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MORE DISSENT OVER IRA GUIDANCE: Some of the Democratic authors of the Inflation Reduction Act said they were let down by the Treasury Department’s new bonus credit guidance and pledged to push the administration to define terms more aggressively to reshore more of the solar supply chain.
Treasury’s guidance requires solar projects taking advantage of the law’s renewable production and investment tax credits to use photovoltaic cells that are manufactured in America in order to get a 10% domestic content bonus credit.
But the guidance excludes origin requirements for “subcomponents” that go into a cell, such as silicon ingots and wafers.
Why that’s significant: Some 98% of global capacity for polysilicon ingots and wafers is located within China, according to the Department of Energy.
Who said what: Senate Finance Chairman Ron Wyden said Friday the rules are too weak: “I wrote the Inflation Reduction Act to make an historic investment in rebuilding domestic solar manufacturing, but the rules the Biden administration put forward today do not go far enough to make the most of that opportunity.”
Wyden pledged “push these domestic content requirements further than the Biden administration has today.”
Sen. Joe Manchin also complained that Treasury’s guidance “rewards the continuation of this Chinese dominance” in wafer production and said it was another example of the administration manipulating the law’s intent with its implementation.
Both men notably recently voted in favor of the resolution of disapproval to cancel the Biden administration’s solar tariff moratorium.
More on the numbers: The United States no longer manufactured crystalline silicon PV ingots, wafers, or cells as of 2020, although there is manufacturing of cadmium telluride cells, a much less common photovoltaic technology.
The vast majority of c-Si PV capacity, including polysilicon production and crystalline silicon ingot, wafer, PV cell, and module manufacturing is located in China and Asia more broadly, according to the Department of Energy, and as of December 2022, China accounted for: 81% of total polysilicon manufacturing capacity, around 98% of ingot and wafer capacity, as well as nearly between 86%-92% of cell capacity.
Trying to make a dent: New wafer and cell capacity is growing with help from the IRA’s incentives, but it’s a drop in the bucket. DOE’s most recent analysis said the recently announced capacity additions are “still below what would be needed to meet even 2021 deployment via a fully domestic supply chain.”
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BIDEN HIT FOR EXPORT FINANCE DEAL WITH INDONESIAN REFINERY: Environmental groups are denouncing President Joe Biden for breaking promises on climate change after the Export-Import Bank approved nearly $100 million in financing for improvements to a petroleum refinery in the Indonesian port city of Balikpapan.
The justification: EXIM announced the deal last week, saying it is “consistent with EXIM’s mission to facilitate American exports and support U.S. jobs” and noted the strategic relationship between the two countries and the refinery’s designation by the government of Indonesia as a “national strategic project.”
Its announcement also offered that Indonesia is highly reliant on imports for refined products and “has been exposed to dramatic price fluctuations for imported fuels since the beginning of the war in Ukraine.”
Oil Change International criticized the administration over the deal, saying it violated pledges it entered into at COP26 in 2021 and at last year’s G-7 summit to end fossil fuel financing abroad.
“Lending his support to devastating fossil fuel development like the Willow oil project, Alaska LNG, Gulf Coast exports, and the Mountain Valley Pipeline is bad enough, but this approval shows the United States is committed to doing the fossil fuel industry’s bidding in all corners of the world,” said Collin Rees, U.S. program manager at Oil Change International.
The history: The Biden administration, alongside nearly two dozen other countries, signed on to a statement in Glasgow in 2021 agreeing to end government funding of unabated overseas coal, oil, and gas projects by the end 2022 and prioritize clean energy with export finance dollars.
The pact allowed for financing under “limited and clearly defined circumstances that are consistent” with the Paris agreement, language that popped back up in G-7 agreements.
A few weeks later, the State Department sent a directive to embassies around the globe informing them that U.S. policy for international energy engagements will now “center on promoting clean energy.”
Strategic need: The export finance deal goes to the heart of the challenge the Biden administration faces in hastening an energy transition, including by extending aid or financing to developing nations, while both catering to the existing global energy system to keep prices low and trying to reduce Russia’s share of global energy markets.
Amos Hochstein explained last year before the Senate Foreign Relations Committee some of the “limited and clearly defined circumstances” in which approvals for new fossil fuel projects would be prudent. The example he gave was offering financing help for gas projects in eastern European allies to help those nations move away from Russian gas.
In the case of Indonesia: Where Indonesia competes with Russia in the refined product market, the U.S. may see a strategic benefit in facilitating more Indonesian exports.
G-7 PLANS NEW EFFORT ON RUSSIAN OIL EXPORTS: Group of Seven member countries are planning to tighten their sanctions on Russian energy exports at their summit in Japan later this week, in a bid to crack down on both Moscow’s illegal oil shipments and third-party countries who have helped Moscow avoid the restrictions.
Though details are still being negotiated, U.S. officials expect G-7 members to agree to automatically ban exports on all Russian goods within certain categories, unless they are on a list of pre-approved items, Reuters reports. Other actions will help close gaps in Russian export restrictions, including the oil price cap that took force in December.
Still, some said they are doubtful these actions will immediately force Russia to change its posture, at least in the near-term.
“At least on day one, that change in presumption doesn’t change the substance of what’s allowed, but it matters for the long-term trajectory of where we’re going and the restrictiveness of the overall regime,” one U.S. official told Reuters.
Russia has been shipping high volumes of crude overseas: In fact, Russian seaborne crude exports rose to a record-high 3.7 million barrels per day in the four week period ending May 12, according to ship tracking data compiled by Bloomberg. That’s a 10% jump from the last four-week period and the highest level recorded since early 2022, when the outlet first began tracking such data.
…Any planned G-7 restrictions are just part of a broader tranche of punishing actions member countries and the EU are preparing to announce as early as this weekend: Leaders are also planning to ban the restart of Russian piped gas, officials told the Financial Times —a gesture that comes after Moscow began throttling gas deliveries to the EU last summer.
The abrupt halt in supplies forced the EU to diversify its suppliers and rapidly begin building out new LNG terminals to allow for delivery from the U.S. and other countries. One official involved in the negotiations said the ban is aimed at ensuring EU members “don’t change their mind in a hypothetical future” in which Russia may seek to resume deliveries.
BOEM ADVANCES WIND PROJECTS OFFSHORE NEW JERSEY: The Bureau of Ocean Energy Management issued a draft environmental impact statement for Atlantic Shores South Wind, which seeks to construct two separate offshore wind facilities totaling up to 200 turbines off the coast of New Jersey.
The construction and operations plan provides for 10 offshore substations with subsea transmission, and the proposed project has a capacity of up to 2.8 gigawatts.
The Rundown
Bloomberg Nuclear plant $16 billion over budget arrives for atomic revival
E&E News A transportation ‘revolution’? How the infrastructure law is fueling freeways.
Reuters EU countries to finalize 42.5% renewable energy target
Washington Examiner Price tag for Biden signature climate law balloons to multiple of initial estimates
