IRA DELAYS: Roughly 40% of the projects announced in the first year of the implementation of President Joe Biden’s largest industrial and climate infrastructure spending bills have been put on hold, according to a new analysis that illustrates the difficulty of translating major subsidies into physical construction.
During the 117th Congress, Biden signed the Inflation Reduction Act and the CHIPS and Science Act, which together offered more than $400 billion in subsidies for clean technology and the domestic buildout of semiconductors.
Of projects worth up to $100 million, however, $85 billion have been put on hold for several months or years or paused for an unspecified period of time, according to a Financial Times investigation. The total valuation of these projects was $227.9 billion.
This poses a complication for the Biden administration, which has said that its spending measures would reshore industries and bring back manufacturing jobs to the United States. The delays are also a setback for Vice President Kamala Harris’s presidential campaign as she looks to attract support from blue-collar workers.
It also highlights the failure of the Biden administration to enact permitting reform to facilitate the construction of major projects. As part of negotiations for the Inflation Reduction Act, Sen. Joe Manchin struck a deal with Senate Majority Leader Chuck Schumer to put a permitting reform proposal on the floor, arguing it was essential to realizing the potential of the law and its subsidies. Biden endorsed the reform measure, but it failed to advance thanks to opposition among Democrats. A new proposal from Manchin, along with Republican Sen. John Barrasso, has reignited hope that a bipartisan effort could gain traction in the upper chamber. Read more on that here.
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EV FUNDS HITTING RED AND PURPLE STATES: The Department of Energy is distributing $50 million to red and purple states to help small- and medium-sized suppliers’ manufacturing facilities transition for the EV supply chain.
DOE is distributing IRA grant program funding across six states:
The announcement follows a DOE feedback request from local entities on how federal funding could best serve auto suppliers that are looking to participate in electric, hybrid, or fuel cell vehicle supply chains. Any state or territory – including the District of Columbia – is eligible, as long as they have a workforce that makes up at least 0.5% of the automotive sector, and would qualify for at least $4 million in grant funding. States have until October to submit an application.
DOE is also announcing $1.5 million that will allow for three technical assistance teams to help create a “small supplier EV transition playbook” that would aid traditional gas-powered car suppliers to acclimate to a greener market.
Why this is important: Smaller and mid-sized companies make up the majority of manufacturers in the U.S., and are essential to the evolution of the auto industry. Plus, Michigan and Ohio – critical swing states in this year’s election – are getting the majority of the funds, and Democrats could point to these funds as they look to court auto workers ahead of the November election.
EASIER REQUIREMENTS FOR 45Z? The Department of Agriculture is advocating for less restrictive tax credit requirements for sustainable aviation fuel, Bloomberg reports.
Current guidance for the subsidy – otherwise known as the 45Z clean fuel credit that was included in the Inflation Reduction Act – requires farmers to adopt practices that include the planting of cover crops during the off season and no-till farming. Producers have said the demands are unrealistic.
Currently, the biofuels industry is waiting for guidance from the Treasury Department to drop, with the subsidy expected to begin in January.
The USDA is working on requirements that would give farmers more flexibility to “choose from a menu of activities and actions” under the new rules, Secretary Tom Vilsack said during an ethanol conference in Nebraska. Another goal of the revised requirements would be to ensure the crops benefiting from the tax credit aren’t restricted to corn or soybeans.
The big fear: Ethanol and corn producers are worried that if the Treasury stands by the proposed guidance for the 45Z tax credit, they won’t be able to participate in the growing SAF market. Read more here.
ERNESTO HEADING TOWARD BERMUDA: Hurricane Ernesto is increasing its momentum as it reaches Bermuda, possibly pouring heavy rains and floods across the British territory, Bloomberg reports.
The storm is about 550 miles south of Bermuda, and has now become a Category 1 weather system as winds reach 85 miles per hour.
However, the storm is expected to reach Category 3 levels by 2 p.m. Friday – but could weaken to Category 2 by the time it reaches the island, with wind speeds expected to reach between 96 and 110 miles per hour.
“It won’t be a direct hit,” Alyssa Glenny, an AccuWeather meteorologist, said in an interview. “But a Category 2 storm is nothing to joke about.”
The territory’s local electric utility is telling residents to prepare for the storm, warning that power outages are possible. However, Bermuda may fare better through the storm than Puerto Rico, which was grazed by Ernesto earlier yesterday. Puerto Rico has a faulty grid system that has been overrun by previous hurricanes, and more than 390,000 homes and businesses have lost power as of midday Thursday. Read more on that here.
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