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TESLA SHAKE-UP IN EUROPE: Tesla indicated it is pulling back plans to manufacture battery cells at a plant in Germany because of the generous subsidies in Democrats’ green energy and health care spending law.
The extent of this shift isn’t completely clear to us yet, but it looks like just the sort of thing Europe has been worried about all the while it’s been lobbying the Biden administration to graft it into some of the more protectionist subsidies in the Inflation Reduction Act.
“The IRA tax breaks have influenced our original plans such that the focus of cell production now lies on the manufacturing facilities in the USA,” a Tesla spokesperson told German newspaper FAZ.
Tesla opened its Berlin-Brandenburg gigafactory, its first in Europe, nearly a year ago with plans to manufacture its Model Y SUV and “millions” of battery cells.
The economics have since changed big-time due to the IRA’s conditional subsidies for consumer clean vehicles purchases, which advantage EVs sold with batteries made in North America. The law also subsidizes battery manufacturing itself via the advanced manufacturing production credits.
Company executives discussed Tesla’s German facility in their Q4 earnings call and said they were focused on making it more efficient. Elon Musk said separately that the value of the IRA’s tax credits are “very significant” and stressed they rely on domestic manufacturing.
“The value of credits this year will not be gigantic, but I think it could be gigantic. We think it probably will be very significant in the future,” he said.
Europe’s answer still being worked out: European Union officials and heads of state, along with Asian governments and industrial leaders, have complained about the IRA’s domestically focused subsidy regime.
President Ursula von der Leyen announced the European Commission’s own green industrial proposal in response to the IRA. It broadly provides for faster regulatory approvals and additional public financing for green technologies, although some member countries oppose provision of additional subsidies.
The Treasury Department is still finalizing guidances that will determine how strictly it will implement the sourcing requirements within the IRA’s tax credits, including the consumer vehicle credit.
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NTSB ISSUES FIRST PRELIMINARY REPORT ON OHIO TRAIN DERAILMENT: The National Transportation Safety Board published its first preliminary report today on the Feb. 3 East Palestine train derailment and chemical release.
The NTSB said its investigators did return to the site of the derailment earlier this week to examine each hazardous material tank car, document damage, and secure evidence for laboratory analysis.
NTSB investigators have also identified and examined the rail car that is believed to have initiated the derailment. Surveillance footage captured by a nearby residence showed “what appeared to be a wheel bearing in the final stage of overheat failure moments before the derailment,” the report says.
Both the wheelset and wheel bearing from the suspected railcar have been collected as evidence, and will be examined by engineers from the NTSB Materials Laboratory in D.C.
Future investigative activity will focus on the wheelset and bearing of the tank cars used by freight operator Norfolk Southern, as well as tank car design and damage, railcar maintenance procedures, use of wayside defect detectors, and railcar inspection practices. NTSB said its investigation remains ongoing.
Buttigieg tours: Transportation Secretary Pete Buttigieg, targeted for recriminations over the crash by both right and left, visited East Palestine this morning, after weeks of taking flak for not coming to the site of the crash.
“There’s no question that there have been enormous amount of both information and misinformation injected into this situation,” Buttigieg told reporters there.
COAL INTERESTS CAMPAIGN ON STORM ELLIOT’S GRID HAVOC: Fossil fuel generation was responsible for nearly all of the additional electricity needed when demand peaked in regions affected by Winter Storm Elliot, according to a new report published this morning which found generators with on-site fuel (read coal and oil) were especially instrumental in staving off even worse blackouts.
The findings illustrate the strengths of having on-site fuel, according to the report’s authors, and the risks of retiring coal-fired generation, something utilities continue to do on a large scale in favor of wind and solar to reduce emissions.
“As we see more extreme weather, we’re beginning to see more issues related to load shed,” Michelle Bloodworth, president and CEO of coal-fired power industry group America’s Power, which commissioned the study.
94% of the additional electricity needed when demand peaked because of Elliott, calculated as the delta between the average demand in the first two weeks of December and peak demand during the winter storm, came from coal, oil, and gas, the report found.
Coal provided more than a third of additional electricity in PJM, MISO, and the Southeast Power Pool during the storm. In PJM, which saw significant natural gas supply issues during the event, coal was responsible for nearly half of additional electricity.
Wind also performed well across the affected regions during the storm, significantly better than during Winter Storm Uri. In MISO, wind generation during Elliott was more than 10 gigawatts higher than during Uri.
Bloodworth said it shows the importance of “maintaining a diverse set of resources but also ensuring we have resources with adequate on site fuel,” which can be controlled.
Problems with gas: Gas generators had immense problems during Winter Storm Uri, NERC found in its assessment of the storm. Elliot was different only in scale. Utilities experienced generator outages and fuel issues both.
Gas has a number of uses that compete with electricity generation, including home heating and industrial applications, making it a challenge to ensure grid reliability during extreme events even in areas with lots of pipeline capacity.
Seth Schwartz, managing director of Energy Ventures Analysis and a co-author of the report, said these limitations are not a risk for coal generation, which doesn’t have to rely on “just in time” fuel.
“The industry has not learned the most important lesson from Winter Storm Uri, which is that if we continue to retire the existing fossil fuel fleet, especially coal … the problems that we have in every winter storm are going to get worse and worse,” Schwartz told Jeremy. “These events never used to happen to the electric power grid.”
TVA, one of the utilities that had to implement load shedding during the storm, is still working on a report reviewing what went wrong. That report is expected to be released this spring, according to a spokesperson.
NERC is doing its own review of how utilities and grid operators performed during the storm.
CLIMATE CHANGE AND ENERGY ARE TOP-OF-MIND AS SCHOLZ PREPS FOR INDIA VISIT: German Chancellor Olaf Scholz will travel to India this weekend for a two-day visit, making him the first German leader to travel to New Delhi since the two countries began their Intergovernmental Consultation mechanism in 2011.
Scholz will meet with Indian Prime Minister Narendra Modi, and advisers said they expect the conversations to focus on several key priorities, such as boosting economic cooperation between the two countries, and advancing the Green and Sustainable Development Partnership.
German Ambassador Philipp Ackermann told reporters yesterday that Scholz will also use the visit to urge more cooperation between the countries on areas of trade, climate change, and clean energy as Russia’s war in Ukraine nears the one-year mark.
“We see Russia and Ukraine (conflict) very high on the agenda in the meeting between [Scholz and Modi],” Ackermann said. “It will be a very important part of the agenda.”
Ackermann also dismissed questions as to whether Germany objects to India’s purchases of discounted Russian crude, saying India’s purchases from Moscow “are none of our business basically.”
MUSK WARMS BACK UP TO CALIFORNIA: Tesla CEO Elon Musk and California Gov. Gavin Newsom announced yesterday that Tesla will make its new global engineering headquarters in Silicon Valley, California, with plans to take over the Palo Alto office space formerly occupied by Hewlett Packard.
The news represents an about-face for Musk, whose relationship with the state of California, and with Newsom, by extension, had grown increasingly strained in recent years.
Tesla was founded in San Carlos, California, in 2003 and until recently had called the state home to its entire operation. But long-simmering tensions reached a head in 2020 when measures aimed at stopping the spread of COVID-19 forced Tesla to close its Fremont factory temporarily. In December 2021, Musk announced he would relocate Tesla’s headquarters to Austin, Texas, citing frustrations with California’s pandemic response as one of the main reasons.
California is now home to 44 manufacturing headquartered companies in the electric vehicle space, Newsom noted yesterday, “but none that dominate like Tesla.”
BIDEN NOMINATES AJAY BANGA TO RUN THE WORLD BANK: President Joe Biden this morning nominated General Atlantic vice chairman and former Mastercard CEO Ajay Banga to lead the World Bank, replacing David Malpass, the Trump nominee who was on the outs with the Biden administration because of his comments on climate change.
Biden highlighted climate change in a statement announcing the nomination. Treasury Secretary Janet Yellen said that Banga understands that the World Bank’s goals are “deeply intertwined with challenges like meeting ambitious goals for climate adaptation and emissions reduction.”
Of note, Banga was an adviser to General Atlantic’s climate-focused fund, BeyondNetZero.
The Rundown
ProPublica A Norfolk Southern policy lets officials order crews to ignore safety alerts
The Guardian This ‘climate-friendly’ fuel comes with an astronomical cancer risk
Canary Media Thin-film solar sparks a manufacturing boom in the Midwest
Calendar
WEDNESDAY | MARCH 1
The American Bar Association will host the Environmental Summit of the Americas in New York City, where environmental, social, and governance will be on the agenda.
MONDAY | MARCH 6
The annual CERAWeek conference kicks off in Houston, Texas. Learn more and register here.
TIME AND DATE TBA
The Senate Environment and Public Works Committee will hold a hearing in early March on the emergency response and cleanup effort related to the train derailment in East Palestine, Ohio.
