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Technology

How Biden’s Sustainable Aviation Fuel Tax Credits Will Work

On the future of flying, efficient water heaters, and data centers

How Biden’s Sustainable Aviation Fuel Tax Credits Will Work
Heatmap Illustration/Getty Images

Current conditions: It will be 107 degrees Fahrenheit in Kolkata as Southeast Asia’s heat wave continues • Kansas and Oklahoma are on alert for tornadoes and large hail • The Eta Aquariids meteor shower peaks this week.

THE TOP FIVE

1. Biden administration outlines rules for sustainable aviation fuel subsidies

The Treasury Department and IRS yesterday released new details about the subsidy program for producers of sustainable aviation fuel (SAF), which the Biden administration hopes will help cut emissions from the aviation industry while also supporting farmers. What makes SAF “sustainable” is that it comes from biomass (stuff like corn grain, wood mill waste, even manure) instead of petroleum. Burning SAFs for fuel still produces carbon dioxide, but their lifecycle emissions are lower than those of fossil fuels, and they can be used in existing planes, so they are seen as a quick way to cut aviation emissions in the short term.

Under the new guidance, refiners will be eligible for a credit of $1.25 per gallon if their fuel reduces greenhouse gas emissions by 50% compared to traditional jet fuel, and up to $1.75 per gallon if emissions cuts go beyond 50%. The announcement clarified that SAF made out of ethanol is eligible if corn farmers use “climate smart agriculture” such as cover cropping, no-till, and efficient fertilizer application to keep carbon in the soil. Reaction to the announcement has been mixed. Ethanol trade groups were pleased to be included but annoyed at the stringent farming requirements. Environmental groups worry crop-based biofuels will take up too much farmland and could lead to deforestation. “Powering planes with crop-based biofuels is anything but sustainable,” said Dan Lashof, director of the World Resources Institute. Commercial aviation accounts for 2% of U.S. carbon emissions.

2. DOE finalizes water heater efficiency standards

More news from the government yesterday: The Department of Energy announced that most new electric water heaters will have to run on heat pump technology starting in 2029. Water heaters are some of the biggest energy hogs in the average American home. Making them more efficient could reduce consumers’ utility bills by approximately $100 per year, the DOE said. And the energy savings of the new standards are quite astonishing: 17.6 quadrillion British thermal units over 30 years of shipments, “the largest savings ever from a single DOE efficiency standard, representing more than the energy use of the entire U.S. residential building sector in a single year.” As for the climate, the DOE said the efficiency standards will reduce greenhouse gas emissions by 2.5 billion metric tons over 30 years, which is roughly equivalent to taking 18 million gas-powered cars off the road.

3. Microsoft teams up with Brookfield to power data centers with clean energy

Microsoft is throwing significant financial backing behind renewable energy projects to be developed by Brookfield Asset Management that will help power data centers, the Financial Times reported. The wind and solar projects will be built between 2026 and 2030, and have at least 10.5 gigawatts of generating capacity, or enough to power 1.8 million homes. The tech giant will back the projects’ development to the tune of about $10 billion, “in a deal that underscores the race to meet clean energy commitments while satisfying the voracious energy demand of cloud computing and artificial intelligence,” the FT added.

4. Internal documents offer insight into fossil fuel companies’ climate strategies

Congressional Democrats released documents they say reveal how big oil companies have misled the public about their role in causing and fixing the climate crisis. The documents include internal communications from companies like Exxon, Chevron, Shell, and BP. In the exchanges, company representatives cast doubt on the feasibility of limiting global warming to 1.5 degrees Celsius, dismiss the idea that the Paris Agreement should be cause for changing course on fossil fuel production, and acknowledge the huge climate-warming potential of methane. “For decades, the fossil-fuel industry has known about the economic and climate harms of its products but has deceived the American public to keep collecting more than $600 billion each year in subsidies while raking in record-breaking profits,” said Democratic Sen. Sheldon Whitehouse, who chairs the Senate Budget Committee. The committee will hold a hearing on the subject today.

5. Tesla shares dip after Supercharger layoffs

Tesla shares are down by about 5% this morning following news that the company slashed its entire Supercharging unit. Sources toldElectrek that Tesla has already pulled out of four leases on planned Supercharger locations in New York. CEO Elon Musk also confirmed on X that the company will slow construction of new charging stations.

THE KICKER

The North Atlantic broke its 420-day streak of record high sea surface temperatures this week.

X/EliotJacobson

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Ideas

The GOP Megabill Is Playing Right Into China’s Hands

Two former Department of Energy staffers argue from experience that severe foreign entity restrictions aren’t the way to reshore America’s clean energy supply chain.

Xi Jinping and solar panels.
Heatmap Illustration/Getty Images

The latest version of Congress’s “One Big, Beautiful Bill” claims to be tough on China. Instead, it penalizes American energy developers and hands China the keys to dominate 21st century energy supply chains and energy-intensive industries like AI.

Republicans are on the verge of enacting a convoluted maze of “foreign entity” restrictions and penalties on U.S. manufacturers and energy companies in the name of excising China from U.S. energy supply chains. We share this goal to end U.S. reliance on Chinese minerals and manufacturing. While at the U.S. Department of Energy and the White House, we worked on numerous efforts to combat China’s grip on energy supply chains. That included developing tough, nuanced and, importantly, workable rules to restrict tax credit eligibility for electric vehicles made using materials from China or Chinese entities — rules that quickly began to shift supply chains away from China and toward the U.S. and our allies.

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AM Briefing: Let the Vote-a-Rama Begin

On taxing renewables, climate finance, and Europe’s heat wave

Where Things Stand with the GOP’s Megabill
Heatmap Illustration/Getty Images

Current conditions: Parts of Northern California are under red flag warnings as warm air meets whipping winds • China’s southwestern Guizhou province is flooded for the second time in a week • A potential bomb cyclone is taking aim at Australia’s east coast.

THE TOP FIVE

1. The Senate GOP’s new tax on renewables could kill the industry

Late on Friday Senate Republicans added a new tax on solar and wind projects to the budget reconciliation megabill that sent many in the industry into full-blown crisis mode. The proposal would levy a first-of-its-kind penalty on all solar and wind projects tied to the quantity of materials they source from companies with ties to China or other countries designated as adversaries by the U.S. government. “Taken together with other factors both in the bill and not, including permitting timelines and Trump’s tariffs, this tax could indefinitely undermine renewables development in America,” wrote Heatmap’s Jael Holzman. Here are a few reactions from politicians and industry insiders:

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Politics

How the Senate GOP’s New Tax on Renewables Could ‘Kill’ the Industry

As bad as previous drafts of the reconciliation bill have been, this one is worse.

The Capitol and John Thune.
Heatmap Illustration/Getty Images

Senate Republicans are in the final stages of passing their budget reconciliation megabill — which suddenly includes a new tax on solar and wind projects that has sent many in the industry into full-blown crisis mode.

The proposed tax was tucked inside the latest text of the Senate reconciliation bill, released late Friday night, and would levy a first-of-its-kind penalty on all solar and wind projects tied to the quantity of materials they source from companies with ties to China or other countries designated as adversaries by the U.S. government. Industry representatives are still processing the legislative language, but some fear it would kick in for certain developers as soon as the date of its enactment. Taken together with other factors both in the bill and not, including permitting timelines and Trump’s tariffs, this tax could indefinitely undermine renewables development in America.

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Green