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The Transportation and Infrastructure Committee released a budget proposal that attempts to claw back nearly $9 billion in grants.

The House Transportation and Infrastructure Committee released the first draft of its portion of Trump’s big budget bill on Tuesday, and it includes the first official swipe at the Inflation Reduction Act of the months-long process ahead.
Remember, the name of the game for Republicans is to find ways to pay for Trump’s long list of tax cuts. The budget framework Congress passed two weeks ago assigned eleven House committees to craft proposals that would each raise or reduce revenue by a specific amount to accomplish Trump’s agenda.
The Transportation Committee proposal contains one new revenue-generating program, placing a $200 annual fee on electric vehicles and $100 fee on hybrid vehicles, alongside a $20 fee on conventional cars. The money would go into the Highway Trust Fund, which is currently financed mostly by the gas tax — and which, of course, EV owners don’t pay.
But the draft also includes a list of “rescissions” of unobligated funds from seven IRA grant programs. While the Biden administration awarded the vast majority of the money allocated to the programs listed, in many cases the recipients never reached a final project agreement with the government. That means a lot of the funding can, in fact, be clawed back.
Take the first item on the list, the Alternative Fuel and Low Emissions Aviation Technology Program. The IRA allocated $291 million for grants to support producing sustainable aviation fuel and developing low-emission aviation technologies, and the Biden administration awarded the full amount to 36 recipients in August of last year. It’s not clear how many reached final project agreements with the Federal Aviation Administration, however. A quick scan of the government’s database of awards is missing a $25.7 million grant to oil giant BP to produce sustainable aviation fuel at its refinery in Washington State, but it does include the full obligation of $240,000 to the City of Atlanta to conduct a study on deploying SAF at Hartsfield-Jackson Airport.
Grants aren’t always logged in USASpending.gov in a timely manner, so it’s possible BP does have an agreement in place. Among the other awardees that I could not find listed in the database were World Energy, which was awarded nearly $22 million to install infrastructure enabling Los Angeles International Airport to get deliveries of SAF, and Buckeye Terminals, which got $24 million to upgrade four SAF storage facilities in the midwest. Republicans tend to support biofuels, so it’s somewhat surprising they went after this program — especially since $291 million is chump change on the scale of a multi-trillion-dollar budget.
We know a bit more about the second item on the list, the Neighborhood Access and Equity Grant Program. This one allocated just over $3.2 billion to the Federal Highway Administration to award state and local governments with grants to improve walkability and transportation access, to mitigate transportation-related pollution in disadvantaged communities, and to improve transportation equity. The advocacy group Transportation for America found that of the nearly 100 awards the Biden administration announced from this program in 2023, totaling more than $3.1 billion, only 25 projects may have reached a final project agreement, per USASpending.gov. The group says this means it’s possible that nearly the entire $3 billion is up for grabs.
Other funding targeted includes more than $3.3 billion across three allocations to the General Services Administration to improve the efficiency of government buildings, prioritize lower-carbon building materials, and invest in other “emerging and sustainable” building solutions. The Government Accountability Office published a well-timed report about these three programs today, noting that while 99% of the money has been awarded, only half has been obligated, leaving more than $1.7 billion for Congress to take back.
Lastly, the proposal lists $2 billion in grants for states and local governments to use low-carbon materials in road projects. The Department of Transportation awarded $1.8 billion of the money to 39 states last year, although again, it's unclear how many of these awards have been obligated.
Having said all that, let’s assume for a moment that the full amount allocated to each of the programs was available to Congress to claw back. That would come to just under $9 billion of the $10 billion of deficit reductions the Transportation and Infrastructure Committee is required to find under the special rules governing the budget bill.
But the draft bill also contains huge amounts of new spending, including allocating more than $20 billion to the United States Coast Guard for border security and $15 billion for upgrades to Air Traffic Control systems. The nonprofit Union of Concerned Scientists estimates that the new fees on EVs and other vehicles could raise between $7 and $33 billion over the lifetime of the bill, which is not enough to pay for all of that. (They also note that it would barely make up for the more than $200 billion deficit in the Highway Trust Fund.) So if Republicans want to keep those provisions, they may have to find more cuts. They’ll likely have to find more anyway, depending on how much of the IRA money has been obligated.
I’ll leave you with a reminder that I’ll be repeating ad nauseam over the next few weeks or months as Congress hammers out its budget bill: This is just a first pass, and this is all subject to change. The Transportation and Infrastructure Committee will be holding a markup of the proposal on Wednesday, where it will debate each line and make changes before voting on whether to advance it.
Most of the Inflation Reduction Act programs come under the aegis of the Energy and Commerce and Ways and Means committees, neither of which have published any bill text yet. But we’ll be here for you when they do.
Editor’s note: This story has been updated to remove a reference to Gevo, a sustainable aviation fuel producer, which told Heatmap that it declined its awarded grant due to changed business priorities. It has also been update to include the Union of Concerned Scientists’ revenue estimate.
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On green steel, Europe’s gas problem, and America’s withering onshore wind
Current conditions: Drenching storms are heading for the East Coast tonight, especially in the South • The storms barreling through the Pacific, including the now-Category 4 Hurricane Lowell, are unlikely to make landfall or do much beyond stir up the surf in parts of Hawaii and California • Further west across the ocean, Typhoon Krovanh is hammering Japan’s Amami Islands with rain.
The breakneck speed of China’s deployments of solar panels, wind turbines, and nuclear reactors has done much to curb its emissions, even as the People’s Republic remains heavily reliant on coal. But Beijing’s effort to weather the shock of losing steady access to oil and gas out of the Persian Gulf is paying off as the country accelerates its transition away from hydrocarbons to alternative fuels and electrification. Last month, I told you when Sinopec’s chief executive predicted that China’s demand for oil had already peaked. Now a new report shows that China’s emissions dropped by 1% in the second quarter of 2026 as a result of plummeting oil consumption amid the Strait of Hormuz crisis. Analysis from the Centre for Research on Energy and Clean Air, a Helsinki-based research nonprofit that tracks China’s energy transition, produced for Carbon Brief found that China’s total carbon dioxide emissions fell despite a rebound in coal-fired power generation because oil dropped by 9% overall and by a whopping 16% for transportation. It’s the first time a reduction in oil consumption was directly responsible for falling emissions in China. And the country is likely to see further emissions drops. After all, Chinese technology essentially “saved the world from Trump’s energy crisis,” as my colleague Robinson Meyer teased out in a recent Shift Key episode.

Thanks to the Trump administration’s recent wrangling, the $500 million the Biden administration had given steelmaker Cleveland-Cliffs to upgrade its facility in Ohio to produce steel with a cleaner, electricity-based method is now going to refurbishing the coal-fired blast furnaces at the facility, instead. That made Hyundai’s plans for a hydrogen-powered steel plant in southern Louisiana the flagship green steel project in the nation. Later today, it’s finally breaking ground. Canary Media reported that the South Korean automotive and industrial giant will hold a ceremony Friday to mark the start of construction on the project, which is set to come online by 2029. At first, the project is set to run on hydrogen made from natural gas. But by the early 2030s, Hyundai has laid plans to switch to hydrogen made by electrolysis using clean electricity and produced locally.
Meanwhile, Posco, one of South Korea’s dedicated steel giants, is experimenting with hydrogen-based steel production using iron ore from Australia, the latest sign that the East Asian nation is leaning into green H2, according to Hydrogen Insight.
In 2021, western Europe suffered what the Germans call a dunkelflaute, or “dark doldrums,” when expected wind simply doesn’t blow. As a result, wind turbines produced less electricity, and Europeans tapped natural gas stores to generate power, draining supplies ahead of winter. That left the European Union particularly vulnerable to energy shocks when Russia invaded Ukraine the following February. Once again we find ourselves in a situation where America’s spy chief is going to Moscow to reportedly dissuade the Kremlin from launching an attack on a Western ally and Europe’s gas stocks are way down. On Thursday, the head of the industry group Gas Infrastructure Europe told the Financial Times that natural gas stores are at a record low for this time of year. “If we are faced with a compound shock, this is going to be problematic,” said Lucie Boost, the head of the trade association.
Meanwhile, Russia’s ballooning gas crisis, brought on by Ukrainian attacks on refineries, is hurting another American ally. Mongolia, the splotch of democratic blue in the middle of authoritarian red Asia on the Freedom House Index map, is heavily dependent on Russia for fuel and energy. Fuel prices have nearly doubled since the spring, Reuters reported. In the U.S., diesel prices reached an all-time high on Thursday of $5.82 per gallon, surpassing by a 10th of a cent the previous high set in June 2022. “My routine now starts with checking the overnight wires to see if there were any drone strikes on refineries,” Gulf Oil energy advisor Tom Kloza told my colleague Matthew Zeitlin. “That’s what this business has come down to.”
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The U.S. added nearly 5 gigawatts of onshore wind turbines in the second quarter of 2026, but the projects in the pipeline are dwindling by 4%, according to a new American Clean Power Association report. At least 44 gigawatts are “stuck” in the Department of Defense’s review process, though a judge recently ordered the Trump administration to restart processing applications after a prolonged pause. “Time will tell how the Department of Defense reacts to that judgment, and whether or not they start to process those wind projects in the same way that we saw them do before a lot of these actions were implemented,” John Hensley, senior vice president of markets and policy analysis at ACP, told Utility Dive. “If that is the case, then I think there is a large volume of projects sitting behind that bottleneck.”
India’s solar sector has boomed in recent years, especially as the U.S. and Europe went looking for alternate suppliers to China. While the country still has a way to go to build out its capacity for upstream components such as cells and wafers, India’s module manufacturing output has reached 233 gigawatts, with factories operating at most 45% of the time as demand fails to match the maximum potential output, PV Tech reported.
California’s biggest experiment in virtual power plants is progressing. Pacific Gas & Electric announced a first-of-its-kind VPP deal with Google, Tesla, Sunrun, and others coordinating networks of solar panels, batteries, and smart devices in the Bay Area. “This is about delivering power at the speed our economy demands—while improving affordability and reliability for the people we serve,” Chelle Izzi, PG&E’s chief commercial officer, said in a statement.
The August Electricity Price Hub data is in.
It’s another hot and expensive summer.
Across the country, average household electricity bills are up 2.7% in the first eight months of the year, according to the latest update to Heatmap and MIT’s Electricity Price Hub, tacking on $4 per month to the typical bill. This level of rise is consistent with the pace set in 2024 and 2025, but faster than 2021 and 2023.
As we’ve discussed before, some of the fastest growth in prices comes either in the Atlantic Seaboard — with Washington, D.C., Virginia, and New Jersey all having year over year growth rates of at least 7.5% — thanks largely to increased demand and capacity payments in the PJM Interconnection marketplace. Another standout so far this year is Hawaii, which is uniquely dependent on imported oil to power its grid and has seen its 12-month trailing average prices rise by over 8% so far this year.
California, which is well known for seeing especially sharp price increases in recent years largely due to wildfire-related costs, has seen somewhat restrained bill growth so far this year across the state, with the 12-month-rolling average bill rising just 3% in the past 12 months and prices going up 4%. (That price level is still quite high, however, at almost 32 cents per kilowatt-hour, compared to a national average of around 19.)
Rates charged by Southern California Edison, one of the state’s big three investor-owned utilities, are up almost 15% in the past year, averaged across its baseline regions. The MIT researchers attribute this increase to two major factors: one, a decrease in the California Climate Credit, which is paid out to electricity customers from the state’s emissions cap-and-invest program. This year, the credit for Southern California Edison ratepayers is $72, applied to bills in July and August in tranches of $36. Last year, by contrast, Southern California Edison handed out $112 in two tranches, April and October.
The second factor in Southern California Edison’s inflated bills is an increase in the fixed charge portion of the bills ratepayers receive. Following changes in California state law designed to distribute the cost of the grid more equitably, SCE revamped its rate structure at the end of last year to include a “Base Services Charge” of $24 per month for customers not enrolled in any special rate program. At the same time, SCE instituted a roughly 10% decrease in its per-kilowatt-hour electricity rate in order to protect lower-income ratepayers (who would pay a fixed charge substantially lower than the baseline $24). PG&E moved to a similar system earlier this year.
When it introduced the new rates in November of last year, SCE said that “medium energy users” would likely see little change in their bills. Price Hub data suggests, however, that the typical household has seen a bill increase from the new service charge of 13%, even before accounting for the smaller climate credit.
A new policy proposal argues that large load tariffs on their own aren’t enough.
Earlier this year, I attempted to draw up a web diagram about energy affordability. My head was spinning from reading social media threads of experts arguing over the reasons electricity rates were so high, the best strategies to lower them, and how the data center explosion fit into the picture. I wanted to see all of the ideas laid out in one place. Here’s what I sketched out at the time:

That was in March. Looking back at it now, a few things stand out. Of course, Washington hasn't gotten anywhere meaningful yet on permitting reform. Also, the BYOP, or “bring your own power,” idea has in some cases become a justification to build huge off-grid natural gas power plants. Amazon, for example, defended backing what may become the largest fossil fuel plant in the country by saying that it “believes in paying the full costs of powering our operations,” and that the Texas data center project is “powered by new on-site generation that won’t raise electricity costs for Texas families.”
On the other hand, there have been some promising developments in deploying virtual power plants and “grid edge” technologies like rooftop solar, to the benefit of both tech companies and regular folks. In July, New Jersey passed a law to incentivize data center developers to fund virtual power plants that can create more capacity on the grid. The program could ultimately help residential customers get solar panels and batteries, which would bring down their energy bills. Just today, Google announced a partnership with the California utility PG&E to offer residential customers discounts on heat pumps combined with battery energy storage in Alameda and Santa Clara counties. The first 25 homeowners to sign up will get $10,000 off; after that the discount is $5,000.
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One strategy I didn’t jot down back in March was the “large load tariff.” This is when utility regulators create a new electricity rate class for large energy users that helps isolate the costs of serving these customers. A growing number of states have gone one step further and developed data center-specific tariffs, with requirements like charging data centers a minimum fee regardless of how much energy they use, and, in some cases, creating incentives for them to build new renewable energy projects.
A policy paper that came across my desk this week argues that this approach doesn’t go far enough. It says that states have an opportunity to fund the modernization of the electric grid by adding a surcharge on top of large load tariffs.
The paper is from the State Support Center, a nonprofit that provides clean energy policy recommendations and technical assistance to states. It was co-founded by Sam Ricketts, one of the founders of the climate group Evergreen Action and a significant voice in shaping the Inflation Reduction Act. Initially, the Center helped states figure out how to take advantage of all of the new federal funding that came out of that law. Now, like the rest of us, Ricketts is thinking about data centers.
“State policymakers are looking for ways to meet the load growth that is predominantly being driven by data centers,” he told me. “There hasn't been a thorough-enough discussion about capturing investments that large data center loads are making and using those revenues to drive investment into key barriers for the clean grid expansion that the electricity system in the U.S. now needs.”
Traditional large load tariffs are about cost assignment, Ricketts said: Regulators determine the cost of network and operational upgrades required to serve big customers and require utilities to pass those on directly rather than spreading them across the entire customer base. This is just the baseline of what data center developers should do to pay their “fair share,” though, Ricketts argued. Even if large load tariffs help cover the cost of new power plants, they don’t necessarily help solve the interconnection bottlenecks that are preventing generators — especially renewables — from joining the grid, for example.
By adding a simple per-megawatt surcharge to the rates data centers pay, states could raise revenue to accelerate interconnection. They could fund additional staff and invest in new software solutions to help move through the queue of projects waiting to connect faster. They could also put the money toward financing grid upgrades, such as installing grid-enhancing technologies that create more capacity on existing power lines. Alternatively, they could use the money to reward cities and towns for permitting projects more quickly, or to support siting and permitting at the state level, the paper suggests.
Ricketts told me that many state utility commissions have the power to do this today, and those that don’t would require just a simple bit of legislation to empower them. New York could become the first to adopt the idea. In June, Governor Kathy Hochul directed the state’s Department of Public Service to consider requiring data centers to invest in a “grid acceleration fund.”
Several states have already levied similar fees on data centers — they just haven’t dedicated the money toward grid upgrades. A new $0.01-per-kilowatt-hour surcharge on loads larger than 100 megawatts in Oregon will fund efficiency and distributed energy projects that reduce costs for residential customers. Virginia enacted a $0.011 per kilowatt-hour data center electricity consumption tax that will raise money for the state’s general fund. It’s expected to generate $600 million per year.
The paper doesn’t pitch the surcharge as a cure-all, nor does it touch the issue of public opposition or federal permitting obstacles. “The surcharge as envisioned and proposed here is pretty modest,” Ricketts told me. “It is trying to attend to a gap, which is like, hey, there's an opportunity here to capture reinvestment into the grid needs that are truly necessary.”