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The president isn’t trying to cut emissions as fast possible. He’s doing something else.
Here’s the problem with President Joe Biden’s climate policy: From a certain point of view, it makes no sense.
Take his electricity policy. At the top level, Biden has committed to eliminating greenhouse-gas pollution from the power sector by 2035. He wants to accomplish this largely by making clean energy cheaper — that’s the goal of the Inflation Reduction Act, of course — and he has also changed federal rules so it’s slightly easier to build power lines and large-scale renewable projects. He has also added teeth to that goal in the form of new Environmental Protection Agency rules cracking down on coal and natural gas.
Yet at the same time, Biden has seemingly also made it more difficult to decarbonize. Last week, he raised tariffs on cheap solar panels and grid-scale batteries made in China. And he ended the two-year “solar bridge,” a tariff exemption for some Chinese-based solar manufacturers that operated in other countries. That means that as soon as next month, some eye-watering tariffs — possibly as high as 254% — could apply to many U.S. solar imports.
Then there’s Biden’s policy on electric cars. The president wants 50% of all new vehicles sold in the U.S. to be EVs or plug-in hybrids by 2030, and he has overseen billions of dollars of spending aimed at building a national charging network. His climate law discounts the price of many EVs by $7,500 and directly subsidizes virtually every battery and vehicle made in America. Yet he recently put 100% tariffs on EV imports from China, the country that makes some of the world’s cheapest and best electric cars.
This combination is, frankly, a little confusing. And it has confounded critics around the world: It can sometimes seem like the president is cutting the cost of clean energy with one hand while raising it with another. “The Biden effect will be to raise the U.S. domestic price of EVs, solar panels and other green inputs and delay America’s energy transition,” writes Edward Luce of the Financial Times. The Economist, in high dudgeon, lectured Biden for forgetting his David Ricardo.
There is certainly much to criticize about Biden’s climate policy, but reading coverage of it, I’m often struck by how little the commentator seems to understand what the policy is trying to do. There is, as Noah Smith and Matt Yglesias have written, a strong national-security component to the tariffs announced last week. But there’s more to these policies than national security alone. Although the president’s actions can sometimes seem contradictory, there is in fact a logic to what Biden is trying to do on climate change. And without defending the policy, I think it is important to describe it accurately.
Let’s back up. For the past 30 years, climate advocates tried to raise the cost of fossil fuels in America by imposing a carbon price. Taxing carbon pollution is the most elegant and economically efficient way to solve climate change, and — at least in theory — it doesn’t require the kind of fine-tuned economic tampering that the Biden administration is engaged in. Or at least that’s what the economists say — I remain skeptical that a carbon tax alone would have succeeded in decarbonizing the economy without additional policy.
And in any case, the point is moot: Climate advocates never succeeded in passing such a price. Voters were understandably resistant to raising the cost of energy, especially gasoline, and no coalition emerged to persuade politicians that the political costs of a carbon tax would be worth bearing. During many of those years, too, the American economy was so understimulated that passing a revenue-raising tax made little political sense: There was effectively no public constituency for deficit reduction.
By 2020, Democrats had largely given up on this approach. Although many still believe that a carbon tax could be an effective decarbonization tool, they instead adopted a new political economic philosophy. Simplified somewhat, it goes something like:
1. The biggest obstacle to passing American climate policy is the lack of a domestic coalition that supports the deep and continued decarbonization of the domestic economy.
2. Passing climate policy has been so hard historically because a powerful and geographically diverse set of companies, unions, state, and local officials, and political donors — largely but not entirely in the fossil fuel industry — don’t want to see the U.S. move away from oil and natural gas. They’re backed up by status-quo-favoring consumers.
3. The central aim of near-term climate policy, then, should be to create an enduring coalition to support the continued decarbonization of the U.S. economy.
This is the guiding logic of Biden’s climate policy: that American politics must have a powerful, durable, and flexible pro-decarbonization coalition if the U.S. is to succeed in reaching net zero. Achieving this coalition is the underlying aim of the IRA, the EPA rules, and — yes — the recent tariffs.
This is what I wish critics understood about the president’s climate strategy: Biden’s strategy won’t have succeeded if the U.S. makes some headway on emissions but imports all of its decarbonization tech from China. The U.S. actually has to develop its own supply chain and manufacturing base to build the kind of deep economic coalition that can sustain long-term decarbonization. This is why trade restrictions have become so central to the administration’s world view.
I should add that for all that the administration emphasizes “good-paying union jobs” in its messaging around climate policy, jobs alone aren’t necessarily the goal of this strategy. Critics of American industrial policy sometimes point out that, even in China, the labor share of manufacturing is falling; indeed, one of China’s great manufacturing advantages is the extent to which it has automated its assembly lines. But that may not necessarily matter to coalition politics: As the political scientist Nina Kelsey has shown in her research on the Montreal Protocol, companies tend to support environmental policy when doing so will help their large-scale, fixed investments — essentially, their factories — not their labor force.
There are big risks to Biden’s strategy. The next administration — which in this moment looks likely to be helmed by Donald Trump — could repeal the production and installation subsidies for renewables but leave the tariffs in place. That would devastate the finances of domestic solar manufacturers and significantly slow down the decarbonization of America’s grid, and it would mean that Americans who want to import cheap solar panels wouldn’t be able to. That would essentially freeze America’s decarbonization effort while the rest of the world races ahead.
Even if Biden wins, the kind of economic management that he’s trying to do may simply not be possible in the federal system — or, for that matter, with the existing Democratic coalition. There may be too many interest groups to placate or too many obstacles to building. California offers a warning about how well-intentioned liberal policy can prevent enough new infrastructure from getting built.
Still a third risk is that the American solar manufacturing industry meets domestic demand but doesn’t become very competitive, so it doesn’t reduce costs aggressively. A relatively small number of firms actually make solar panels in the United States, and they have to compete for engineering talent with more established industries like software. What has brought down the cost of solar in China isn’t subsidies per se, but an intensely competitive and very large domestic market. It isn’t clear that the American market for solar power will attain such scale or efficiency.
These would, obviously, be lasting setbacks for American decarbonization. But even in critiquing this set of policies, I hope the world notes what a different problem America faces when taking on climate change as compared to the rest of the world. Most countries import more oil than they produce, meaning their fossil-fuel addiction shackles their currencies and economies to a volatile global commodity. They are only too happy to move away from fossil fuels, and especially oil, provided that a cheap and acceptable alternative is available. In the United Kingdom, for instance, cross-partisan support for decarbonization policy has existed since the era of Margaret Thatcher.
In the United States, with our oil-drenched politics, the task is different. Only a sufficiently powerful pro-climate coalition will be able to unseat the fossil fuels enthroned atop our economy. Forging this coalition — even if it slows down decarbonization for a few years — is Biden’s true goal. Whether that’s worth it is another story.
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A conversation with Mary King, a vice president handling venture strategy at Aligned Capital
Today’s conversation is with Mary King, a vice president handling venture strategy at Aligned Capital, which has invested in developers like Summit Ridge and Brightnight. I reached out to Mary as a part of the broader range of conversations I’ve had with industry professionals since it has become clear Republicans in Congress will be taking a chainsaw to the Inflation Reduction Act. I wanted to ask her about investment philosophies in this trying time and how the landscape for putting capital into renewable energy has shifted. But Mary’s quite open with her view: these technologies aren’t going anywhere.
The following conversation has been lightly edited and abridged for clarity.
How do you approach working in this field given all the macro uncertainties?
It’s a really fair question. One, macro uncertainties aside, when you look at the levelized cost of energy report Lazard releases it is clear that there are forms of clean energy that are by far the cheapest to deploy. There are all kinds of reasons to do decarbonizing projects that aren’t clean energy generation: storage, resiliency, energy efficiency – this is massively cost saving. Like, a lot of the methane industry [exists] because there’s value in not leaking methane. There’s all sorts of stuff you can do that you don’t need policy incentives for.
That said, the policy questions are unavoidable. You can’t really ignore them and I don’t want to say they don’t matter to the industry – they do. It’s just, my belief in this being an investable asset class and incredibly important from a humanity perspective is unwavering. That’s the perspective I’ve been taking. This maybe isn’t going to be the most fun market, investing in decarbonizing things, but the sense of purpose and the belief in the underlying drivers of the industry outweigh that.
With respect to clean energy development, and the investment class working in development, how have things changed since January and the introduction of these bills that would pare back the IRA?
Both investors and companies are worried. There’s a lot more political and policy engagement. We’re seeing a lot of firms and organizations getting involved. I think companies are really trying to find ways to structure around the incentives. Companies and developers, I think everybody is trying to – for lack of a better term – future-proof themselves against the worst eventuality.
One of the things I’ve been personally thinking about is that the way developers generally make money is, you have a financier that’s going to buy a project from them, and the financier is going to have a certain investment rate of return, or IRR. So ITC [investment tax credit] or no ITC, that IRR is going to be the same. And the developer captures the difference.
My guess – and I’m not incredibly confident yet – but I think the industry just focuses on being less ITC dependent. Finding the projects that are juicier regardless of the ITC.
The other thing is that as drafts come out for what we’re expecting to see, it’s gone from bad to terrible to a little bit better. We’ll see what else happens as we see other iterations.
How are you evaluating companies and projects differently today, compared to how you were maybe before it was clear the IRA would be targeted?
Let’s say that we’re looking at a project developer and they have a series of projects. Right now we’re thinking about a few things. First, what assets are these? It’s not all ITC and PTC. A lot of it is other credits. Going through and asking, how at risk are these credits? And then, once we know how at risk those credits are we apply it at a project level.
This also raises a question of whether you’re going to be able to find as many projects. Is there going to be as much demand if you’re not able to get to an IRR? Is the industry going to pay that?
What gives you optimism in this moment?
I’ll just look at the levelized cost of energy and looking at the unsubsidized tables say these are the projects that make sense and will still get built. Utility-scale solar? Really attractive. Some of these next-gen geothermal projects, I think those are going to be cost effective.
The other thing is that the cost of battery storage is just declining so rapidly and it’s continuing to decline. We are as a country expected to compare the current price of these technologies in perpetuity to the current price of oil and gas, which is challenging and where the technologies have not changed materially. So we’re not going to see the cost decline we’re going to see in renewables.
And more news around renewable energy conflicts.
1. Nantucket County, Massachusetts – The SouthCoast offshore wind project will be forced to abandon its existing power purchase agreements with Massachusetts and Rhode Island if the Trump administration’s wind permitting freeze continues, according to court filings submitted last week.
2. Tippacanoe County, Indiana – This county has now passed a full solar moratorium but is looking at grandfathering one large utility-scale project: RWE and Geenex’s Rainbow Trout solar farm.
3. Columbia County, Wisconsin – An Alliant wind farm named after this county is facing its own pushback as the developer begins the state permitting process and is seeking community buy-in through public info hearings.
4. Washington County, Arkansas – It turns out even mere exploration for a wind project out in this stretch of northwest Arkansas can get you in trouble with locals.
5. Wagoner County, Oklahoma – A large NextEra solar project has been blocked by county officials despite support from some Republican politicians in the Sooner state.
6. Skagit County, Washington – If you’re looking for a ray of developer sunshine on a cloudy day, look no further than this Washington State county that’s bucking opposition to a BESS facility.
7. Orange County, California – A progressive Democratic congressman is now opposing a large battery storage project in his district and talking about battery fire risks, the latest sign of a populist revolt in California against BESS facilities.
Permitting delays and missed deadlines are bedeviling solar developers and activist groups alike. What’s going on?
It’s no longer possible to say the Trump administration is moving solar projects along as one of the nation’s largest solar farms is being quietly delayed and even observers fighting the project aren’t sure why.
Months ago, it looked like Trump was going to start greenlighting large-scale solar with an emphasis out West. Agency spokespeople told me Trump’s 60-day pause on permitting solar projects had been lifted and then the Bureau of Land Management formally approved its first utility-scale project under this administration, Leeward Renewable Energy’s Elisabeth solar project in Arizona, and BLM also unveiled other solar projects it “reasonably” expected would be developed in the area surrounding Elisabeth.
But the biggest indicator of Trump’s thinking on solar out west was Esmeralda 7, a compilation of solar project proposals in western Nevada from NextEra, Invenergy, Arevia, ConnectGen, and other developers that would, if constructed, produce at least 6 gigawatts of power. My colleague Matthew Zeitlin was first to report that BLM officials updated the timetable for fully permitting the expansive project to say it would complete its environmental review by late April and be completely finished with the federal bureaucratic process by mid-July. BLM told Matthew that the final environmental impact statement – the official study completing the environmental review – would be published “in the coming days or week or so.”
More than two months later, it’s crickets from BLM on Esmeralda 7. BLM never released the study that its website as of today still says should’ve come out in late April. I asked BLM for comment on this and a spokesperson simply told me the agency “does not have any updates to share on this project at this time.”
This state of quiet stasis is not unique to Esmeralda; for example, Leeward has yet to receive a final environmental impact statement for its 700 mega-watt Copper Rays solar project in Nevada’s Pahrump Valley that BLM records state was to be published in early May. Earlier this month, BLM updated the project timeline for another Nevada solar project – EDF’s Bonanza – to say it would come out imminently, too, but nothing’s been released.
Delays happen in the federal government and timelines aren’t always met. But on its face, it is hard for stakeholders I speak with out in Nevada to take these months-long stutters as simply good faith bureaucratic hold-ups. And it’s even making work fighting solar for activists out in the desert much more confusing.
For Shaaron Netherton, executive director of the conservation group Friends of the Nevada Wilderness, these solar project permitting delays mean an uncertain future. Friends of the Nevada Wilderness is a volunteer group of ecology protection activists that is opposing Esmeralda 7 and filed its first lawsuit against Greenlink West, a transmission project that will connect the massive solar constellation to the energy grid. Netherton told me her group may sue against the approval of Esmeralda 7… but that the next phase of their battle against the project is a hazy unknown.
“It’s just kind of a black hole,” she told me of the Esmeralda 7 permitting process. “We will litigate Esmeralda 7 if we have to, and we were hoping that with this administration there would be a little bit of a pause. There may be. That’s still up in the air.”
I’d like to note that Netherton’s organization has different reasons for opposition than I normally write about in The Fight. Instead of concerns about property values or conspiracies about battery fires, her organization and a multitude of other desert ecosystem advocates are trying to avoid a future where large industries of any type harm or damage one of the nation’s most biodiverse and undeveloped areas.
This concern for nature has historically motivated environmental activism. But it’s also precisely the sort of advocacy that Trump officials have opposed tooth-and-nail, dating back to the president’s previous term, when advocates successfully opposed his rewrite of Endangered Species Act regulations. This reason – a motivation to hippie-punch, so to speak – is a reason why I hardly expect species protection to be enough of a concern to stop solar projects in their tracks under Trump, at least for now. There’s also the whole “energy dominance” thing, though Trump has been wishy-washy on adhering to that goal.
Patrick Donnelly, great basin director at the Center for Biological Diversity, agrees that this is a period of confusion but not necessarily an end to solar permitting on BLM land.
“[Solar] is moving a lot slower than it was six months ago, when it was coming at a breakneck pace,” said Patrick Donnelly of the Center for Biological Diversity. “How much of that is ideological versus 15-20% of the agencies taking early retirement and utter chaos inside the agencies? I’m not sure. But my feeling is it’s less ideological. I really don’t think Trump’s going to just start saying no to these energy projects.”