Congress & Reconciliation: Why This New Clean Energy Program Matters
Originally published by Union of Concerned Scientists, The Equation.
By John Rogers
With its passage out of a key committee in the House of Representatives last week, the Clean Electricity Performance Program (CEPP) is a step closer to reality, as part of the powerful budget reconciliation bill (the Build Back Better Act). The bill, and that provision, still have a ways to go to get through Congress, as the House and Senate negotiate a final package. But it’s really important for clean energy to have this and complementary pieces moving — and even more important to get strong versions of them across the finish line.
To understand why, consider how the current design of the CEPP component answers the questions we had recently offered for gauging the robustness of the policy. The good news is that there’s a lot to like in what our elected representatives have laid out so far, and a whole lot to want to defend as its legislative journey continues.
And as for those five questions … the answers are very close, quite possibly, check, TBD, and yes. Here’s how the House language stacks up.
Would the targets be as strong as needed? Very close.
While “as needed” is tricky, since we need much more globally than has been put on the table so far, one useful benchmark might be the current US commitment under the Paris climate accord (50- to 52-percent reductions in heat-trapping emissions below 2005 levels by 2030), and specifically the power sector implications of that (approximately 80-percent clean electricity).
The focus of the CEPP is retail electricity providers — investor-owned utilities, municipal utilities, electric cooperatives, and third-party retail electricity providers in states with competitive power markets. The CEPP that passed out of the House Energy and Commerce Committee (E&C) would reward those providers that increased their clean electricity supply by at least 4 percentage points in a given year (or per year, given some multiyear flexibility written into the plan). And it would collect payments from those that missed that benchmark.
That level of annual growth across the board, coupled with other complementary programs moving through the Build Back Better Act, such as clean energy tax incentives, would get us most of the way to the national target of 80 percent by 2030, according to analysis by the Rhodium Group. And the CEPP as envisioned provides a strong incentive for providers to beat that 4-percent-per-year level of growth to get us the rest of the way, together with all the clean energy pushes from states, utilities, companies, institutions, and households.
Would there be enough funding to power the transition? Quite possibly.
The early stages of the budget reconciliation process had the House and Senate approve the key top line number of $3.5 trillion, plus the allocations to the various committees. That resulted in $150 billion carved out for the CEPP within the portion the E&C is shepherding.
Is that sum enough? The performance grants for providers hitting the 4-point target would be $150 per megawatt-hour (MWh) of increased clean energy above a certain level. And that math — $150/MWh times the number of MWh needed to get to 80-percent clean electricity — works out pretty well, coming in close to the $150 billion.
So the next question is whether the resulting credit (including avoided payments for coming in too low) is enough to motivate providers to make the necessary push — and make the transition as easy and affordable as possible for customers. That level of incentive should make the willingness to invest in new renewables (directly or indirectly) at the pace and scale required all the more powerful.
So grants at that level under the CEPP could be a powerful complement to the extensions of the tax credits also included in the House reconciliation package to drive high levels of clean energy deployment.
Photo credit: John Rogers
Would the funding be used well? Check.
The current House text is explicit about what a provider can do with the performance grants it earns: use it “exclusively for the benefit of the ratepayers.” It then includes examples, such as direct bill assistance, clean energy and efficiency investments, and worker retention.
We agree: The CEPP grants should be used for purposes that directly and solely benefit the public by achieving the transition to clean electricity at a low cost and for maximum gain to consumers. So that’s good, strong language.
And it can be built on. We’ve recommended to lawmakers that they further specify allocation of the resources to ensure that this policy is doing its part to meet the administration’s Justice40 effort aimed at getting at least 40 percent of the benefits from federal investments to flow directly to disadvantaged communities.
Another clause in the E&C bill helpfully addresses the penalty portion for providers that don’t make the threshold in a given period: The legislation would let those payments be recovered only from “shareholders or owners.” That stipulation is particularly important in the case of investor-owned utilities.
Will it drive the cleanest sources? TBD.
As I’ve noted before, there’s low-carbon energy and then there’s really clean energy. Wind and solar would be the overwhelming favorites for providing the bulk of the new electrical capacity fueled by the CEPP. But the House does leave the door open to other options.
The E&C bill doesn’t spell out particular sources for inclusion or exclusion, instead setting a carbon intensity target — the maximum carbon pollution (carbon-dioxide equivalent on a 20-year global warming potential basis) per unit of electricity allowed for a source to qualify.
The good news is the House’s carbon intensity target is potentially quite strong, if it includes the emissions from the fuel supply (“upstream” emissions), although that isn’t clear from the current bill language. If upstream emissions are in there (again TBD), any fossil fuel generation would need a pretty high level of carbon capture and storage to count for the CEPP. A colleague has estimated that, with those upstream emissions included, coal or gas plants would need to capture and store at least 80 to 90 percent of their carbon dioxide emissions.
But the legislation needs to be clearer about those upstream emissions indeed being in the calculations. And the Union of Concerned Scientists (UCS) also has recommended other changes to make sure this section is as strong as it needs to be:
- explicitly excluding particular sources, such as municipal solid waste incineration and conventional natural gas generation;
- prorating performance grants for resources that meet the carbon intensity standard but are still above zero; and
- putting in place strong guardrails for bioenergy, hydroelectric, carbon capture and storage, and nuclear projects to address other environmental and fuel-cycle impacts.
Would all electric utilities be covered? Yes!
This one is maybe the most straightforward. The E&C language seems quite clear that all retail electricity providers, regardless of type or size, would be covered. That’s good news, because it means that all electricity customers would benefit from the transition to clean energy.
Stronger is better
So a strong performance by the House Energy and Commerce Committee, with a few things to strengthen and a lot worth defending as this piece continues through Congress.
And all this is in the context of maintaining the crucial top line $3.5-trillion number — and the boldness needed for a “rapid, just transition to clean energy.”
Be assured that UCS will continue to push for the reconciliation package as a whole — and you can, too, by contacting your members of Congress. And we also will continue to weigh in to make sure that the Clean Electricity Performance Program lives up to its full promise and becomes a powerful tool for our clean energy transition.
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It sounds like Tesla jumped the gun when announcing that Nissan drivers now have access to the Supercharger network in North America.
They will have to wait a bit.
Yesterday, we reported that Tesla added Nissan to the list of automakers with EVs capable of using the Supercharger network in North America.
However, Tesla has since removed Nissan from its list of automakers with access and switched the Japanese automaker back to the “coming soon” list.
Nissan confirmed to Electrek that access is not currently available, but it will be available by the end of the year.
It sounds like a miscommunication on Tesla’s side. We hear that it should be coming soon.
Elon Musk fired Tesla’s entire charging team – seemingly to make an example of its then-head of charging, Rebecca Tinucci, who reportedly disagreed with Musk about making further layoffs following another layoff wave.
Instead of just firing her, Musk decided to fire the entire team and then sent an email to other Tesla managers using the charging team situation as a warning.
Tesla has since had to rehire several former members of its charging team to rebuild the department.
This is believed to have slowed down the opening of the Supercharger network to other automakers in North America. We were told that communications with Tesla’s charging team were difficult to non-existent for those automakers for weeks earlier this year.
As we have previously reported, the situation has definitely slowed down Tesla’s own deployment of Supercharger stations.
Nonetheless, the Supercharger network recently hit the milestone of 60,000 chargers worldwide.
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Europe’s “green dream” Northvolt has filed for bankruptcy protection in the US after a rescue package failed to go through, leaving the battery maker with just one week’s worth of cash in the account. Cofounder and CEO Peter Carlsson, who spearheaded a costly expansion, has also quit.
The Swedish-owned battery maker filed for Chapter 11 in the Southern District of Texas, reports Bloomberg, with $5.8 billion debt. CEO Peter Carlsson, Telsa’s former chief products officer, stepped down from his role as CEO after the filing, but will remain onboard as advisor and director.
According to a statement, Northvolt said that its main factory will maintain business as usual during the reorganization, as the company now has a buffer from creditors, giving it time to restructure the balance sheet. However, the company said that this will not impact its business in Germany, and through the court process, Northvolt now has access to about $145 million in cash collateral. An additional $100 million in debtor-in-possession financing will be added to the pot via one of its customers, the report said.
In recent weeks, Northvolt has been in intense negotiations in the hope of securing a $300 million rescue package to give the company a bit more time to seek longer-term funding. But when that deal fell through, the battery maker was forced to seek protection from creditors via the Chapter 11 filing.
The company still has a $7 billion project in place in Quebec – a new campus that is set to include a cell production plant, battery recycling, and cathode active-material production facilities – and the bankruptcy won’t affect those plans, the company said on its website. “Northvolt Germany and Northvolt North America, subsidiaries of Northvolt AB with projects in Germany and Canada, are financed separately and will continue to operate as usual outside of the Chapter 11 process as key parts of Northvolt’s strategic positioning.”
The plant is expected to have capacity to produce 30 GWh of battery cell every year, with an expansion set to double that output, making it enough to power 1 million EVs. The Canadian government is putting $1.334 billion CND toward the project, with Quebec chipping in another $1.37 billion CND.
Northvolt has hit hard times in recent months, once thought of as Europe’s best shot to homegrown EVs and the makers of “the world’s greenest battery.” Enthusiasm mounted as the company opened the doors to its first plant in Sweden, in the small town of Skelleftea near the Arctic Circle, in 2021. Billions of dollars have been invested into the company, and Volvo, VW, and BMW rushed to place future orders.
All of this enthusiasm has been fueled by a vision to cut dependency on China by creating greener EV batteries using 100 percent recycled nickel, manganese, and cobalt. Plans were put in place to build factories in Gothenburg, in southern Sweden, and Poland, Germany, and Canada, all backed by huge government subsidies. Back in January, the company raised an additional $5 billion, firmly locking in its position as one of Europe’s best-funded startups and recipient of the largest-ever green loan in the EU.
But then things started going south, with Northvolt’s production problems and massive delays forcing BMW to cancel its €2 billion battery cell order with the company. This past May, Northvolt also announced that it pushing back its plans for an IPO until next year. The interim report that followed revealed the dire state of its finances and how far its production had fallen short of goals, with Carlsson admitting he had been “too aggressive” with the company’s expansion plan.
Since Northvolt has put in place a series of changes to reset the company’s course, including bringing onboard a new CFO, leaving the former CFO to focus solely on expansion plans. Plus the company started making cuts, including closing down its research center, Cuberg, in San Francisco and deprioritizing secondary businesses. At the end of September, Northvolt announced that it would cut 1,600 staff from three Swedish sites and about 20 percent of its international workforce.
Last month, Volvo started proceedings to take over their joint venture with Northvolt, while Volkswagen Group’s representative to Northvolt’s board stepped down this month. Sweden, for its part, is ruling out taking a stake to save its homegrown enterprise, Bloomberg reports. Carlsson had said last month that the company needs more than $900 million to permanently shore up its finances.
Photo credit: Northvolt
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Leading yard operation 3PL YMX Logistics has announced plans to deploy fully twenty (20) of Orange EV’s fully electric Class 8 terminal trucks at a number of distribution and manufacturing sites across North America.
As the shipping and logistics industries increasingly move to embrace electrification, yard operations have proven to be an almost ideal use case for EVs, enabling companies like Orange EV, which specialize in yard hostlers or terminal tractors, to drive real, impactful change. To that end, companies like YMX are partnering with Orange EV.
“This relationship between YMX and Orange EV is a significant step forward in transforming yard operations across North America,” said Matt Yearling, CEO of YMX Logistics. “Besides the initial benefits of reduction in emissions and carbon footprint, our customers are also seeing improvements in the overall operational efficiency and seeking to expand. Our team members have also been sharing positive feedback about their new equipment and highlighting the positive impact on their health and day-to-day activities.”
This Orange looks good in blue
One of the most interesting aspects of this story – beyond the Orange EV HUSK-e XP’s almost unbelievable 180,000 lb. GCWR spec. – is that this isn’t a story about California’s ports, which mandate EVs. Instead, YMX is truly deploying these trucks throughout the country, with at least four currently in Chicago (and more on the way).
“Our collaboration with YMX Logistics represents a powerful stride in delivering sustainable yard solutions at scale for enterprise customers,” explains Wayne Mathisen, CEO of Orange EV. “With rising demand for electric yard trucks, our joint efforts ensure that more companies can access the environmental, financial, and operational benefits of electrification … this is a win for the planet, the workforce, and the bottom line of these organizations.”
We interviewed Orange EV founder Kurt Neutgens on The Heavy Equipment Podcast a few months back, but if you’re not familiar with these purpose-built trucks, it’s worth a listen.
HEP-isode 26
SOURCE | IMAGES: YMX Logistics.
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