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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 told Electrek 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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Hotspots

Judge, Siding With Trump, Saves Solar From NEPA

And more on the week’s biggest conflicts around renewable energy projects.

The United States.
Heatmap Illustration/Getty Images

1. Jackson County, Kansas – A judge has rejected a Hail Mary lawsuit to kill a single solar farm over it benefiting from the Inflation Reduction Act, siding with arguments from a somewhat unexpected source — the Trump administration’s Justice Department — which argued that projects qualifying for tax credits do not require federal environmental reviews.

  • We previously reported that this lawsuit filed by frustrated Kansans targeted implementation of the IRA when it first was filed in February. That was true then, but afterwards an amended complaint was filed that focused entirely on the solar farm at the heart of the case: NextEra’s Jeffrey Solar. The case focuses now on whether Jeffrey benefiting from IRA credits means it should’ve gotten reviewed under the National Environmental Policy Act.
  • Perhaps surprisingly to some, the Trump Justice Department argued against these NEPA reviews – a posture that jibes with the administration’s approach to streamlining the overall environmental analysis process but works in favor of companies using IRA credits.
  • In a ruling that came down on Tuesday, District Judge Holly Teeter ruled the landowners lacked standing to sue because “there is a mismatch between their environmental concerns tied to construction of the Jeffrey Solar Project and the tax credits and regulations,” and they did not “plausibly allege the substantial federal control and responsibility necessary to trigger NEPA review.”
  • “Plaintiffs’ claims, arguments, and requested relief have been difficult to analyze,” Teeter wrote in her opinion. “They are trying to use the procedural requirements of NEPA as a roadblock because they do not like what Congress has chosen to incentivize and what regulations Jackson County is considering. But those challenges must be made to the legislative branch, not to the judiciary.”

2. Portage County, Wisconsin – The largest solar project in the Badger State is now one step closer to construction after settling with environmentalists concerned about impacts to the Greater Prairie Chicken, an imperiled bird species beloved in wildlife conservation circles.

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Spotlight

Renewables Swept Up in Data Center Backlash

Just look at Virginia.

A data center.
Heatmap Illustration/Getty Images

Solar and wind projects are getting swept up in the blowback to data center construction, presenting a risk to renewable energy companies who are hoping to ride the rise of AI in an otherwise difficult moment for the industry.

The American data center boom is going to demand an enormous amount of electricity and renewables developers believe much of it will come from solar and wind. But while these types of energy generation may be more easily constructed than, say, a fossil power plant, it doesn’t necessarily mean a connection to a data center will make a renewable project more popular. Not to mention data centers in rural areas face complaints that overlap with prominent arguments against solar and wind – like noise and impacts to water and farmland – which is leading to unfavorable outcomes for renewable energy developers more broadly when a community turns against a data center.

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Energy

Where Clean Energy Goes From Here

The One Big Beautiful Bill Act is one signature away from becoming law and drastically changing the economics of renewables development in the U.S. That doesn’t mean decarbonization is over, experts told Heatmap, but it certainly doesn’t help.

The Big Beautiful Bill and clean energy.
Heatmap Illustration/Getty Images

What do we do now?

That’s the question people across the climate change and clean energy communities are asking themselves now that Congress has passed the One Big Beautiful Bill Act, which would slash most of the tax credits and subsidies for clean energy established under the Inflation Reduction Act.

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