving in the direction of electrification, but it’s doing so begrudgingly and these incentives — coupled with state and local ones as well — gave them a reason to move quicker than “the market” would’ve done.
That’s good news for batteries. What about the cars themselves? Since the IRA heavily incentivizes batteries and EVs to be made locally — which I’ll touch on in a moment — it’s kicking off a surge in U.S. car manufacturing the likes of which haven’t been seen in decades.
While battery factories themselves are getting the lion’s share of the attention and money, automakers are adding new factories, expanding existing ones, and retooling lines to scale up their EV outputs.
Granted, many automakers are still investing heavily into (or hedging their bets on) their profitable gasoline models, especially big trucks and SUVs. But EV production is ramping up in America and that scale should eventually drive prices down. Simply put, if a car company — GM, Ford, Nissan, BMW, Hyundai, all of them — builds in the U.S., they’re about to start making EVs here too.
There’s an undercurrent that can be found across all of the Biden administration’s climate and tech investments: cutting off a rising China in countless areas. It’s why only EVs with “final assembly” in North America, that don’t source batteries or components from China, qualify for tax incentives. China has made huge investments into not only its own EV industry but controlling the supply chain around it, and America doesn’t want to cede that to a potentially hostile, non-allied peer state that has a horrific record on human rights and civic freedoms.
Is it working? So far, yes. However, it’s not going to happen overnight. Just as the Center for Strategic and International Studies called it last year, “in the short term it will be difficult to avoid Chinese supply chains.” That’s true of chips, minerals, and everything else.
Moreover, don’t expect automakers to give up the potential of exporting Chinese-made cars. Tesla already sells China-made EVs in Canada, and Volvo has found a George Washington-era loophole to sell the affordable EX30 electric crossover in America without steep tariff penalties. IRA rules may keep Chinese batteries out of our country and stiff tariffs hamper automakers like BYD for now, but this side of things is far from settled.
Now, it’s time for our lesson in unintended consequences. The new $7,500 EV tax credits have strict requirements; essentially, the cars and their batteries have to be built in North America. Given the long-term nature of these investments, not every automaker with an EV lineup can meet those rules for now, leaving a lot of cars out of the credit. (South Korea’s Hyundai Motor Group, in particular, got pretty burned here, leaving its excellent EVs on the expensive side.)
Long-term, these cars and their batteries will be built locally and more cars will qualify for the tax credit. For now, the high cost of EVs is proving to be a major deterrent to adoption. Buyers, squeezed by interest rates and the rising cost of everything, are having trouble justifying the switch. So far the biggest winner is Tesla, which has always been building EVs and batteries in America.
I think a better approach would’ve been to allow all EVs to qualify for the full tax credit until, say, 2026 or so; after that, and perhaps after a gradual phase-in, automakers would have to build local or charge higher prices. That would’ve given them time to ramp up these factories and pushed EV adoption harder at the same time. At the start of the year, before a ton of EVs and hybrids got kicked out of the program, that’s exactly the trend we saw.
That’s what I would’ve done. But, to date, Joe Biden has not put me in charge of such things.
This one is due to be an objective win for the IRA. That Environmental Defense Fund report counts 84,800 jobs that have been announced for the EV industry in America since the IRA’s passage.
According to their data, nearly all of those are located in Southern states. Georgia’s the biggest winner here, believe it or not. And Tennessee, South and North Carolina, and Kentucky are all seeing, or will soon see, big booms in EV-related job growth. The same is true for Michigan, the home of America’s auto industry, as well as lithium-rich Nevada, where Tesla has had a foothold for years.
Again, there’s another universe where the IRA didn’t pass and all of those jobs went to China instead as America’s automakers put their patriotism on the back burner to chase lower labor costs and easy profits. The U.S. is getting a major employment boost instead.
But there’s a difference between “jobs” and “good jobs.” Take a newly militant United Auto Workers union, currently locked into unusually bitter contract negotiations with the Big Three American automakers. One thing they’re mad about: those battery factories going up everywhere, especially the joint-venture ones, don’t automatically lead to union jobs. (One GM-LG battery plant in Ohio voted to unionize with the UAW last year but doesn’t have a contract yet.)
The result is that those battery plant workers could make considerably less money than America’s unionized auto workers, as my colleague Emily Pontecorvo reported in June. Adding insult to injury, EVs generally need fewer parts and labor than conventional cars to assemble; indeed, those battery plant jobs could one day form the bulk of America’s automotive labor force.
The UAW did support the IRA’s passage last year. But that also happened before the union’s much tougher current leadership came in; I’m not convinced it would have gone the same way today. In general, the law doesn’t do a ton for labor, and that’s why the reliably Democratic UAW has held off on endorsing Biden.
So far, the Biden administration doesn’t have a great answer for this, either. The president himself is doing the “Can’t we all just get along?” dance, but that may be the best he can do as he navigates climate, geopolitical, industry, and labor needs at the same time. And the move to EVs is expected to define the automotive labor world — here and globally — for the next few decades.
As Ryan Cooper astutely noted this week, the IRA’s biggest problem is arguably one of awareness. Very few people seem to know about these investments or what’s coming from them. That lack of awareness could be the IRA’s biggest threat.
Maybe that’s a problem more for Biden than the EV industry, America’s supply chain, or the climate, but when nobody knows about the president’s biggest achievement — especially in all those red states where the jobs are going — you have to wonder what a change at the White House next year could mean for all of this momentum. It’s not like those battery plants under construction will just disappear, but I wouldn’t put it past a less climate-focused White House (or Congress) to find a way to thwart all this progress.
There’s also the rising right-wing backlash to EVs in general, predicated more on the messaging power of the fossil fuel industry and our own endlessly stupid culture wars. In short, though these investments do take time, very few people seem to know about them or see the benefits that will come from them.
Auto industries are always heavily subsidized and regulated by the countries they come from. It was true of Japan after World War II, it’s been true of China for the past 20 years, and it’s certainly been true in various ways in America for a century. The IRA is just the biggest such move the U.S. has seen to modernize, compete and innovate in a world where gas cars could eventually be discarded as obsolete technology.
The groundwork has been laid. Now we’ll find out if it has staying power.
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Current conditions: Bosnia’s capital of Sarajevo is blanketed in a layer of toxic smog • Temperatures in Perth, in Western Australia, could hit 106 degrees Fahrenheit this weekend • It is cloudy in Washington, D.C., where lawmakers are scrambling to prevent a government shutdown.
The weather has gotten so weird that the U.S. National Oceanic and Atmospheric Administration is holding internal talks about how to adjust its models to produce more accurate forecasts, the Financial Timesreported. Current models are based on temperature swings observed over one part of the Pacific Ocean that have for years correlated consistently with specific weather phenomena across the globe, but climate change seems to be disrupting that cause and effect pattern, making it harder to predict things like La Niña and El Niño. Many forecasters had expected La Niña to appear by now and help cool things down, but that has yet to happen. “It’s concerning when this region we’ve studied and written all these papers on is not related to all the impacts you’d see with [La Niña],” NOAA’s Michelle L’Heureux told the FT. “That’s when you start going ‘uh-oh’ there may be an issue here we need to resolve.”
There is quite a lot of news coming out of the Department of Energy as the year (and the Biden administration) comes to an end. A few recent updates:
Walmart, the world’s largest retailer, does not expect to meet its 2025 or 2030 emissions targets, and is putting the blame on policy, infrastructure, and technology limitations. The company previously pledged to cut its emissions by 35% by next year, and 65% by the end of the decade. Emissions in 2023 were up 4% year-over-year.
Walmart
“While we continue to work toward our aspirational target of zero operational emissions by 2040, progress will not be linear … and depends not only on our own initiatives but also on factors beyond our control,” Walmart’s statement said. “These factors include energy policy and infrastructure in Walmart markets around the world, availability of more cost-effective low-GWP refrigeration and HVAC solutions, and timely emergence of cost-effective technologies for low-carbon heavy tractor transportation (which does not appear likely until the 2030s).”
BlackRock yesterday said it is writing down the value of its Global Renewable Power Fund III following the failure of Northvolt and SolarZero, two companies the fund had invested in. Its net internal rate of return was -0.3% at the end of the third quarter, way down from 11.5% in the second quarter, according toBloomberg. Sectors like EV charging, transmission, and renewable energy generation and storage have been “particularly challenged,” executives said, and some other renewables companies in the portfolio have yet to get in the black, meaning their valuations may be “more subjective and sensitive to evolving dynamics in the industry.”
Flies may be more vulnerable to climate change than bees are, according to a new study published in the Journal of Melittology. The fly haters among us might shrug at the finding, but the researchers insist flies are essential pollinators that help bolster ecosystem biodiversity and agriculture. “It’s time we gave flies some more recognition for their role as pollinators,” said lead author Margarita López-Uribe, who is the Lorenzo Langstroth Early Career Associate Professor of Entomology at Penn State. The study found bees can tolerate higher temperatures than flies, so flies are at greater risk of decline as global temperatures rise. “In alpine and subarctic environments, flies are the primary pollinator,” López-Uribe said. “This study shows us that we have entire regions that could lose their primary pollinator as the climate warms, which could be catastrophic for those ecosystems.”
“No one goes to the movies because they want to be scolded.” –Heatmap’s Jeva Lange writes about the challenges facing climate cinema, and why 2024 might be the year the climate movie grew up.
Whether you agree probably depends on how you define “climate movie” to begin with.
Climate change is the greatest story of our time — but our time doesn’t seem to invent many great stories about climate change. Maybe it’s due to the enormity and urgency of the subject matter: Climate is “important,” and therefore conscripted to the humorless realms of journalism and documentary. Or maybe it’s because of a misunderstanding on the part of producers and storytellers, rooted in an outdated belief that climate change still needs to be explained to an audience, when in reality they don’t need convincing. Maybe there’s just not a great way to have a character mention climate change and not have it feel super cringe.
Whatever the reason, between 2016 and 2020, less than 3% of film and TV scripts used climate-related keywords during their runtime, according to an analysis by media researchers at the University of Southern California. (The situation isn’t as bad in literature, where cli-fi has been going strong since at least 2013.) At least on the surface, this on-screen avoidance of climate change continued in 2024. One of the biggest movies of the summer, Twisters, had an extreme weather angle sitting right there, but its director, Lee Isaac Chung, went out of his way to ensure the film didn’t have a climate change “message.”
I have a slightly different take on the situation, though — that 2024 was actuallyfull of climate movies, and, I’d argue, that they’re getting much closer to the kinds of stories a climate-concerned individual should want on screen.
That’s because for the most part, when movies and TV shows have tackled the topic of climate change in the past, it’s been with the sort of “simplistic anger-stoking and pathos-wringing” that The New Yorker’s Richard Brody identified in 2022’s Don’t Look Up, the Adam McKay satire that became the primary touchpoint for scripted climate stories. At least it was kind of funny: More overt climate stories like last year’s Foe, starring Saoirse Ronan and Paul Mescal, and Extrapolations, the Apple TV+ show in which Meryl Streep voices a whale, are so self-righteous as to be unwatchable (not to mention, no fun).
But what if we widened our lens and weren’t so prescriptive? Then maybe Furiosa, this spring’s Mad Max prequel, becomes a climate change movie. The film is set during a “near future” ecological collapse, and it certainly makes you think about water scarcity and our overreliance on a finite extracted resource — but it also makes you think about how badass the Octoboss’ kite is. The same goes for Dune: Part Two, which made over $82 million in its opening weekend and is also a recognizable environmental allegory featuring some cool worms. Even Ghostbusters: Frozen Empire, a flop that most people have already memory-holed, revisitedThe Day After Tomorrow’s question of, “What if New York City got really, really, really cold?”
Two 2024 animated films with climate themes could even compete against each other at the Academy Awards next year. Dreamworks Animation’s The Wild Robot, one of the centerpiece films at this fall’s inaugural Climate Film Festival, is set in a world where sea levels have risen to submerge the Golden Gate Bridge, and it impresses on its audience the importance of protecting the natural world. And in Gints Zilbalodis’ Flow, one of my favorite films of the year, a cat must band together with other animals to survive a flood.
Flow also raises the question of whether a project can unintentionally be a climate movie. Zilbalodis told me that making a point about environmental catastrophe wasn’t his intention — “I can’t really start with the message, I have to start with the character,” he said — and to him, the water is a visual metaphor in an allegory about overcoming your fears.
But watching the movie in a year when more than a thousand people worldwide have died in floods, and with images of inundated towns in North Carolina still fresh in mind, it’s actually climate change itself that makes one watch Flow as a movie about climate change. (I’m not the only one with this interpretation, either: Zilbalodis told me he’d been asked by one young audience member if the flood depicted in his film is “the future.”)
Perhaps this is how we should also consider Chung’s comments about Twisters. While nobody in the film says the words “climate change” or “global warming,” the characters note that storms are becoming exceptional — “we've never seen tornadoes like this before,” one says. Despite the director’s stated intention not to make the movie “about” climate change, it becomes a climate movie by virtue of what its audiences have experienced in their own lives.
Still, there’s that niggling question: Do movies like these, which approach climate themes slant-wise, really count? To help me decide, I turned to Sam Read, the executive director of the Sustainable Entertainment Alliance, an advocacy consortium that encourages environmental awareness both on set and on screen. He told me that to qualify something as a “climate” movie or TV show, some research groups look to see if climate change exists in the world of the story or whether the characters acknowledge it. Other groups consider climate in tiers, such as whether a project has a climate premise, theme, or simply a moment.
The Sustainable Entertainment Alliance, however, has no hard rules. “We want to make sure that we support creatives in integrating these stories in whatever way works for them,” Read told me.
Read also confirmed my belief that there seemed to be an uptick in movies this year that were “not about climate change but still deal with things that feel very climate-related, like resource extraction.” There was even more progress on this front in television, he pointed out: True Detective: Night Country wove in themes of environmentalism, pollution, mining, and Indigenous stewardship; the Max comedy Hacks featured an episode about climate change this season; and Industry involved a storyline about taking a clean energy company public, with some of the characters even attending COP. Even Doctor Odyssey, a cruise ship medical drama that airs on USA, worked climate change into its script, albeit in ridiculous ways. (Also worth mentioning: The Netflix dating show Love is Blind cast Taylor Krause, who works on decarbonizing heavy industry at RMI.)
We can certainly do more. As many critics before me have written, it’s still important to draw a connection between things like environmental catastrophes and the real-world human causes of global warming. But the difference between something being “a climate movie” and propaganda — however true its message, or however well-intentioned — is thin. Besides, no one goes to the movies because they want to be scolded; we want to be moved and distracted and entertained.
I’ve done my fair share of complaining over the past few years about how climate storytelling needs to grow up. But lately I’ve been coming around to the idea that it’s not the words “climate change” appearing in a script that we need to be so focused on. As 2024’s slate of films has proven to me — or, perhaps, as this year’s extreme weather events have thrown into relief — there are climate movies everywhere.
Keep ‘em coming.
They might not be worried now, but Democrats made the same mistake earlier this year.
Permitting reform is dead in the 118th Congress.
It died earlier this week, although you could be forgiven for missing it. On Tuesday, bipartisan talks among lawmakers fell apart over a bid to rewrite parts of the National Environmental Policy Act. The changes — pushed for by Representative Bruce Westerman, chairman of the House Natural Resources Committee — would have made it harder for outside groups to sue to block energy projects under NEPA, a 1970 law that governs the country’s process for environmental decisionmaking.
When those talks died, they also killed a separate deal over permitting struck earlier this year between Senator Joe Manchin of West Virginia and Senator John Barrasso of Wyoming. That deal, as I detailed last week, would have loosened some federal rules around oil and gas drilling in exchange for a new, quasi-mandatory scheme to build huge amounts of long-distance transmission.
Rest in peace, I suppose. Even if lawmakers could not agree on NEPA changes, I think Republicans made a mistake by not moving forward with the Manchin-Barrasso deal. (I still believe that the standalone deal could have passed the Senate and the House if put to a vote.) At this point, I do not think we will see another shot at bipartisan permitting reform until at least late 2026, when the federal highway law will need fresh funding.
But it is difficult to get too upset about this failure because larger mistakes have since compounded the initial one. On Wednesday, Republican Speaker Mike Johnson’s bipartisan deal to fund the government — which is, after all, a much more fundamental task of governance than rewriting some federal permitting laws — fell apart, seemingly because Donald Trump and Elon Musk decided they didn’t like it. If I can indulge in the subjunctive for a moment: That breakdown might have likely killed any potential permitting deal, too. So even in a world where lawmakers somehow did strike a deal earlier this week, it might already be dead. (As I write this, the House GOP has reportedly reached a new deal to fund the government through March, which has weakened or removed provisions governing pharmacy benefit managers and limiting American investments in China.)
The facile reading of this situation is that Republicans now hold the advantage. The Trump administration will soon be able to implement some of the fossil fuel provisions in the Manchin-Barrasso deal through the administrative state. Trump will likely expand onshore and offshore drilling, will lease the government’s best acreage to oil and gas companies, and will approve as many liquified natural gas export terminals as possible. His administration will do so, however, without the enhanced legal protection that the deal would have provided — and while those protections are not a must-have, especially with a friendly Supreme Court, their absence will still allow environmental groups to try to run down the clock on some of Trump’s more ambitious initiatives.
Republicans believe that they will be able to get parts of permitting reform done in a partisan reconciliation bill next year. These efforts seem quite likely to run aground, at least as long as something like the current rules governing reconciliation bills hold. I have heard some crazy proposals on this topic — what if skipping a permitting fight somehow became a revenue-raiser for the federal government? — but even they do not touch the deep structure of NEPA in the way a bipartisan compromise could. As Westerman toldPolitico’s Josh Siegel: “We need 60 votes in the Senate to get real permitting reform … People are just going to have to come to an agreement on what permitting reform is.” In any case, Manchin and the Democrats already tried to reform the permitting system via a partisan reconciliation bill and found it essentially impossible.
Even if reconciliation fails, Republicans say, they will still be in a better negotiating position next year than this year because the party will control a few more Senate votes. But will they? The GOP will just have come off a difficult fight over tax reform. Twelve or 24 months from now, demands on the country’s electricity grid are likely to be higher than they are today, and the risk of blackouts will be higher than before. The lack of a robust transmission network will hinder the ability to build a massive new AI infrastructure, as some of Trump’s tech industry backers hope. But 12 or 24 months from now, too, Democrats — furious at Trump — are not going to be in a dealmaking mood, and Republicans have relatively few ways to bring them to the table.
In any case, savvy Republicans should have realized that it is important to get supply-side economic reforms done as early in a president’s four-year term as possible. Such changes take time to filter through the system and turn into real projects and real economic activity; passing the law as early as possible means that the president’s party can enjoy them and campaign on them.
All of it starts to seem more and more familiar. When Manchin and Barrasso unveiled their compromise earlier this year, Democrats didn’t act quickly on it. They felt confident that the window for a deal wouldn’t close — and they looked forward to a potential trifecta, when they would be able to get even more done (and reject some of Manchin’s fossil fuel-friendly compromises).
Democrats, I think, wound up regretting the cavalier attitude that they brought to permitting reform before Trump’s win. But now the GOP is acting the same way: It is rejecting compromises, believing that it will be able to strike a better deal on permitting issues during its forthcoming trifecta. That was a mistake when Democrats did it. I think it will be a mistake for Republicans, too.