Interesting article on the new Climate Bill

[Theo1000]

Maybe there’s something I’m missing… but why are folks fixated on the proposed 80K limit when the Lightning may not even qualify in 2023 due to the foreign content?

I would not worry about the content rules. Rule making on the back end will make Ford eligible. Folks don't recall this but the existing credit has a little known clause on the size of the EV batteries. I believe 10 kwh for the full credit. Why 10 kwh, because it was added to make the chevy volt in particular, qualify and stick it to nissan. There are other tweaks that folks did to qualify, on the I3 we ended up with a teeny tiny 2.5 Gal tank, software limit mind you, to satisfy some odd California rule.

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[cvalue13]

I came across an interesting study about energy subsidies from The University of Texas, which is a very liberal institution. Excerpt is below, followed by the link to the study.

Renewables receive signifiantly more support than conventional technologies on the basis of annual support relative to annual generation from all existing generation assets ($/yr / MWh/yr = $/MWh). Depending on the year, coal receives $0.5-$1/MWh, hydrocarbons $1/MWh, and nuclear $1-2/ MWh. Support to wind falls from $57/MWh to $15/MWh over our study period, and support to solar declines from $260/MWh to $43/MWh.

https://energy.utexas.edu/sites/default/files/UTAustin_FCe_Subsidies_2018_April.pdf

It’s a valid point worth considering, but also worth some context. For just a few examples:

First, and least important: calling UT a “very liberal institution” is controversial on any metric, but especially when discussing viewpoint on energy policy. The University of Texas (and Texas Tech) Permanent University Fund this year is on pace to receive more than $2 billion dollars from its West Texas oil and gas holdings. That represents nearly 1/5 of all the income received by the PUF. Texas, including UT/Tech, runs on Oil and Gas.

Second, studies such as the ones you site tend to pass over (or readers tend to pass over) the more important context: while renewables may presently receive more support, that is necessary by context: the O$G industry has been receiving this type of support for nearing 1.5 centuries, contributing historically to making O&G the most establish and dominant energy system available; conversely, renewables have only recently, as in in the past 1.5 decades begun seeing significant support, and even then as by orders of magnitude the new runt of possible energy systems.

In theory, this sort of “support” is intended to assist new and emerging energy systems establish a foothold against the old and dominant energy systems. On that theory, the fact that the O&G industry continues to receive any support is the distortion of issue here.

Again, I say all this having fed my family off the O&G industry for the past 15 years - so don’t confuse me with a dogmatic anti-industry sort of fanatic. Instead, it’s that I’m deep enough in the industry to have seen the various ways the sausage is made, while also understanding the importance of getting sausage to the table. I spent years (better years, years ago) representing Russian oil and gas companies. For reasons we don’t need to get into (least of all while witnessing what is going on in Europe presently given the Ukraine), no matter how important O&G is to humanity, having a back-up alternative as soon as possible is mission critical - even ignoring the environment - for reasons of global and geo-political security.

We should be putting *more* not less into alternative energy sources of all kinds, and learning how to ween off of O&G, if we want to continue being a prosperous country during my children’s lifetimes.

 

[Tony Burgh]

It’s a valid point worth considering, but also worth some context. For just a few examples:

First, and least important: calling UT a “very liberal institution” is controversial on any metric, but especially when discussing viewpoint on energy policy. The University of Texas (and Texas Tech) Permanent University Fund this year is on pace to receive more than $2 billion dollars from its West Texas oil and gas holdings. That represents nearly 1/5 of all the income received by the PUF. Texas, including UT/Tech, runs on Oil and Gas.

Second, studies such as the ones you site tend to pass over (or readers tend to pass over) the more important context: while renewables may presently receive more support, that is necessary by context: the O$G industry has been receiving this type of support for nearing 1.5 centuries, contributing historically to making O&G the most establish and dominant energy system available; conversely, renewables have only recently, as in in the past 1.5 decades begun seeing significant support, and even then as by orders of magnitude the new runt of possible energy systems.

In theory, this sort of “support” is intended to assist new and emerging energy systems establish a foothold against the old and dominant energy systems. On that theory, the fact that the O&G industry continues to receive any support is the distortion of issue here.

Again, I say all this having fed my family off the O&G industry for the past 15 years - so don’t confuse me with a dogmatic anti-industry sort of fanatic. Instead, it’s that I’m deep enough in the industry to have seen the various ways the sausage is made, while also understanding the importance of getting sausage to the table. I spent years (better years, years ago) representing Russian oil and gas companies. For reasons we don’t need to get into (least of all while witnessing what is going on in Europe presently given the Ukraine), no matter how important O&G is to humanity, having a back-up alternative as soon as possible is mission critical - even ignoring the environment - for reasons of global and geo-political security.

We should be putting *more* not less into alternative energy sources of all kinds, and learning how to ween off of O&G, if we want to continue being a prosperous country during my children’s lifetimes.

As a long time participant in downstream petrochem, the catch phrase and bible verse was “feedstock flexibility is everything “. Never tie yourself to just one source or just one feed.

 

[world2steven]

Renewables receive significantly more support than conventional technologies on the basis of annual support relative to annual generation from all existing generation assets
https://energy.utexas.edu/sites/default/files/UTAustin_FCe_Subsidies_2018_April.pdf

The key here is what economists call 'externalities' - costs you don't have to pay when you use a product but which other people who don't use it most definitely have to pay. There are the health costs people who live downwind from fossil fuel power plants have to pay right away. Longer term, there will be the cost of moving the world's major seacoast cities inland to higher ground - costs your children will have to pay IF it can even be done.

 

[cvalue13]

As a long time participant in downstream petrochem, the catch phrase and bible verse was “feedstock flexibility is everything “. Never tie yourself to just one source or just one feed.

amen

 

[PiMatrix]

That may well be true, but the article (even if only briefly) points towards how the current tax bill appears to include within it several “poison pills.”

“Although EV manufacturers are already pursuing plans to develop supply chains that meet these sourcing requirements, proposals for mines and processing facilities often face challenges. Indigenous and environmental concerns have slowed a proposed lithium mine in Nevada. In some cases, key materials, such as cobalt and graphite, are not readily sourced domestically or from fair-trade allies.”

This briefly points to what are only two of these poison pills.

Forstly, the raw materials for *current* battery technologies are potentially unavailable as a matter of geology. Changing geology on any time scale is impossible, and changing battery technologies to work around these geologic constraints is almost certainly unlikely within the current bill’s proposed timelines. Accordingly, this poison pill in the pessimistic view amounts to saying, emphasis on the parenthetical,, “we’ll give you a $7,500 refund (so long as pigs fly).”

Secondly, even we’re the above geologic and technological constraints missing, there would still be perhaps the larger social poison pill: aspirations paired with an overriding NIMBY mentality (for those unfamiliar: Not In My Back Yard). Even discounting the perhaps disingenuous marketing efforts of anti-battery interests to suggest mining and similar extraction efforts are catastrophically bad for the environment, there are still left many strong indications that - in effect - everyone supports mining and similar efforts, only so long as they need not see, hear, smell, touch, or know of where it is occurring.

China currently produces all these resources and provides all these services not only because they have been prophetically planning for it for decades, but also because - as a precondition allowing their planning - it faces nearly zero social obstacles to execute on these plans, by providing both philosophical disinterest in environmentalism of the sort we have adopted in the west, as well as fleets of dirty hands willing, desperate, or forced to do the menial work required of these industries.

There are arguments for additional poison pills embedded in the current bill I’m sure, but these two alone jump out at me as being sufficient to cast grave doubt on the meaningfulness of the bill after say 2023 or 2024.

By way of background, I’ve just exited 15 years in the oil and gas industry, and so have - albeit from a different industry - plenty of perspective on an American people who (by-in-large) simultaneously demand “clean” energy while at the same time have seemingly zero appetite to curb their own voracious appetite for energy.

For just one bit of proof: take a look at Boden’s earlier climate efforts, and you’ll notice one thing glaringly absent - a single policy that requires even a single individual American to accept any degree of discomfort or throttling of their energy appetite. The policies say, for example, things like “make HVAC more energy efficient,” but never once say, for example, “require government buildings to set their thermostats to 80 degrees in summer.”

From that mentality of wanting it all while willing to give little to nothing, it becomes hard to imagine how by 2024 these manufacturers can meet the bill’s domestic sourcing requirements.

PS: lest someone take my above skepticism to be borne of some O&G industry indoctrination, bare in mind I have 21KW of solar on my roof, and just early-adopted a F150L. I’m an “all-the-above” energy guy, who I like to think merely has some modicum of practical observation to add.

Yes, the challenge is difficult for the industry to ramp up domestically in such short time for raw materials, batteries, etc. However, there are a few things that will happen all beneficial. Foreign supply companies and assembly plants will move their manufacturing here creating more high-tech jobs. The bill talks about (1) final assembly of the vehicle occurring in North America; (2) specified percentages of the vehicle battery's critical minerals originating from a US free trade agreement ("FTA") partner, or being recycled in North America; and (3) specified percentages of the battery's components being manufactured in North America. Moreover, after a short transition period, the IRA would make vehicles ineligible for the credit if the vehicle battery contains "any" critical minerals or components sourced from countries such as China and Russia.

North America is not just the USA. It encompasses Canada, the United States, Mexico, Guatemala, Belize, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, and the Caribbean countries. Canada has tons of raw materials and Mexico among others cheap labor. In fact Elon Musk looking to purchase raw materials mine in Canada and I'm sure Ford must be also trying to guarantee supplies.

Finally, there are a number of battery breakthus in development which will reduce the need for some of these metals. It will take many years but with an new economic incentive will likely accelerate.

Will be interesting to watch!

 

[MM in SouthTX]

First, and least important: calling UT a “very liberal institution” is controversial on any metric, but especially when discussing viewpoint on energy policy. The University of Texas (and Texas Tech) Permanent University Fund this year is on pace to receive more than $2 billion dollars from its West Texas oil and gas holdings. That represents nearly 1/5 of all the income received by the PUF. Texas, including UT/Tech, runs on Oil and Gas.

UT is definitely predominantly liberal. I do not know about these individual authors, but the institution is liberal. I do know some people in the Bureau of Economic Geology and they are quite liberal.

Don’t mistake source of income with ideology. I know lots of liberals down here whose family fortunes, and I mean fortunes, were made in the oil and gas industry.

By the way, I have solar on my roof, too.

 

[shutterbug]

Why 10 kwh, because it was added to make the chevy volt in particular, qualify and stick it to nissan

The first Volt had a 16kWh battery, Nissan Leaf first version had 24 kWh battery. So how is that sticking to Nissan? The first version of Toyota PHEV had 4.4 kWh. Ford Energi had 7.6 kWh.

The way the tax credit works is, new plug-in electric vehicles is worth $2,500 plus $417 for each kilowatt-hour of battery capacity over 4 kWh, and the portion of the credit determined by battery capacity cannot exceed $5,000. Meaning, Volt was the only early PHEV that was eligible for full $7,500 credit. Prius PHEV got only $2,500 and Fords got $4,000.

 

[Tony Burgh]

UT is definitely predominantly liberal. I do not know about these individual authors, but the institution is liberal. I do know some people in the Bureau of Economic Geology and they are quite liberal.

Don’t mistake source of income with ideology. I know lots of liberals down here whose family fortunes, and I mean fortunes, were made in the oil and gas industry.

By the way, I have solar on my roof, too.

So you are a progressive, as opposed to regressive, thinker.

 

[cvalue13]

UT is definitely predominantly liberal. I do not know about these individual authors, but the institution is liberal. I do know some people in the Bureau of Economic Geology and they are quite liberal.

Don’t mistake source of income with ideology. I know lots of liberals down here whose family fortunes, and I mean fortunes, were made in the oil and gas industry.

By the way, I have solar on my roof, too.

To be honest, I’m not at all certain what anyone might mean by “liberal” applied in the context of labeling an entire institution as having an ideology.

Setting that aside, perhaps I was misunderstanding the intent of your having stated that UT is “liberal” just before then posting data about subsidies to different energy industries. I interpreted it to mean, essentially, “even the liberals agree renewables get more subsidies than O&G.”

All I intended to add was, regardless of whether an institution can be categorized as “liberal” (whatever that is intended to mean in this context), that label alone may not provide any inference as to the institutions’ biases regarding energy policy.

Just ask almost any “liberal” in the petro-state of Alaska. Or as you mention, just ask any other “liberal” whose family fortunes derive from the hydrocarbon industry.

I might begin to think one’s source of income does afterall effect their ideology.

 

[MM in SouthTX]

Setting that aside, perhaps I was misunderstanding the intent of your having stated that UT is “liberal” just before then posting data about subsidies to different energy industries. I interpreted it to mean, essentially, “even the liberals agree renewables get more subsidies than O&G.”

Yeah, that’s basically what I meant. That this did not come from Fox News or Hillsdale College. I didn’t mean to pick a fight though. I should not have used the term “liberal.” I intended just to make people aware of the massive advantage that wind and solar have.

I get your point on cumulative subsidies, but the history does not change the present. The only reason wind and solar exist is because of the subsidies. Given the concern with climate change, that may be a valid tipping of the scales. Time will tell.

The main problem I have with wind and solar, though, is that they can not at this time replace fossil fuels. They can only displace them, as there is (almost) no storage for that energy. There is none in Texas. If the wind is not blowing and the sun is not shining, there is no power if all you have is wind and solar. Outside of a few huge battery plants in California, the grid needs 100% fossil fuel (or nuclear) backup to exist. We saw the effect of relying too much on wind and solar with the winter storm in Texas. When the windmills froze, the fossil fuel backup that had been idled by wind and solar was not capable of ramping up. The Texas grid did not have any problem handling FAR worse freezes in the past when those plants were operational full time. It was the idling of those plants that kept them from being ready to produce when the wind failed.

So I am left to ponder how much carbon dioxide was produced in building a redundant wind and solar system, and whether its carbon footprint is offset by the idling of the fossil fuel generation stations. I don’t know the answer to that.

I also don’t know whether the production of a (currently) redundant energy generation system is a worthy long term goal, in anticipation of the day that it could replace fossil fuels. It can’t right now.

My comments are intended not for taking sides, but to keep people thinking. Too many people are too sure of themselves, I think. But I’m not sure!

 

[adoublee]

We saw the effect of relying too much on wind and solar with the winter storm in Texas. When the windmills froze, the fossil fuel backup that had been idled by wind and solar was not capable of ramping up. The Texas grid did not have any problem handling FAR worse freezes in the past when those plants were operational full time. It was the idling of those plants that kept them from being ready to produce when the wind failed.

Sorry but this is poor understanding of what happened in Texas based on what has been published following the initial wind-blaming headlines that came out to the glee of many fossil fuel lovers. The regional electricity operators had never seen a cold front of that magnitude/duration extend as far North and South at the same time, putting a huge strain on natural gas distribution. Natural gas plants in Texas were not hardened against the effects of extended freezing temperatures with many of the support systems required to run a gas plant frozen. While a a good percentage of wind capacity was lost due to a lack of winterization kits on Texas wind turbines (not grain mills), I believe it has been shown that gas plants lost significantly more planned capacity than wind. So while intermittent generation resources do have issues that have to be managed more diligently/expensively as their proportion of penetration increase, blaming the 2021 Texas outages on wind and solar can disqualify the balance of the discussion for those who (at least think they) know what happened.

 

[cvalue13]

My comments are intended not for taking sides, but to keep people thinking. Too many people are too sure of themselves, I think. But I’m not sure!

Just the same: just because people disagree with you does not mean they’ve stopped thinking or are any more sure of themselves; it’s equally (more?) possible they’ve simply thought more than you. On first impressions, knowing more or knowing less can look very similar - takes some patience to sort which is which.

As for the observations on the energy industries, and relative virtues of O&G vs renewables:

Your conclusion seems to depend on the assumption that we just choose between either O&G or renewables, which is a poor assumption I think. Precisely because feedstock flexibility is everything, not only do we not need to choose between O&G, we absolutely shouldn’t. The game here, as someone so nicely stated above is, “‘feedstock flexibility is everything,’ never tie yourself to just one source or just one feed.”

We need not even raise our various environmental/climate prerogatives to arrive at the above feedstock flexibility issue. We can instead look purely at economics and geo-political stability.

Things in Europe at the moment are an ideal test case. For the past 15-20 years, on the surface sort of public-relations level of discourse, European countries have postured as being more environmentally conscientious and forward-thinking than other parts of the globe, touting higher than average statistics of grid from renewables.

Below that PR, however, was the actual motivator to such massive investments in renewables: national-security, through independence from Russian hydrocarbon dependency. All of Europe has known for decades that it had become held on Moscow’s string by its reliance on Russia’s hydrocarbons. And so, with a public-facing message of superior environmental principles, the countries were actually investing significant capital into its national security by developing renewable sources at greater speeds and with greater public subsidies than, for example, the U.S.

What we’ve seen the past 6 months out of the Ukraine situation is the near but not far enough accomplishment of Europe’s goals, and now a further expediting of these renewables efforts. Much more could be said here, but suffices to point towards a present day example of how and why “feedstock flexibility is everything.”

While Europe’s situation with Russia has been acute, it’s not that North America is without its own, similar, national security concerns over feedstock inflexibility. Our entire hydrocarbon-dependent economy, and principally our military apparatus, can be strengthened or weakened as though with a remote-control from living room couches located in Russia, the Middle East, China, and parts of South America. Our present degree of feedstock inflexibility is mission-critical (as seen by the freezes here in Texas two years ago), and investment these new feedstock sectors probably our #1 national security weakness.

For these reasons, I actually think my fellow liberals have done our country a great disservice by following the European model of couching all this in terms of environmental morality. It has cast the conversation into a quagmire of Fox News vs MSMBC like toddler’s spat, when instead we should be all looking out at fields full of windmills the same way we might look at a harbor full of aircraft carriers.

So yes, not only are new feedstocks (and technologies tangential to them like the F150L) receiving disproportionate investment compared to O&G, they SHOULD be receiving far, far, more - and both sets of toddlers in both the Fox News and MSNBC classrooms should be calling it what it really is: defense spending.

Decades worth of climate-change is forthcoming, unpredictably effecting any manner of energy source - so the key to literally weathering these unpredictable storms is having multiple, synergistic, forms of feedstock flexibility… and hopefully just more than the country “next door.”

 

[MM in SouthTX]

Sorry but this is poor understanding of what happened in Texas based on what has been published following the initial wind-blaming headlines that came out to the glee of many fossil fuel lovers. The regional electricity operators had never seen a cold front of that magnitude/duration extend as far North and South at the same time, putting a huge strain on natural gas distribution. Natural gas plants in Texas were not hardened against the effects of extended freezing temperatures with many of the support systems required to run a gas plant frozen. While a a good percentage of wind capacity was lost due to a lack of winterization kits on Texas wind turbines (not grain mills), I believe it has been shown that gas plants lost significantly more planned capacity than wind. So while intermittent generation resources do have issues that have to be managed more diligently/expensively as their proportion of penetration increase, blaming the 2021 Texas outages on wind and solar can disqualify the balance of the discussion for those who (at least think they) know what happened.

Your first sentence is a bit personal. I did not base my logic on headlines. I based it on facts. The freezes of 1983 and 1989 were far worse, statewide. The grid did not fail. Just facts. https://www.dfwweather.org/wxblog/?p=74
https://www.houstonchronicle.com/bu...reezes-How-the-Texas-grid-stayed-16005807.php

 

[MM in SouthTX]

Just the same: just because people disagree with you does not mean they’ve stopped thinking or are any more sure of themselves; it’s equally (more?) possible they’ve simply thought more than you. On first impressions, knowing more or knowing less can look very similar - takes some patience to sort which is which.

As for the observations on the energy industries, and relative virtues of O&G vs renewables:

Your conclusion seems to depend on the assumption that we just choose between either O&G or renewables, which is a poor assumption I think. Precisely because feedstock flexibility is everything, not only do we not need to choose between O&G, we absolutely shouldn’t. The game here, as someone so nicely stated above is, “‘feedstock flexibility is everything,’ never tie yourself to just one source or just one feed.”

We need not even raise our various environmental/climate prerogatives to arrive at the above feedstock flexibility issue. We can instead look purely at economics and geo-political stability.

Things in Europe at the moment are an ideal test case. For the past 15-20 years, on the surface sort of public-relations level of discourse, European countries have postured as being more environmentally conscientious and forward-thinking than other parts of the globe, touting higher than average statistics of grid from renewables.

Below that PR, however, was the actual motivator to such massive investments in renewables: national-security, through independence from Russian hydrocarbon dependency. All of Europe has known for decades that it had become held on Moscow’s string by its reliance on Russia’s hydrocarbons. And so, with a public-facing message of superior environmental principles, the countries were actually investing significant capital into its national security by developing renewable sources at greater speeds and with greater public subsidies than, for example, the U.S.

What we’ve seen the past 6 months out of the Ukraine situation is the near but not far enough accomplishment of Europe’s goals, and now a further expediting of these renewables efforts. Much more could be said here, but suffices to point towards a present day example of how and why “feedstock flexibility is everything.”

While Europe’s situation with Russia has been acute, it’s not that North America is without its own, similar, national security concerns over feedstock inflexibility. Our entire hydrocarbon-dependent economy, and principally our military apparatus, can be strengthened or weakened as though with a remote-control from living room couches located in Russia, the Middle East, China, and parts of South America. Our present degree of feedstock inflexibility is mission-critical (as seen by the freezes here in Texas two years ago), and investment these new feedstock sectors probably our #1 national security weakness.

For these reasons, I actually think my fellow liberals have done our country a great disservice by following the European model of couching all this in terms of environmental morality. It has cast the conversation into a quagmire of Fox News vs MSMBC like toddler’s spat, when instead we should be all looking out at fields full of windmills the same way we might look at a harbor full of aircraft carriers.

So yes, not only are new feedstocks (and technologies tangential to them like the F150L) receiving disproportionate investment compared to O&G, they SHOULD be receiving far, far, more - and both sets of toddlers in both the Fox News and MSNBC classrooms should be calling it what it really is: defense spending.

Decades worth of climate-change is forthcoming, unpredictably effecting any manner of energy source - so the key to literally weathering these unpredictable storms is having multiple, synergistic, forms of feedstock flexibility… and hopefully just more than the country “next door.”

Not sure what conclusions you are talking about. I am mostly raising questions. I do conclude that renewables are redundant at this time because there is no storage mechanism for them. Let’s say that Germany had enough wind and solar to power their entire grid. If Russia turns off their gas, what is going to power the ventilators in the hospital at night when the wind is not blowing? I don’t see renewables as a geo-politically strategic maneuver at this time. But maybe as you suggest I’m just somebody who can’t manage to think through this as well as you.

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