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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 Mike Hall of Anza.
This week’s conversation is with Mike Hall, CEO of the solar and battery storage data company Anza. I rang him because, in my book, the more insights into the ways renewables companies are responding to the war on the Inflation Reduction Act, the better.
The following chat was lightly edited for clarity. Let’s jump in!
How much do we know about developers’ reactions to the anti-IRA bill that was passed out of the House last week?
So it’s only been a few days. What I can tell you is there’s a lot of surprise about what came out of the House. Industries mobilized in trying to improve the bill from here and I think a lot of the industry is hopeful because, for many reasons, the bill doesn’t seem to make sense for the country. Not just the renewable energy industry. There’s hope that the voices in Congress — House members and senators — who already understand the impact of this on the economy will in the coming weeks understand how bad this is.
I spoke to a tax attorney last week that her clients had been preparing for a worst case scenario like this and preparing contingency plans of some kind. Have you seen anything so far to indicate people have been preparing for a worst case scenario?
Yeah. There’s a subset of the market that has prepared and already executed plans.
In Q4 [of 2024] and Q1 [of this year] with a number of companies to procure material from projects in order to safe harbor those projects. What that means is, typically if you commence construction by a certain date, the date on which you commence construction is the date you lock in tax credit eligibility, and we worked with companies to help them meet that criteria. It hedged them on a number of fronts. I don’t think most of them thought we’d get what came out of the House but there were a lot of concerns about stepdowns for the credit.
After Trump was elected, there were also companies who wanted to hedge against tariffs so they bought equipment ahead of that, too. We were helping companies do deals the night before Liberation Day. There was a lot of activity.
We saw less after April 2nd because the trade landscape has been changing so quickly that it’s been hard for people to act but now we’re seeing people act again to try and hit that commencement milestone.
It’s not lost on me that there’s an irony here – the attempts to erode these credits might lead to a rush of projects moving faster, actually. Is that your sense?
There’s a slug of projects that would get accelerated and in fact just having this bill come out of the House is already going to accelerate a number of projects. But there’s limits to what you can do there. The bill also has a placed-in-service criteria and really problematic language with regard to the “foreign entity of concern” provisions.
Are you seeing any increase in opposition against solar projects? And is that the biggest hurdle you see to meeting that “placed-in-service” requirement?
What I have here is qualitative, not quantitative, but I was in the development business for 20 years, and what I have seen qualitatively is that it is increasingly harder to develop projects. Local opposition is one of the headwinds. Interconnection is another really big one and that’s the biggest concern I have with regards to the “placed-in-service” requirement. Most of these large projects, even if you overcome the NIMBY issues, and you get your permitting, and you do everything else you need to do, you get your permits and construction… In the end if you’re talking about projects at scale, there is a requirement that utilities do work. And there’s no requirement that utilities do that work on time [to meet that deadline]. This is a risk they need to manage.
And more of the week’s top news in renewable energy conflicts.
1. Columbia County, New York – A Hecate Energy solar project in upstate New York blessed by Governor Kathy Hochul is now getting local blowback.
2. Sussex County, Delaware – The battle between a Bethany Beach landowner and a major offshore wind project came to a head earlier this week after Delaware regulators decided to comply with a massive government records request.
3. Fayette County, Pennsylvania – A Bollinger Solar project in rural Pennsylvania that was approved last year now faces fresh local opposition.
4. Cleveland County, North Carolina – Brookcliff Solar has settled with a county that was legally challenging the developer over the validity of its permits, reaching what by all appearances is an amicable resolution.
5. Adams County, Illinois – The solar project in Quincy, Illinois, we told you about last week has been rejected by the city’s planning commission.
6. Pierce County, Wisconsin – AES’ Isabelle Creek solar project is facing new issues as the developer seeks to actually talk more to residents on the ground.
7. Austin County, Texas – We have a couple of fresh battery storage wars to report this week, including a danger alert in this rural Texas county west of Houston.
8. Esmeralda County, Nevada – The Trump administration this week approved the final proposed plan for NV Energy’s Greenlink North, a massive transmission line that will help the state expand its renewable energy capacity.
9. Merced County, California – The Moss Landing battery fire is having aftershocks in Merced County as residents seek to undo progress made on Longroad’s Zeta battery project south of Los Banos.
Anti-solar activists in agricultural areas get a powerful new ally.
The Trump administration is joining the war against solar projects on farmland, offering anti-solar activists on the ground a powerful ally against developers across the country.
In a report released last week, President Trump’s Agriculture Department took aim at solar and stated competition with “solar development on productive farmland” was creating a “considerable barrier” for farmers trying to acquire land. The USDA also stated it would disincentivize “the use of federal funding” for solar “through prioritization points and regulatory action,” which a spokesperson – Emily Cannon – later clarified in an email to me this week will include reconfiguring the agency’s Rural Energy for America loan and grant program. Cannon declined to give a time-table for the new regulation, stating that the agency “will have more information when the updates are ready to be published.”
“Farmland should be for agricultural production, not solar production,” Cannon wrote – a statement also made in the USDA report.
REAP is a program created in 2008 that exists to help fund renewable energy and sustainability projects at the level of individual farms and has been seen as a potential tool for not only building more solar but also more trust in agriculturally-focused communities. It’s without question that retooling REAP to actively disincentivize awardees from building solar on farmland could have a chilling effect, at least amongst those who receive money from the program or wish to in the future. This comes after Trump officials temporarily froze money promised to farmers, too.
As we’ve previously written in The Fight, agricultural interests can at times present as much a threat to the future of solar energy as any oil-funded dark money group, if not more so. Conflicts over solar production on farmland make up a large portion of the total projects I cover in The Fight every week, and it is one of the most frequently cited reasons for opposition against individual renewables projects. (Agricultural workforces are one of the most important signals for renewable energy opposition in Heatmap Pro’s modeling data as well.) I wrote shortly after Trump’s inauguration that I wondered when – not if – he would adopt this position.
It’s unclear what exactly led USDA to dive headlong into the “No Solar on Farmland” campaign, aside from its growing popularity in conservative political circles, but there is reason to believe farming interests may have played a role. USDA has stated the report was the product of discussions with farming groups and an industry roundtable. In addition, per lobbying disclosures, at least one agricultural group – the Pennsylvania Farm Bureau – advocated earlier this year for “congressional action and/or executive orders” to “balance renewable and conventional sources of energy” through “limit[ing] solar on productive farmland.” (The Pennsylvania Farm Bureau denied this in an email to me earlier this week.)
There’s also reason to believe some key stakeholders were caught off-guard or weren’t looped in on the matter.
American Farmland Trust has been trying to cultivate common ground between farmers, solar companies, and various agencies at all levels of government over the future of development. But when asked about this report, the nonprofit told me it couldn’t speak on the matter because it was still trying to suss out what was going on.
“AFT is meeting with the Trump administration to learn more about what they are planning in terms of policy and programs to implement this concept,” AFT media relations associate Michael Shulman told me.