The Washington PostDemocracy Dies in Darkness
The Climate 202

Biden's clean-energy czar faces his toughest task yet

The Climate 202

Good morning and welcome to The Climate 202! If you’re a fan of this newsletter, you might enjoy Climate Coach, a new column and newsletter from The Washington Post that will help readers navigate the choices they face when seeking to live a more climate-conscious life. You can sign up for the Climate Coach newsletter here before it launches in January. But first:

John Podesta and the IRS are racing to implement the climate law’s clean energy tax credits

John Podesta’s résumé includes stints as chief of staff to President Bill Clinton and counselor to President Barack Obama. Now the veteran Democratic power broker is taking on what might be his hardest job yet: implementing President Biden’s landmark climate law.

Podesta, 73, returned to the White House in September to oversee implementation of the Inflation Reduction Act, which authorized the biggest burst of spending in the nation’s history to bolster clean energy and curb planet-warming emissions.

Podesta’s central task might seem dull and bureaucratic, but it’s incredibly important for U.S. climate and industrial policy: He must ensure that the Internal Revenue Service and the Treasury Department issue detailed guidance on how consumers and corporations can use $270 billion worth of tax credits to spur the deployment of clean energy nationwide.

“In terms of people who have the skills, the expertise and the relationships within the federal government to tackle such complicated issues, there's no one like John Podesta,” said Christy Goldfuss, chief policy impact officer at the Natural Resources Defense Council and a former colleague of Podesta’s at the Center for American Progress think tank.

If successfully implemented, the law’s tax credits could supercharge domestic manufacturing of solar panels, batteries, electric vehicles and other green technologies. They could also help the United States meet Biden’s ambitious goal of cutting greenhouse gas emissions 50 to 52 percent by 2030 compared to 2005 levels.

But several clean energy companies and trade groups have called on the Biden administration to clarify certain requirements that they say are too confusing or cumbersome. The IRS and Treasury are now racing to issue guidance that allays the industry’s concerns, with some guidance expected by the end of the year.

“The administration has made this a priority, but they're probably facing dueling outcomes: They want to get it right, but they want to get it out fast,” said Timothy Fox, vice president of research at ClearView Energy Partners, an independent research firm. “Doing both is not always easy.”

Treasury did not immediately respond to a request for comment.

Groups grapple with ‘energy communities,’ prevailing wages

One of the most confusing aspects of the climate law, according to some industry groups, is the uncertain definition of “energy communities.”

The law offers additional tax credits to developers of clean-energy projects that are located in “energy communities,” or areas historically reliant on fossil fuels. But it’s unclear whether an area with an idled coal mine would qualify, or whether the coal mine would need to be permanently closed, the groups say.

Also unclear is whether the community would need to have a certain level of employment or revenue from the fossil fuel industry over a certain period of time, said Sean Gallagher, vice president of state and regulatory affairs at the Solar Energy Industries Association, which represents the U.S. solar industry.

“Treasury is going to have to tell us how to calculate this, so that developers will know if they’re eligible or not,” Gallagher said.

The Inflation Reduction Act also requires developers of clean-energy projects to pay workers the prevailing wage rates for “construction, alteration or repair” of a facility. In public comments submitted to the administration, SEIA voiced support for these requirements but requested clarity on whether state or federal prevailing wage rates would apply.

Questions persist over the EV tax credit

The climate law offers tax credits of up to $7,500 for people who purchase new electric vehicles. But the credit only applies to cars with a sticker price below $55,000. For trucks and SUVs, the price must be less than $80,000.

This requirement could be ripe for abuse: When the Canadian government imposed a price cap of $45,000 Canadian dollars on EVs for its tax credit program, Tesla began selling a version of the Model 3 that cost $44,999 Canadian dollars but could only travel 93 miles on a single charge. After buying the car and claiming a tax credit of $5,000 Canadian dollars, consumers could pay an additional fee of nearly $12,000 Canadian dollars to unlock the rest of the battery capacity.

“Exactly how the IRS will police this is an open question,” said Sam Abuelsamid, head of e-mobility research at Guidehouse Insights.

Meanwhile, for their EVs to qualify for the tax credits, automakers must source at least 40 percent of the critical minerals in their EV batteries from the United States or countries with which the United States has a free-trade agreement. This requirement will take effect starting next year and will increase to 50 percent in 2024, 80 percent in 2027 and 100 percent by 2029. 

The Alliance for Automotive Innovation, a trade group representing the U.S. auto industry, has warned that it might be impossible to meet this requirement without any changes or clarifications from the administration.

Tesla, which dissolved its PR department in 2020, could not be reached for comment.

Agency alert

Interior proposes rule to curb methane waste on public lands

The Interior Department’s Bureau of Land Management on Monday unveiled a proposed rule aimed at reducing leaks, venting and flaring of methane from oil and gas operations on public lands.

The proposal seeks to crack down on releases of methane, a potent greenhouse gas that is 80 times more powerful than carbon dioxide for its first 20 years in the atmosphere. Flaring, or the burning of extra natural gas at wells, is a routine step in the oil and gas drilling process.

In a news release, the agency said it estimates that the proposal will prevent billions of cubic feet of natural gas from being wasted and will generate nearly $40 million annually in royalties. 

The Obama administration issued a rule to curb methane waste on public lands in 2016, but the Trump administration sought to weaken the regulation in 2018. Courts vacated the Obama and Trump rules in 2020, leaving outdated regulations from 1979 on the books.

Jon Goldstein, senior director of regulatory and legislative affairs at the Environmental Defense Fund, praised the proposal but urged Interior Secretary Deb Haaland to further strengthen it.

“While BLM’s proposal is an important first step, consistent with its long-standing authority to minimize waste, the Biden administration and Secretary Haaland must go further by setting clear requirements to eliminate waste caused by venting and flaring to safeguard public resources while protecting taxpayers and our energy security,” Goldstein said in a statement.

Interior finalizes area for offshore oil and gas lease sale in Alaska

The Interior Department’s Bureau of Ocean Energy Management on Monday finalized plans to auction off about 958,202 acres off the coast of Alaska for new oil and gas development during a Dec. 30 lease sale mandated by the Inflation Reduction Act. 

The climate law requires the agency to hold the auction in Alaska’s Cook Inlet, known as Lease Sale 258, by the end of the year. But environmental groups have raised concerns that drilling in these waters will release planet-warming emissions and will harm Cook Inlet belugas, one of the world’s most endangered whale populations.

International climate

Britain’s architecture, built for the cold, is being tested by global warming

The United Kingdom has always contended with cold, damp weather. But in an era of climate change, summer is increasingly bringing its own challenges, with a succession of heat waves, wildfires and other extreme events putting its built environment under intense stress, Philip Kennicott, Simon Ducroquet, Frank Hulley-Jones and Aaron Steckelberg report for The Post

Many of the country’s homes were built more than a century ago, meaning they are some of the leakiest and draftiest in Europe. Now, as the country heads into winter amid Russia’s war in Ukraine, the issue is coming under greater scrutiny as some people fear having to make a difficult choice between food and heat.

In the atmosphere


Thanks for reading!