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AUTOMAKERS ON BOARD, CONSUMERS NEEDED: President Joe Biden’s new target for 50% electric vehicle sales follows the direction automakers were already going on their own, but it will likely push them farther and faster.
Indeed, the Big 3 U.S. automakers are flanking Biden during a White House event where he will announce the new target and unveil stricter standards for fuel-efficiency and tailpipe emissions for cars and light trucks. Ford, GM and Stellantis in a joint statement this morning said they too share an aspiration to achieve sales of 40-50% of EVs (defined as battery electric, fuel cell and plug-in hybrids), but they are giving themselves more leeway.
“The voluntary targets and proposed mileage and emissions standards set for the next few years should be looked at as the bare minimum that auto companies are expected to achieve in the short run,” Ryan Gallentine, director of transportation at Advanced Energy Economy, told me, noting many of the major automakers have a track record of doing the bare minimum, or worse.
The big question: Even if a 50% target pushes the boundaries of automakers’ comfort zone, consumers still need to buy them to achieve the goal.
“The 50% EV target is a step up in ambition. But it won’t achieve itself,” Mary Nichols, the former chairwoman of the California Air Resources Board, told me. Nichols helped negotiate a pact between California and six automakers that rejected President Donald Trump‘s weakening of fuel economy mandates. Biden’s proposed new rules will match this agreement, mandating a 3.7% annual mileage increase in fuel economy through the 2026 model year.
But automakers warn stricter fuel economy rules won’t spur sluggish demand for EVs (which represent nearly 3% of U.S. sales) without complementary policies that lower their upfront cost and reduce range anxiety.
“Obstacles to EV adoption in the U.S. have long been and continue to be the cost,” Michelle Krebs, executive analyst at Cox Automotive, told me.
Passing Biden’s infrastructure agenda is key: His Build Back Better agenda seeks to pave the way for EV adoption by making them more attractive to buyers, reducing the cost of the cars through subsidies and rebates, while providing grants to states and localities to build 500,000 charging stations, and incentives for manufacturers to retool factories to make batteries and EVs.
The bipartisan infrastructure agreement progressing in Congress provides $7.5 billion to help build a network of electric vehicle chargers across the country — half of what Biden originally called for — and includes measures to bolster the supply chain for EV equipment, including batteries and critical minerals. It does not include consumer subsidies, which Democrats are expected to pursue as part of a second larger infrastructure bill without Republicans.
“There is not a market in the world that has gotten to those levels [50% EV sales] without subsidies, either for consumers, or incentives for manufacturers, suppliers or others,” said Kristin Dziczek, senior vice president of research at the Center for Automotive Research, citing the examples of Norway and China, which give huge subsidies that have helped make EVs cheaper than gas-powered ones.
Signs U.S. consumers are coming around to EVs: Overall domestic automarket sales were down 15% last year during the pandemic, but electric and hybrids were up 5%, Dziczek told me.
Krebs provided results of a new EV study unveiled by Ernst & Young at a major auto conference happening today in Michigan.
It finds that 42% of shoppers globally will consider an EV in the next 12 months, including 29% in the U.S.
The study says that demonstrates a “wave of acceptance is coming like we haven’t seen in the past.”
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writer Josh Siegel (@SiegelScribe). Email [email protected] 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.
SIGNS HYDROGEN HYPE IS REAL: Electrolyzer installations are on track to double this year, underscoring how countries across the world and all types of industry see developing a hydrogen economy as a linchpin in the effort to reach net-zero emissions by 2050.
The market for electrolyzers – the devices that produce hydrogen using water and electricity – is set to be at least nine times bigger in 2022 than in 2020, BloombergNEF said in a new report this morning.
More than 90 projects are being planned worldwide to use hydrogen in industry. China, which has a carbon-neutrality target, is especially driving growth in hydrogen, with large companies boosting their investments to comply. China should account for 60-63% of global installations of electrolyzers over the next two years, BloombergNEF said.
Hydrogen is being counted on as a tool to decarbonize the hardest-to-abate sectors, such as heavy-duty trucking, marine shipping, and industrial manufacturing.
Still, hydrogen’s future as a major clean energy source is “far from certain,” said Martin Tengler, lead hydrogen analyst at BloombergNEF. Large-scale demand for hydrogen, which remains expensive, will need stronger demand-side incentives, potentially requiring governments to set carbon prices of at least $100 per ton by 2030.
WOAH…NUCLEAR-DERIVED HYDROGEN COULD HELP CLEAN SHIPPING: Hydrogen-based zero carbon-fuels derived from nuclear energy could play a key role in decarbonizing the global marine shipping sector, the Clear Air Task Force said in a report this morning.
The international shipping industry is one of the toughest sectors to decarbonize, accounting for 2.6% of the world’s carbon emissions, higher than global aviation.
Ultimately, eliminating emissions from shipping will require widespread fuel switching from fossil fuels to zero-carbon fuels like hydrogen and ammonia.
The new report evaluated the technical implications of using nuclear energy to produce these zero-carbon fuels, finding that nuclear has distinct advantages.
These include: Nuclear power plants already use hydrogen in their daily operations, and are well positioned to explore hydrogen production for use in shipping.
Nuclear energy is dense, meaning it can generate large amounts of energy without consuming as many resources, which pairs well with the global shipping sector’s reliance on a small number of concentrated fueling hubs. Nuclear energy is a 24/7 power source, allowing high utilization rates for electrolysis. And much of the existing nuclear energy fleet in the U.S. is accessible by waterways.
NOAA FORECASTS ‘ABOVE AVERAGE’ HURRICANE SEASON: The National Oceanic and Atmospheric Administration updated its 2021 Atlantic hurricane seasonal forecast yesterday, acknowledging a slight increase in anticipated severe storms for the rest of the season, the Washington Examiner’s Kaelan Deese reports.
The U.S. government agency is now forecasting a 65% chance of an “above-average” season, with a 70% probability of 15-21 named storms. It predicts seven to 10 will become hurricanes, with three to five as major hurricanes of Category 3, 4, or 5 strength.
Five named storms have already formed this season, including the earliest fifth-named storm on record for the Atlantic basin, which was Hurricane Elsa at the start of July. The NOAA previously reported a 60% chance of above-normal conditions last month.
MAKING SENSE OF DEMOCRATS’ PROPOSAL TO TARGET BIG OIL: A group of liberal Senate Democrats introduced a draft legislative proposal yesterday to impose a tax on a handful of the largest oil and gas companies.
Sen. Chris Van Hollen of Maryland’s “Polluters Pay Climate Fund Act” would identify the oil producers and refiners that released the most greenhouse gases from 2000 to 2019 and assess a tax based on the amounts they emitted. Van Hollen said his proposal could raise $500 billion over the next decade, and he posited it could be used as a funding source for Senate Democrats’ $3.5 trillion climate and social spending reconciliation package.
His idea has the support of co-sponsors Bernie Sanders of Vermont — the chairman of the Budget Committee — Ed Markey and Elizabeth Warren of Massachusetts, Jeff Merkley of Oregon, and Sheldon Whitehouse of Rhode Island. But all of these senators are leading liberal climate hawks, and it’s “highly unlikely” centrists like Joe Manchin of West Virginia would tolerate the provision being included in the reconciliation package, given it could harm companies active in his home state, the research group ClearView Energy partners said in a note.
Without him, Senate Democrats would be highly unlikely to muster the 50 votes necessary to include it in the bill. It’s also dubious whether a proposal like this would reduce emissions, given other producers not targeted by the bill could pick up the slack.
“Even so, we see the proposal as another sign that domestic climate debate may be moving further past the market-based modalities of yesteryear and deeper into more command-oriented terrain,” ClearView said.
ISRAEL DEMANDS RETALIATION FOR IRAN OIL TANKER ATTACK: Western allies must develop an urgent plan to retaliate against Iran following multiple reported attacks on oil tankers near Oman, a senior Israeli official warned yesterday, the Washington Examiner’s Joel Gerhke reports.
“Iran has once again proven to be a global challenge, a regional challenge, and also a challenge to the State of Israel,” Israeli Defense Minister Benny Gantz told a group of ambassadors yesterday. “It is time for diplomatic, economic, and even military deeds — otherwise, the attacks will continue.”
Gantz, along with Israeli Foreign Minister Yair Lapid, directed that message to envoys from each of the countries that currently hold a seat on the United Nations Security Council. The outreach followed last week’s attack on an Israeli-linked oil tanker in international waters off the coast of Oman that killed two sailors, one from the United Kingdom and another from Romania.
The Rundown
Wall Street Journal Exxon considers pledging ‘net-zero’ carbon by 2050
New York Times What if highways were electric? Germany is testing the idea.
Wall Street Journal Coal is a gold mine for producers after blistering rally
Washington Post In a summer scarred by heat, drought, and fire, adaptation becomes a necessity
Calendar
WEDNESDAY | AUG. 11
12 p.m. CRES Forum will hold a virtual event titled, “Resiliency & Clean Energy: Keeping the Lights on While Reducing Emissions.”
