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Manchin doubles down on electric car subsidies, despite Europe's wrath

The Climate 202

Good morning and welcome to The Climate 202! Today we’re laughing at this story about the movies people hated most in 2022. We think we’ll stick with the Oscar nominees. But first:

Manchin doubles down on EV tax credits in climate law, despite trade tensions with Europe

Sen. Joe Manchin III (D-W.Va.) unveiled a bill today to halt tax credits for electric vehicles that don’t satisfy the battery sourcing requirements in the Inflation Reduction Act.

The measure could increase tensions in Europe, where leaders already worry that America’s climate law will unfairly disadvantage their clean-energy industries, and in Washington, where the Biden administration is still racing to implement the landmark law.

The legislation, dubbed the American Vehicle Security Act, would direct the Treasury Department to stop issuing tax credits for EVs that don’t comply with the climate law’s battery sourcing provisions.

  • The law provides buyers of EVs a credit of up to $7,500 — but only if the vehicle’s battery components were made in North America.
  • To qualify for the full credit, the vehicle’s battery also must contain at least 40 percent critical minerals from the United States or a country with which the United States has a free-trade agreement.
  • In late December, Treasury said it would delay the rollout of these strict new requirements until March. But under Manchin’s bill, the requirements would retroactively take effect on Jan. 1.

“It is unacceptable that the U.S. Treasury … continues to make the full $7,500 credits available without meeting all of the clear requirements included in the Inflation Reduction Act,” Manchin said in a statement.

“The IRA and the EV tax credits must be implemented according to the Congressional intent to ensure the United States, as the superpower of the world, is not beholden to countries that don’t share our values,” he added.

‘You’re hurting my country'

The measure comes after several European leaders voiced frustration with America’s massive green-subsidy package at last week’s World Economic Forum meeting in Davos, Switzerland.

  • “It is no secret that certain elements of the design of the Inflation Reduction Act raised a number of concerns in terms of some of the targeted incentives for companies,” Ursula von der Leyen, the president of the European Union, told delegates.
  • Olaf Scholz, the chancellor of Germany, warned that the EV incentives would harm Germany’s auto industry and eventually spark a green trade war.
  • And when French President Emmanuel Macron visited Washington late last year, he told Manchin, “You’re hurting my country,” Alexander Ward reports for Politico.

A Democratic aide for the Senate Energy and Natural Resources Committee, which Manchin chairs, declined to comment on Europe’s concerns during a Tuesday call with reporters previewing the bill.

But Manchin has defended the intent of the law, telling Politico that “this piece of legislation was not intended to harm anybody. It was intended to keep America strong so we could help our friends. That’s it.”

Manchin also said last week that he didn’t realize the European Union lacked a free trade agreement with the United States when he crafted the new requirements for the EV credits.

From Davos to Dirksen

The new bill faces an uncertain fate on Capitol Hill, where all Republicans voted against the climate law, while Democrats might be wary of tweaking one of their signature achievements.

“Modifying or reopening the Inflation Reduction Act isn’t going to be that popular,” Kevin Book, managing director at ClearView Energy Partners, an independent research firm, told The Climate 202.

“It’s pretty clear that the Democrats who support most of the Inflation Reduction Act … feel really good about the credits as they stand today,” Book added. “And there could be some political risks to showing that the bill could be modified and reconsidered.”

Of course, President Biden suggested during Macron’s state visit that there are “glitches” in the climate law and “tweaks that can be made.” However, White House press secretary Karine Jean-Pierre subsequently clarified that the administration was not seeking a legislative fix.

“We don’t have plans to go back to Congress on that,” Jean-Pierre said. “But when it comes to [Europe’s] concerns, of course, we’re going to have conversations with our European allies.”

Minerals rush

Closer to home, American car companies have also raised alarm about the difficulty of meeting the new requirements for the EV credits.

That’s because the main minerals used in EV batteries — lithium, cobalt, graphite and nickel — primarily come from countries that aren’t parties to U.S. free trade agreements, such as China, Russia, Indonesia and the Democratic Republic of Congo.

Treasury may have attempted to address concerns on both sides of the Atlantic, Book said, by delaying the rollout of the requirements until March.

“Any time anyone passes a law, there’s a whole bunch of fairly competent lawyers who start looking at ways to work within it, and sometimes around it,” he said. “In this case, a lot of those competent counsel happen to reside within the Treasury Department and the administration.”

Spokespeople for Treasury and the Alliance for Automotive Innovation, a trade group representing the U.S. auto industry, did not immediately respond to requests for comment Wednesday morning.

On the Hill

Curtis, Miller-Meeks to lead Conservative Climate Caucus

The Conservative Climate Caucus on Tuesday announced its leadership for the 118th Congress, with Rep. John Curtis (R-Utah) returning as chair and Rep. Mariannette Miller-Meeks (R-Iowa) serving as the first vice chair.

Launched in 2021, the caucus seeks to educate House Republicans about climate change, as polling increasingly shows that younger conservative voters care about the issue.

Last year, Curtis led a delegation of five House Republicans to the United Nations climate summit in Sharm el-Sheikh, Egypt, where they touted the role of natural gas — a fossil fuel — and nuclear energy in reducing emissions. Miller-Meeks joined the delegation to the summit, known as COP27.

“I’m thrilled to join Chairman Curtis as Vice Chair of the Conservative Climate Caucus,” Miller-Meeks said in a statement. “Iowa is leading the nation in the clean energy space, and I look forward to bringing that perspective to the table as we continue to promote sensible renewable energy solutions.”

The power grid

Dead whales and tough economics bedevil Biden’s massive wind energy push

After nine large whales were found stranded on or near beaches in the Northeast in the past six weeks, developers of offshore wind projects are facing criticism even though government scientists say the deaths are unrelated, The Washington Post’s Evan Halper, Timothy Puko and Dino Grandoni report

It’s the latest in a string of challenges facing a fledgling offshore wind industry that climate advocates say is crucial for cutting carbon pollution. High costs, supply chain woes and pushback from the fossil fuel industry are also creating head winds for the nascent sector.

President Biden has committed to deploy 30 gigawatts of new power from offshore wind by 2030. But so far, there are only seven working offshore wind turbines in the entire country. Achieving Biden’s goal would require the installation of thousands of the gigantic machines — and no more delays. 

“As we build out this industry, there are going to be bumps in the road,” Elizabeth Klein, the newly installed director of the federal Bureau of Ocean Energy Management, said at a gathering of U.S. mayors in Washington on Thursday. “We will continue to collaborate with communities up and down the coast and all across the country to make this a reality.”

Corporate commitments

Shareholders tell Wall Street to quit financing fossil fuels

A group of investors asked six big banks on Tuesday to speed up the process of phasing out the financing of new fossil fuel projects to help meet global climate goals, Saijel Kishan reports for Bloomberg News. 

In shareholder proposals, the Interfaith Center on Corporate Responsibility asked JPMorgan Chase, Citigroup, Goldman Sachs, Morgan Stanley, Wells Fargo and Bank of America to move faster on restricting financing for oil and gas development and exploration. They also called for the banks to be more transparent about plans to align lending for all industries with their own goals to cut planet-warming emissions by 2030. 

Meanwhile, New York City Comptroller Brad Lander and three of the city’s pension funds on Tuesday asked lenders, including Royal Bank of Canada, to disclose their 2030 emissions reduction targets on an absolute basis. 

Last year’s climate resolutions filed with Wall Street banks garnered between 8 and 13 percent support at annual shareholder meetings, Bloomberg data shows.

Pressure points

Why conservatives are accusing the Xbox of being ‘woke’

Conservative commentators and politicians are lashing out against Xbox after its parent company, Microsoft, said on Jan. 11 that it will update the video game console to run more efficiently, saving users money on energy bills and lowering the brand’s carbon footprint, The Post’s Dino Grandoni reports.

The criticism follows a similar debate over gas stoves that began this month after Richard Trumka Jr., one of the four commissioners on the Consumer Product Safety Commission, said he had not ruled out banning or regulating the kitchen appliance to protect public health from toxic fumes. 

The Young America’s Foundation, a conservative group, said “now the woke brigade is after video games” in light of Microsoft’s announcement. And Sen. Ted Cruz (R-Tex.) quipped on Twitter this week: “First gas stoves, then your coffee, now they’re gunning for your Xbox.”

Microsoft, which committed to becoming “carbon negative” by the end of the decade, said that it will schedule updates for games, apps and other software during the night when renewable sources are generating a higher proportion of electricity on the local grid. The company added that Xbox will also automatically update certain older consoles to include an energy-saving mode instead of sleep mode, which is already the default on newer models. 

In the atmosphere

Viral

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