UNDERSTANDING THE NEW NUMBERS FOR THE IRA CLEAN ENERGY PROVISIONS: The Inflation Reduction Act’s clean energy provisions will cost taxpayers roughly $428 billion more in the next decade than originally projected, according to a new estimate from the Congressional Budget Office — an increase larger than the original projection for the total cost of the measures, which was $369 billion.
The update came yesterday as part of the office’s annual budget projections, which also estimated that the federal deficit will grow to $2.6 trillion in 2034, up from $1.6 trillion in fiscal 2024.
CBO director Phillip Swagel said costs of the clean energy-related tax credit costs “are much higher than the staff of the Joint Committee on Taxation originally projected,” and “reflect new emissions standards, market developments, and actions taken by the Administration to implement the tax provisions.”
Why costs are higher: One big reason is that more people and businesses have taken advantage of the law’s tax credits in a shorter time frame than anticipated.
The CBO report adds to other estimates that have similarly found that the costs of the IRA will be far higher than originally projected – in fact, it’s more conservative. Goldman Sachs, for instance, estimated that the incentives would cost roughly $1.2 trillion by 2032—three times as much as the official figures.
And another report from researchers at Penn Wharton projected that the IRA’s energy and climate costs would total around $1.05 trillion. That report projected that incentives for EV cars and trucks alone would add around $393 billion in costs in the next 10 years, as Washington Examiner alum Jeremy Beaman previously reported.
How the CBO report is different: The Goldman and Penn Wharton estimates only accounted for the higher-than-expected take-up for the credits. The CBO’s new estimate also takes into account the Biden administration’s new emissions standards for autos and its efforts to promote electric vehicles. It says that those efforts will decrease gas tax revenues and increase take-up for EV tax credits. All together, federal revenues will take an additional $224 billion hit from those factors over the next 10 years.
The higher costs for wind, solar, battery manufacturing, and other credits will account for another additional $204 billion in costs. Adding those together gives the total of $428 billion.
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment writers Breanne Deppisch (@breanne_dep) and Nancy Vu (@NancyVu99). Email bdeppisch@washingtonexaminer dot com or nancy.vu@washingtonexaminer dot com for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.
SENATE GRILLS BIDEN ADMIN OVER LNG EXPORT PAUSE: Deputy Energy Secretary David Turk was grilled by Energy and Natural Resources Committee members on Thursday, as the Biden administration continues to face backlash on its pause of new liquified natural gas terminals.
Throughout the hearing, committee Chairman Sen. Joe Manchin, along with Republicans, hammered the Biden administration for the move, arguing it sends a signal to allied nations that the U.S. would not be as involved in the markets, and could empower countries like Russia, Qatar, and Iran.
“Again and again, this White House has shown that it is so concerned with indulging radical climate activists that it’s willing to play politics with our energy security and that of our allies,” Manchin said during his opening remarks.
Something we noticed: Turk declined to say whether U.S. allies were given any advance notice of the pause on exports, including state-owned companies in Japan and Germany that had already signed offtake agreements for the CP2 LNG export facility in Louisiana that is affected by the pause. The question was brought forward by GOP Sen. Lisa Murkowski, who raised the fear that the pause could cause price volatility and economic turmoil.
Turk, meanwhile, characterized the pause as crucial to understanding the downstream effects LNG exports will have on the climate – and particularly methane emissions from LNG — as U.S. exports have tripled in the last five years, and are on track to double that amount with current approvals.
“Given all these transformational changes, DOE has the responsibility to assess additional proposed exports using the most complete, the most updated and the most robust analysis possible,” he said.
A second panel of witnesses were brought in following the first half of the hearing, to examine how Europe may be affected by the LNG pause.
“And by not being able, perhaps, to honor the commitments that have been made in the United States towards its allies, you are going to indeed force us to continue to do business with Russia,” said James Watson, the secretary general of Eurogas. “Even though we have a stated aim to reduce Russian gas supply to zero by 2027, we feel very strongly that the United States should support us in this activity.”
Following the hearing, the committee’s top Republican, John Barrasso, led a press conference with other Senate GOPers to further push back on the LNG pause.
President Joe Biden is “choosing Putin over Pennsylvania. He’s choosing the Ayatollah over Appalachia. And he is also choosing the Kremlin over the Kanawha in West Virginia,” Shelley Moore Capito said.
They were joined by Sens. John Kennedy, John Hoeven, Steve Daines, and Dan Sullivan.
S&P DEMOTES ORSTED TO “BBB”: S&P downgraded Danish wind power company Orsted to “BBB” on Wednesday, Reuters reports – citing higher levels of debt on its balance sheet and mishaps due to supply chain delays and higher costs.
S&P said Orsted’s business risk profile had weakened from last year, but was still considered adequate. According to S&P, a “BBB” rating is considered to be within “adequate capacity to meet financial commitments” but is “more subject to adverse economic conditions.” S&P said it expects Orsted, the world’s largest offshore wind farm developer, would be able to navigate the significant industry risks it faces.
In an emailed statement to Reuters, Orsted stated that the downgrade would not have any impact on its business plan or its funding strategy.
Why it matters: Orsted has been struggling to restore investor confidence after canceling the development of two U.S. offshore wind projects in November last year, with related impairments surging above $5 billion. Read more on that here.
EPA LOOKING TO HIRE: The EPA is pushing to recruit nearly 400 hires for job openings this year as the agency works to fulfill its expanded mandate under Biden’s climate and infrastructure laws, E&E News reports.
Top leaders are visibly involved in the hiring effort, and have created a public campaign to attract recruits for the agency.
The recruitment drive follows a hiring surge at the agency last year as significant levels of funding streamed in from the bipartisan infrastructure bill and the IRA. The agency will need more staff as the Biden administration races to distribute billions to enact the bills’ provisions.
Yesterday, the agency held a hiring webinar where almost 1,900 people tuned in. In just 2023, EPA brought on 1,977 new employees, surpassing its own hiring goal. Read more on that here.
EU DELAYS ESG REPORTING REQUIREMENTS: The European Union has agreed to delay further ESG disclosure requirements by two years, as it responds to opposition from business leaders who say they’re feeling restricted under the weight of the regulations, Bloomberg outlines.
The EU’s Corporate Sustainability Reporting Directive had previously set a June 30 deadline for companies to report on environmental, social, and governance data points. But EU lawmakers and member states agreed to push the deadline to June 2026, and are still developing sector-specific reporting requirements. The decision, however, doesn’t affect a requirement to report general ESG data points from June of this year.
Why it matters: The delay is the latest obstacle in the EU’s plan to address environmental threats by requiring companies to report on their climate impacts. European firms lobbied hard against the EU’s planned ESG regulations.
Last year, the bloc said companies under the scope of the CRSD would be able to determine themselves what constitutes relevant ESG information to report – which critics said constituted a loophole that could allow for greenwashing.
Looking forward: The delay still needs to be formally adopted by both the EU Council and Parliament. Companies are expected to comply as soon as the new reporting standards are officially published. More on that here.
RUNDOWN
The Hill January set new record for heat: EU scientists
Bloomberg A Hedge Fund Manager’s Guide to Handling GOP Attacks on ESG
E&E News Tribal lawsuits threaten Biden’s clean energy push
Correction: This newsletter has been updated to correct a quote referring to the Kanawha River.
