With his Build Back Better initiative stymied in the Senate, President Biden has issued an ambitious executive order to leverage the federal government’s immense purchasing power to speed a national conversion to green energy. The Biden administration also is moving to implement provisions of the Infrastructure Investment and Jobs Act to support the switch to electric cars and trucks.
Biden’s executive order seeks to “reduce emissions across federal operations, invest in American clean energy industries and manufacturing, and create clean, healthy and resilient communities.” “It’s a similar strategy to what China is doing so successfully, leveraging the purchasing power of their government to create demand that markets can meet,” explains Josh Freed, senior vice president for Third Way, a Democratic-leaning climate and energy research group.
Under the order, the federal government will aim to make its operations carbon neutral by 2050 by leasing facilities that use green energy, investing to scale up American clean energy production and ending purchases of gas-powered vehicles. Federal agencies will be able to coordinate with utilities to support wind, solar and nuclear power generation projects. The Pentagon will move ahead on a 520-megawatt solar panel project at Edwards Air Force Base in Southern California. Federal investments will try to create hydrogen fuel from water rather than methane.
Because it’s an executive order, steps can proceed immediately without going through lengthy rule-writing procedures and potential court challenges. The downside, the next President can void the executive order.
In the same vein, the Biden administration is gearing up to award competitive grants and distribute federal formula funds to states to expedite a national electric vehicle charging network. The $4.2 billion in state formula funds will sync with Alternative Fuel Corridors (AFCs) established by the Federal Highway Administration. Interstate and major state highways tend to make up the AFCs. Here is the list of AFCs in Oregon and Washington:
Funding guidelines require spacing EV charging stations a maximum 50 miles apart and within one mile of an AFC. Stations should be open to the public and commercial truckers. The federal cost share for each project will be 80 percent. There is an August 1 deadline for state submissions regarding how they will employ federal funds to bolster EV infrastructure. Actual funding will flow through the National Electric Vehicle Infrastructure (NEVI) program.
Meanwhile, auto and truck manufacturers are moving forward aggressively to produce electric vehicles and phase out gas-powered vehicles. Consumers are beginning to respond as US sales of EVs in 2021 were triple what they were two years earlier, going from 2.5 percent of total vehicles sold to 9 percent. Tesla produced more than 930,000 vehicles in 2021, doubling its 2020 volume.
The US electric vehicle market is projected to total more than $802 billion by 2028. Globally, experts predict 20 percent of all new cars sold in 2025 will be EVs, jumping to 40 percent by 2030. By 2040, virtually all new vehicles will be electric-powered. A similar pattern of growth is projected for commercial vehicles.
Tesla predicts it will sell 20 million EVs annually by 2030. General Motors plans to sell only zero-emission vehicles by 2035. Ford expects up to 50 percent of its global vehicle production will be electric by 2030. Daimler estimates 50 percent of its sales in 2025 will be EVs, as it invests $47 billion to catch up with Tesla production. Electric trucks are projected to total more than 1.4 million units by 2030.
The cost of electric vehicles, a key to wider consumer appeal, will depend on efforts to reduce the cost of EV batteries. Those efforts include more efficient and automated manufacturing and the price of materials such as lithium, graphite, cobalt, manganese and nickel. Raw material prices will reflect supply chain bottlenecks and market concentration. Lithium mining is limited at the present to Australia, Chile and Argentina, though lithium reserves have been identified elsewhere, including in southeastern Oregon. China dominates the market for graphite, which is used for the anode in lithium-ion batteries, the likely near-term standard for EVs.
The cost of electric vehicles, a key to wider consumer appeal, will depend on efforts to reduce the cost of EV batteries. Those efforts include more efficient and automated manufacturing and the price of materials such as lithium, graphite, cobalt, manganese and nickel.
Continuing Resolution Just Under the Wire
The Senate approved a continuing resolution until March 11 to avert a partial government shutdown last Friday. Congressional Democrats and Republicans expressed confidence they can reach agreement on defense and non-defense spending levels for the remainder of Fiscal Year 2022 that runs through September. Failure to approve FY 2022 spending authority has held up approval of appropriations bills and delayed a range of grant funding.
Senate Democrats Mull Anti-Inflation Measures
Feeling political pressure from slumping poll results, Senate Democrats are exploring a range of options to bring down the inflation rate from its 40-year high of 7.5 percent, which consumers feel at grocery checkout stands, car dealerships and gas pumps. Ideas under discussion include suspending the federal gas tax of 18.3 cents per gallon, capping the cost of prescription drugs such as insulin and pursuing antitrust regulations. Caps on certain drug prices is a provision in the stalled Build Back Better initiative, which could be pulled out for a separate vote.
Suspending federal gas and diesel taxes until next January has drawn support from Democrats facing tough re-election bids this year. Oregon Senator Ron Wyden, who chairs the Senate Finance Committee that will consider the legislation, has thrown his weight behind the effort. State and local officials have expressed concern about the impact on federal highway funding. Sponsors of the idea have proposed temporarily backfilling the foregone tax revenue with other general fund revenue.