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INDUSTRY COULD GIVE UP ON EV TAX CREDITS: New conditions Congress put on the revised electric vehicle tax credit could overwhelm manufacturers and cause them to give up on the incentive, a key industry player warned yesterday.
Democrats revised the tax credit via the Inflation Reduction Act, creating progressively more strict content requirements for EV batteries. The intention was to cut into China’s dominance of the battery supply chain and incentivize more mining, recycling, and manufacturing of battery components in the U.S. and a handful of allied nations.
All automakers want to be eligible for the up to $7,500 credit, said Joe Britton, executive director of the Zero Emission Transportation Association. The group represents U.S. electric vehicle makers, including Tesla and Rivian, as well as utilities and others with a part in the EV world.
But, Britton said, the requirements for compliance may be out of reach for some, or simply not worth the cost or effort.
“People will give up,” Britton said yesterday during an event hosted by the National Mining Association. “If the cost is too much, if compliance exceeds the value of the credit, you’ll see companies say, ‘This is something I can’t do.’”
The credit’s domestic content and “entity of concern” conditions, the latter of which requires companies to cut China out of their battery supply chain if they want their products to be eligible, will be especially challenging to meet, he said.
Is there wiggle room? To be determined — but that’s what automakers and various governments in countries with affected manufacturers want.
Treasury is taking input as it prepares to draw up guidance on the EV and other credits, which have generated an uproar among the Europeans and Asian partners who say their industries will be disadvantaged from protectionist measures, especially the EV assembly and domestic content requirements.
Secretary Janet Yellen has downplayed expectations that the department can do a whole lot in the way of softening requirements.
Corporations and governments chiming in on Treasury’s impending guidance see some opportunities for flexibility, with some requesting waivers from certain requirements and suggesting carefully-crafted definitions of relevant terms to make it as easy as possible to comply.
For example: The EV tax credit’s critical minerals requirement mandates that an eligible electric vehicle battery contain an increasing amount of critical minerals extracted or processed in the United States or a U.S. free-trade agreement partner or recycled in North America.
Mercedes-Benz North America recommends that because Congress has not codified a definition of “free trade agreement,” it should define the term for the purposes of tax credit implementation to include countries in the Minerals Security Partnership launched earlier this summer.
That would include European governments that aren’t on the official free trade agreement list.
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ELECTRIC VEHICLES REQUIRE 40% FEWER WORKERS, FORD CEO SAYS: Producing electric vehicle will require 40% fewer workers than building traditional internal combustion engine vehicles, Ford Motor CEO Jim Farley said yesterday, even as he said the company is committed to building as many of its own parts in-house as possible to help offset the anticipated losses.
“It takes 40% less labor to make an electric car, so … we have to insource, so that everyone has a role in this growth,” Farley said yesterday, speaking at a conference in Detroit aimed at improving racial diversity in the auto industry.
“We have a whole new supply chain to roll out, in batteries and motors and electronics, and diversity has to play an even greater role in that.”
The switch to EVs has required many automakers to replace their traditional supply chains with sourcing and battery production—areas Farley said he is committed to bringing in-house at Ford. The automaker has set a goal to make half of its global sales from EVs by 2030, according to the Financial Times.
“If Henry Ford came back to life he would have thought the last 60 years weren’t that exciting, but he would love it right now because we’re totally reinventing the company,” Farley said.
THREE MILLION UK HOUSEHOLDS OWE MORE AS ENERGY DEBT DEEPENS: Nearly three million households in the UK now owe more money to their power and natural gas suppliers since last autumn, prompting new fears of an affordability crisis this winter, when bills are expected to climb even higher.
While the number of UK households in debt has dropped by roughly one-tenth since last fall, the amount of debt owed has increased by an average of 19% each to around $225 per household, according to a new report from Uswitch, a UK-based utility price comparison site.
All signs point to a widening debt gap ahead of the winter heating season. “A gulf is growing between the UK’s energy haves and have-nots, with energy credit soaring for some as debt swells for others,” Richard Neudegg, Uswitch’s director of regulation, said in a statement. “If bills rise again in April, this will create a perilous situation for many people.”
On average, households are expected to pay $275 more during the three coldest months than they did last year, the report found. Spring is not expected to bring relief, as the UK’s price cap is expected to rise in April and could reach around $4,399 per household—a 48% increase from the current price guarantee.
RUSSIAN MISSILE STRIKE LEAVES HALF OF KYIV IN THE DARK: Russia targeted Ukraine’s energy sector in a massive, 100-missile attack yesterday. It was the largest coordinated airstrike Russia has waged on Ukraine’s power system since the start of the war, and plunged roughly half of the capital city Kyiv into darkness.
Leaders in the major Ukrainian cities of Lviv, Kharkiv, and Rivne also reported outages, and one former parliament member noted on Twitter that 80% of Lviv was without heat, water, and electricity, leaving residents vulnerable to snow and freezing temperatures expected there for much of the week.
“The situation is serious, the most serious in our history, but we are maintaining control of the system,” Volodymyr Kudrytskyi, the head of Ukraine’s national power utility, Ukrenergo, said on Facebook.
Russia has stepped up its missile attacks on Ukraine’s energy sector in recent weeks, as part of its strategic attempt to weaken Ukrainian resolve before winter and make up for Moscow’s losses on the battlefield.
The deputy head of the office of the president, Kyrylo Tymoshenko, described the energy situation in Ukraine as “critical.”
U.S. REGULATORS BLAME ‘INADEQUATE PROCESSES’ FOR FREEPORT BLAST: Federal pipeline safety regulators released the findings of a third-party consultant’s report yesterday examining the cause of the June explosion at Freeport LNG, the Texas Gulf Coast export terminal that had accounted for roughly 15% of U.S. LNG exports prior to the blast.
The consultant report blamed the explosion on inadequate operating and testing procedures, such as deficiencies in valve testing procedures, failure to adjust alarms that could warn operators of rising temperatures, and control rooms that failed to show when temperatures in specific pipelines were rising fast.
Human error and fatigue were also to blame, according to the heavily redacted report, which was made public yesterday by the Pipeline and Hazardous Materials Safety Administration, or PHMSA. Neither Freeport nor the third-party consultants indicated when the plant could restart operations, and PHMSA said the investigation remains “ongoing.”
…OUTAGES EXPECTED TO EXTEND THROUGH DECEMBER: But Freeport told buyers yesterday it is expected to extend its outage through December, Bloomberg reported, as the plant cited longer-than-expected repairs and regulatory approvals still needed before it can restart operations.
Freeport had said as recently as last week that it was hoping to resume operations this month, but told customers yesterday that the timeline has since become challenging.
In addition, Freeport must also submit its restart plan to PHMSA for authorization before it can resume operations, which could take upwards of two weeks. (As of yesterday it had not yet submitted that plan.)
‘PRICES ARE OFF THE CHARTS’: INSIDE THE U.S. DIESEL CRISIS: Mark Wolfe, the executive director of the National Energy Assistance Directors Association, joined former FERC chairman Neil Chatterjee and Breanne on this week’s “Plugged In” podcast to explore the U.S. distillate fuel shortage, which threatens a major affordability crisis this winter for farmers, truckers, and homes in the Northeast, which rely heavily on the fuel for home heating.
“Going into the winter, we’re seeing both high diesel prices, as well as potential shortages … so we have a lot to worry about here, and the prices are off the charts,” Wolfe said. “It’s totally nuts. … The diesel problem, I think, was completely foreseeable,” he added.
The U.S. ban on Russian oil was also to blame, Wolfe said, since much of that oil was already refined into specialty products. Listen to the full episode here.
The Rundown
E&E News Facing questions about climate aid, Democrats blame the GOP
Calendar
THURSDAY | NOVEMBER 17
10:00 a.m. 1324 Longworth The House Committee on Natural Resources will hold a hearing on Puerto Rico’s power grid development, and post-disaster reconstruction in the aftermath of Hurricane Fiona.
