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A new “foreign entities of concern” proposal might be just as unworkable as the House version.
In the House’s version of Trump’s One, Big, Beautiful Bill Act Republicans proposed denying tax credits to clean energy companies whose supply chains contained any ties — big or small — to China. The rules were so administratively and logistically difficult, industry leaders said, that they were effectively the same as killing the tax credits altogether.
Now the Senate is out with a different proposal that, at least on its face, seems to be more flexible and easier to comply with. But upon deeper inspection, it may prove just as unworkable.
“It has the veneer of giving more specificity and clarity,” Kristina Costa, a Biden White House official who worked on Inflation Reduction Act implementation, told me. “But a lot of the fundamental issues that were present in the House bill remain.”
The provisions in question are known as the “foreign entities of concern” or FEOC rules. They penalize companies for having financial or material relationships with businesses that are “owned by, controlled by, or subject to the jurisdiction or direction of” any of four countries — Russia, Iran, North Korea, and, most importantly for clean energy technology, China.
The Inflation Reduction Act imposed FEOC restrictions on just one clean energy tax credit — the $7,500 consumer credit for electric vehicles. Starting in 2024, if automakers wanted their cars to qualify, they could not use battery components that were manufactured or assembled by a FEOC. The rules ratcheted up over time, later disallowing critical minerals extracted or processed by a FEOC.
The idea, Costa told me, was to “target the most economically important components and materials for our energy security and economic security.” But now, the GOP is attempting to impose FEOC restrictions liberally to every tax credit and every component, in a world where China is the biggest lithium producer and dominates roughly 80% of the solar supply chain.
Not only would sourcing outside China be challenging, it would also be an administrative nightmare. The way the House’s reconciliation bill was written, a single bolt or screw sourced from a Chinese company, or even a business partially owned by Chinese citizens, could disqualify an entire project. “How in the world are you going to trace five layers down to a subcontractor who’s buying a bolt and a screw?” John Ketchum, the CEO of the energy company NextEra, said at a recent Politico summit. Ketchum deemed the rules “unworkable.”
The Senate proposal would similarly attach FEOC rules to every tax credit, but it has a slightly different approach. Rather than a straight ban on Chinese sourcing, the bill would phase-in supply chain restrictions, requiring project developers and manufacturers to use fewer and fewer Chinese-sourced inputs over time. For example, starting next year, in order for a solar farm to qualify for tax credits, 40% of the value of the materials used to develop the project could not be tied to a FEOC. By 2030, the threshold would rise to 60%. The bill includes a schedule of benchmarks for each tax credit.
“That might be strict, but it’s clearer and more specific, and it’s potentially doable,” Derrick Flakoll, the senior policy associate for North America at BloombergNEF, told me. “It’s not an all or nothing test.”
But how companies should calculate this percentage is not self-evident. The Senate bill instructs the Treasury department to issue guidance for how companies should weigh the various sub-components that make up a project. It references guidance issued by the Biden administration for the purposes of qualifying for a domestic content bonus credit, and says companies can use this for the FEOC rules until new guidance is issued.
Mike Hall, the CEO of a company called Anza that provides supply chain data and analytics to solar developers, told me he felt that the schedule was achievable for solar farm developers. But the Biden-era guidance only contains instructions for wind, solar, and batteries. It’s unclear what a company building a geothermal project or seeking to claim the manufacturing tax credit would need to do.
Costa was skeptical that the Senate bill was, in fact, clearer or more specific than the House version. “They’re not providing the level of precision in their definitions that it would take to be confident that the effect of what they’re doing here will not still require going upstream to every nut, bolt, screw, and wire in a project,” she said.
It’s also hard to tell whether certain parts of the text are intentional or a drafting error. There’s a section that Flakoll had interpreted as a grandfathering clause to allow companies to exempt certain components from the calculation if they had pre-existing procurement contracts for those materials. But Costa said that even though that seems to have been the intent, the way that it’s written does not actually achieve that goal.
In addition to rules on sourcing, the Senate bill would introduce strict ownership rules that could potentially disqualify projects that are already under construction or factories that are already producing eligible components. The text contains a long list defining various relationships with Chinese entities that would disqualify a company from tax credits. Perhaps the simplest one is if a Chinese entity owns just 25% of the company.
BloombergNEF analyzed the pipeline of solar and battery factories that are operational, under construction, or have been announced in the U.S. as of March, and quite a few have links to China. The research firm identified 22 firms “headquartered in China with Chinese parent companies or majority-Chinese shareholders” that are behind more than 100 existing or planned solar or battery factories in the U.S.
One example is AESC, a Japanese battery manufacturer that sold a controlling stake in the business to a Chinese company in 2018. AESC has two gigafactories under construction in Kentucky and South Carolina, both of which are currently paused, and a third operating in Tennessee. Another is Illuminate USA, a joint venture between U.S. renewables developer Invenergy and Chinese solar panel manufacturer LONGi; it began producing solar panels at a new factory in Ohio last year. The sources I reached out to would not comment on whether they thought that Ford, which has a licensing deal with Chinese battery maker CATL, would be affected. Ford did not respond to a request for comment.
Hall told me he would expect to see Chinese companies try to divest from these projects. But even then, if the business is still using Chinese intellectual property, it may not qualify. “It’s just a lot of hurdles for some of these factories that are already in flight to clear,” he said.
In general, the FEOC language in the Senate bill was “still not good,” he said, but “a big improvement from what was in the House language, which just seemed like an insurmountable challenge.”
Albert Gore, the executive director of the Zero Emissions Transportation Association, had a similar assessment. “Of course, the House bill isn’t the only benchmark,” he told me. “Current law is, in my view, the current benchmark, and this is going to have a pretty negative impact on our industry.”
A statement from the League of Conservation Voters’ Vice President of Federal Policy Matthew Davis was more grave, warning that the Trump administration could use the ambiguity in the bill to block projects and revoke credits. “The FEOC language remains a convoluted, barely workable maze that invites regulatory chaos, giving the Trump administration wide-open authority to worsen and weaponize the rules through agency guidance,” he wrote.
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A conversation with Heather O’Neill of Advanced Energy United.
This week’s conversation is with Heather O’Neill, CEO of renewables advocacy group Advanced Energy United. I wanted to chat with O’Neill in light of the recent effective repeal of the Inflation Reduction Act’s clean electricity tax credits and the action at the Interior Department clamping down on development. I’m quite glad she was game to talk hot topics, including the future of wind energy and whether we’ll see blue states step into the vacuum left by the federal government.
The following conversation has been lightly edited for clarity.
During Trump 1.0 we saw blue states really step into the climate role in light of the federal government. Do you see anything similar taking place now?
I think this moment we’re in – it is a different moment.
How are we handling load growth? How are we making sure consumers are not paying for expensive stranded assets? Thinking about energy affordability? All of those challenges absolutely present a different moment and will result in a different response from state leaders.
But that’s where some of the changes our industry has gone through mean we’re able to meet that moment and provide solutions to those challenges. I think we need aggressive action from state leaders and I think we’ll see that from them, because of the challenges in front of them.
What does that look like?
Every state is different. Take Virginia for example. Five years after we passed the Virginia Clean Economy Act – a big, bold promise of action – we’re not on track. So what are the things we need to do to keep the foot on the accelerator there? This last legislative session we passed the virtual power plant legislation that’ll help tremendously in terms of grid flexibility. We made a big push around siting and permitting reform, and we didn’t quite get it over the finish line but that’s the kind of thing where we made a good foundation.
Or Texas. There’s so much advanced energy powering Texas right now. You had catastrophic grid failure in Hurricane Uri and look at what they’ve been able to build out in response to that: wind, solar, and in the last few years, battery storage, and they just passed the energy waste reduction [bill].
We need to build things and make it easier to build – siting and permitting reform – but it’s also states depending on their environment looking at and engaging with their regional transmission organization.
You saw that last week, a robust set of governors across the PJM region called on them to improve their interconnection queue. It’s about pushing and finding reforms at the market level, to get these assets online and get on the grid deployed.
I think the point about forward momentum, I definitely see what you’re saying there about the need for action. Do you see state primacy laws or pre-emption laws? Like what Michigan, New York, and California have done…
I’m not a siting expert, but the reform packages that work the best include engagement from communities in meaningful ways. But they also make sure you’re not having a vocal minority drowning out the benefits and dragging out the process forever. There are timelines and certainty attached to it while still having meaningful local engagement.
Our industry absolutely has to continue to lean into more local engagement and community engagement around the benefits of a project and what they can deliver for a community. I also think there’s a fair amount of making sure the state is creating that pathway, providing that certainty, so we can actually move forward to build out these projects.
From the federal government’s perspective, they’re cracking down on wind and solar projects while changing the tax credits. Do you see states presenting their own incentives for renewables in lieu of federal incentives? I’ve wondered if that’ll happen given inflation and affordability concerns.
No, I think we have to be really creative as an industry, and state leaders have to be creative too. If I’m a governor, affordability concerns were already front and center for me, and now given what just happened, they’re grappling with incredibly tight state budgets that are about to get tighter, including health care. They’re going to see state budgets hit really hard. And there’s energy impacts – we’re cutting off supply, so we’re going to see prices go up.
This is where governors and state leaders can act but I think in this context of tight state budgets I don’t think we can expect to see states replacing incentive packages.
It’ll be: how do we take advantage of all the flexible tools that we have to help shape and reduce demand in meaningful ways that’ll save consumers money, as well as push on building out projects and getting existing juice out of the transmission system we have today.
Is there a future for wind in the United States?
It is an incredibly challenging environment – no question – for all of our technologies, wind included. I don’t want to sugar-coat that at all.
But I look at the whole picture, and I include wind in this: the technologies have improved dramatically in the past couple of decades and the costs have come down. When you look around at what resources are around to deploy, it’s advanced energy. We’re seeing it continue to grow. There’ll be headwinds, and it’ll be more expensive for all of us. But I look at what our industry and our technologies are able to offer and deliver, and I am confident we’ll continue to see growth.
The Grain Belt Express was just the beginning.
The anti-renewables movement is now coming for transmission lines as the Trump administration signals a willingness to cut off support for wires that connect to renewable energy sources.
Last week, Trump’s Energy Department with a brief letter rescinded a nearly $5 billion loan guarantee to Invenergy for the Grain Belt Express line that would, if completed, connect wind projects in Kansas to areas of Illinois and Indiana. This decision followed a groundswell of public opposition over concerns about land use and agricultural impacts – factors that ring familiar to readers of The Fight – which culminated in Republican Senator Josh Hawley reportedly asking Donald Trump in a meeting to order the loan’s cancellation. It’s unclear whether questions around the legality of this loan cancellation will be resolved in the courts, meaning Invenergy may just try to trudge ahead and not pick a fight with the Trump administration.
But the Grain Belt Express is not an anomaly. Across the country, transmission lines tied to both renewable sources and more conventional fuels – both fossil and nuclear – are facing a growing chorus of angst and anguish from the same crowds that are fighting renewable energy. In some ways, it’s a tale as old as widespread transmission itself. But I am also talking about farmers, ranchers, and rural towns who all now mention transmission lines in the same exasperated breaths they use to bemoan solar, wind, and battery storage. Many of the same communities fighting zero-carbon energy sources see those conflicts as part of a broader stand against a new age of tech industrial build-out – meaning that after a solar or wind farm is defeated, that activism energy is likely to go elsewhere, including expanding the grid.
I’ve been trying to figure out if there are other situations like Grain Belt, where a project facing local headwinds could potentially be considered no longer investable from a renewables-skeptic federal perspective. And that’s why since Invenergy lost its cash for that project, I have been digging into the Cimarron Link transmission line, another Invenergy facility proposed to carry wind energy from eastern Oklahoma to the western part of the state, according to a map on the developer’s website.
Do you remember the campaign to ban wind energy in Oklahoma that I profiled at the start of this year? Well, one of the most prominent scalps that this activism movement has claimed was bagged in late 2024, when they successfully pressured Governor Kevin Stitt into opposing a priority transmission corridor proposed by the Biden administration. Then another one of the activists’ biggest accomplishments came through an anti-wind law enacted this year that would, among other things, require transmission projects to go through a new certification program before the state’s Corporation Commission. Many of the figures fighting Cimarron and another transmission line project – NextEra’s Heartland Spirit Connector – are also involved in fighting wind and solar across the state, and see the struggles as part and parcel with each other.
Invenergy appears to want to soldier on through this increasingly difficult process, or at least that’s according to a letter some landowners received that was posted to Facebook. But these hurdles will seriously impact the plausibility that Cimarron Link can be completed any time soon.
Now, on top of these hurdles, critics want Cimarron Link to get the Grain Belt treatment. Cimarron Link was told last fall it was awarded north of $300 million from the Energy Department as a part of DOE’s Transmission Facilitation Program.
Enter Darren Blanchard, a farmer who says his property is in the path of Cimarron Link and has been one of the main public faces of opposition against the project. Blanchard has recently been pleading with the DOE to nix the disposition of that money if it hasn’t been given already. Blanchard wrote the agency a lengthy request that Cimarron get similar treatment to Grain Belt which was made public in the appendix of the agency’s decision documents related to the loan cancellation (see page 23 of this document).
To Blanchard’s surprise, he got a reply from the Transmission Facilitation Program office “responding on behalf of” Energy Secretary Chris Wright. The note, to him, read like they wanted him to know they saw his comment: “We appreciate you taking the time to share your views on the project,” it read.
Now, this might’ve been innocuous. I haven’t heard back from the Energy Department about Cimarron Link and I am personally skeptical of the chances a grant is canceled easily. There is no high-level politician calling for the cancellation of this money right now, like there was in Sen. Josh Hawley and the Grain Belt Express.
But I do believe that if there is a will, there is a way with the Trump administration. And as anti-renewables sentiments abound further, there’ll be more ways to create woe for transmission projects like Cimarron that connect to renewable resources. Should voices like Blanchard aim their sights at replicating what happened with Grain Belt, well… bets may be off.
Over the next few weeks, I will be chronicling more fights over individual transmission projects connected to zero-carbon sources. Unique but with implications for a host of proposed wires across the country, they’re trend-setters, so to speak. Next week I’ll be tackling some power lines out West, so stay tuned.
On America’s new crude record, coal costs, and Hungary’s SMR deal
Current conditions: Coastal storms are pushing water levels on New England’s shores two feet above normal levels • Japan just set a new temperature record of more than 106 degrees Fahrenheit • A cold front is settling over South Africa, bringing gale-forces to KwaZulu-Natal on the east coast.
The Department of Energy issued a report on Tuesday calling into question the global consensus on climate change and concluding that global warming poses less economic risk than previously believed. “The rise of human flourishing over the past two centuries is a story worth celebrating. Yet we are told — relentlessly — that the very energy systems that enabled this progress now pose an existential threat,” Secretary of Energy Chris Wright said in a statement. “Climate change is real, and it deserves attention. But it is not the greatest threat facing humanity.” But scientists whose work appeared in the 151-page report decried an analysis they said “fundamentally misrepresents” their research. I rounded up some comments they’ve made over the past couple of days:
A pumpjack in the Permian Basin.Joe Raedle / Getty Images
U.S. crude oil production surged to a record 13.49 million barrels per day in May, despite concerns about oversupply driving prices down to four-year lows, according to a Reuters analysis of data from the U.S. Energy Information Administration. The milestone represents a win for President Donald Trump, who has repeatedly urged the industry to “drill, baby, drill,” even as rival producers in the Organization of the Petroleum Exporting Countries increased output to maintain market share, making profits difficult to turn in the U.S.
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The Bureau of Ocean Energy Management has rescinded its designated areas for offshore wind development in federal waters. The move de-designated more than 3.5 million acres off the continental shelf in the Gulf of Maine, the New York Bight, California, Oregon, the Central Atlantic, and the Gulf of Mexico for potential wind development.
The agency said it was acting in accordance with Secretary of the Interior Doug Burgum’s order this week to weed out any policies that give preferential treatment to wind and solar. While the de-designation will not affect existing leases, the decision makes permanent the temporary pause on offshore wind leases Trump issued via an executive order on his first day in office in January.
In May, Energy Secretary Chris Wright issued an emergency order directing the utility Consumers Energy to keep Michigan’s J.H. Campbell coal plant operating for another 90 days, through August 20, to meet surging electricity demand on the Midwest’s grid. In a public filing as part of its quarterly earnings announced Thursday, Consumers Energy named the price of complying with the administration's order so far: $29 million. And that’s just the cost of operating the plant through June 30. The company said it plans to recoup the cost from ratepayers. The filing did not indicate what the total cost would be for the full three-month period.
Even before Trump returned to office, coal plant retirements were slowing. As Heatmap’s Matthew Zeitlin wrote last year, “Coal and gas were being retired so steadily over the past 20 years not just because plants were aging, but also because power use was essentially flat from the early 2000s through, essentially, yesterday. This meant that older plants — especially dirty coal plants — became uneconomic to run, especially as natural gas prices began to fall.” Coal plant retirements dropped last year to their lowest level since 2011, according to the Energy Information Administration, though at least as of February they were projected to increase this year again by 65%.
Of all the small modular reactors competing for a shot in the West’s ballyhooed nuclear renaissance, GE-Hitachi Nuclear Energy’s 300-megawatt model is among the most promising. Ontario’s public utility just broke ground on what could be the world’s first BWRX-300s. The Tennessee Valley Authority has plans to build the second set. And Finland, Sweden, Estonia, and Poland are all considering buying their own. Add Hungary to that list. Piggybacking off the Polish project, Hungary on Wednesday signed a letter of intent with Poland’s Synthos Green Energy to back construction of up to 10 BWRX-300 reactors, the U.S. Embassy in Hungary announced. “This is American engineering at its best — the kind of trusted technology that reflects the strength, reliability, and excellence of the American industrial base,” Chargé d’Affaires Robert Palladino said in a speech at the signing event.
The move comes as the U.S. looks to broaden its grip on Europe’s nuclear sector. Westinghouse, the legendary American nuclear developer behind the only two new reactors built from scratch in a generation in the U.S., is building Poland’s first atomic power station. Earlier this week, Slovakia skipped its competitive bidding process and picked Westinghouse to construct its next nuclear plant. But after struggling to build its own reactors at home, the U.S. has to prove it can deliver on the deals.
“Wind farms: Loud, ugly, harmful to nature. Who says that? These giants are standing tall against fossil fuels, rising up out of the ocean like a middle finger to CO2,” Samuel L. Jackson says in a new minute-long TV commercial from Swedish wind giant Vattenfall advertising seaweed snacks from aquatic crops grown on the artificial reefs around the behemoth turbine foundations. It may be one of the most defiant, if expletive-laden, defenses made yet of the industry the Trump administration is bent on drowning.