Biden's plan would target serious money at several long-time energy-wonk priorities. Here's a look at the coolest parts & the road ahead. (If you don't wanna read, you can listen.)
You wrote: "if Biden can kick-start a domestic EV industry the way Obama’s stimulus bill kick-started solar ... he will have indirectly set in motion the greatest and most rapid reduction of US air pollution in generations."
Actually, Biden can't even hope to "kick-start" the domestic EV industry since it is already growing rapidly and EVs will soon achieve broad cost-competitiveness with ICE vehicles. The best he can do is speed things up a bit. If Biden wants to kick-start something, in the same way that Obama kick-started solar, what he should focus on is the almost universally forgotten problem of replacing fossil fuel and inefficient electric resistance heating systems with heat pumps -- preferably geothermal heat pumps. We cannot achieve our climate goals while burning fossil fuels. We can only achieve them if we replace furnaces and boilers with heat pumps.
An important element in the growth of the solar business was the 30% energy tax credit in IRS §48 that made it possible for the rooftop solar industry to obtain capital investment supporting third-party ownership (leases, PPAs, etc.). Third-party ownership (TPO) relieve homeowners of the up-front cost for solar installations. But, geothermal heat pumps (GHP) are only allowed a temporary, 10% tax credit. The result of this lack of parity in tax credits is that Wall Street invests in solar, not geothermal, even though the consumer savings and GHG reductions from installing GHP in the North and Northeast of this country are much greater than the corresponding benefits from solar installations and even though the asset life of GHP is longer and the incremental up-front cost is about the same as solar's once was. If we simply ensured tax credit parity between solar and geothermal, we'd see the geothermal heat pump industry given a massive kick-start quite similar to that once experienced by the solar industry. If we had tax credit parity, we'd see the development of TPO for GHP.
In every survey that has ever been done, "high up-front costs" are cited as the primary reason that geothermal heat pumps are not adopted. So, GHP faces today exactly the same problem that was overcome by introducing TPO for solar panels -- but there is no TPO for heat pumps and there won't be as long as Congress writes laws preferring solar panels to heat pumps. Biden should recognize that he has the opportunity to kick-start the conversion of 100 million homes and buildings to efficient, sustainable, cheap heating and cooling.
The core of any rational approach to addressing climate change should prioritize these three actions:
1. Decarbonize electricity
2. Adopt electric vehicles
3. Replace furnaces and boilers with heat pumps (preferably GHP)
Achieving those three things will address the bulk of our problem. The first two have received vast amounts of funding and attention. It is time that we addressed the third.
We must have parity between tax treatment of solar and GHP!
It's awesome news. I'm glad rail is mentioned - though I too would like to see a far more aggressive approach to mode shift of long haul freight. A friend with the renewable energy branch of Union of Concerned Scientists shared the quote about RR rights-of-way for transmission. We had collaborated on testimony to the Select Comm on the Climate last year. Seeing that emerge in this plan is very satisfying. A lot of people have done a lot of work to move these ideas forward. They've had to be very patient with less technical folks like me. I think the collaborations are paying off.
Another piece I did in response to Siemens Electric Highways work and other discussions about balancing efficiencies and modes of electrification is here:
"the exact structure of the taxes that will pay for the bill," -- taxes will not pay for the bill. The Federal government which has a monopoly on our currency will pay. It's a myth that taxes are required for social spending. They weren't required for the CAREs Act and they are not required for any of the wars we fight. If you want to learn about this watch one of the Stephanie Kelton youtubes or read her book The Deficit Myth or any of the other wonderful books by economists like L. Randall Wray.
Very insightful and exciting overview, thank you David! Question: do we have any more details on the competitive grant program rewarding jurisdictions that ditch exclusionary zoning? Trying not to get too excited, but very curious about how this would be structured. Thanks!
Adding to the benefits of cutting air pollution, I saw a poster for this paper about the effects of the COVID shutdown in the SF Bay Area. Low pollution = less heat trapped at surface. Large paved areas & big surfaces like large building rooftops were significantly cooler. Nice. https://www.sciencedirect.com/science/article/abs/pii/S2212095521000584
For the first time I listened to the podcast instead of reading, and you have the most beautiful speaking voice! However, I still read faster than anyone can talk, so I'll probably go back to that. Thanks for all your hard work, keeping up to date and analyzing this stuff for us.
You wrote: "President Biden will establish an Energy Efficiency and Clean Electricity Standard (EECES) aimed at cutting electricity bills..."
That is a really stupid, uninformed, and counter-productive goal. The goal should be to *raise* electricity bills while cutting energy bills! Beneficial Electrification, which should be the overall driver of our energy policy, will result in people using more electricity and less fossil fuel. Thus, we should expect, and hope, that *more* is spent on electricity. Certainly, we may wish to find ways to reduce electricity rates (i.e. the per unit cost of electricity), but the expectation should be that electricity bills will increase, not decrease. What should decrease, if not end entirely, is spending on non-electrical energy and energy from polluting, filthy, fossil fuels.
You wrote: "if Biden can kick-start a domestic EV industry the way Obama’s stimulus bill kick-started solar ... he will have indirectly set in motion the greatest and most rapid reduction of US air pollution in generations."
Actually, Biden can't even hope to "kick-start" the domestic EV industry since it is already growing rapidly and EVs will soon achieve broad cost-competitiveness with ICE vehicles. The best he can do is speed things up a bit. If Biden wants to kick-start something, in the same way that Obama kick-started solar, what he should focus on is the almost universally forgotten problem of replacing fossil fuel and inefficient electric resistance heating systems with heat pumps -- preferably geothermal heat pumps. We cannot achieve our climate goals while burning fossil fuels. We can only achieve them if we replace furnaces and boilers with heat pumps.
An important element in the growth of the solar business was the 30% energy tax credit in IRS §48 that made it possible for the rooftop solar industry to obtain capital investment supporting third-party ownership (leases, PPAs, etc.). Third-party ownership (TPO) relieve homeowners of the up-front cost for solar installations. But, geothermal heat pumps (GHP) are only allowed a temporary, 10% tax credit. The result of this lack of parity in tax credits is that Wall Street invests in solar, not geothermal, even though the consumer savings and GHG reductions from installing GHP in the North and Northeast of this country are much greater than the corresponding benefits from solar installations and even though the asset life of GHP is longer and the incremental up-front cost is about the same as solar's once was. If we simply ensured tax credit parity between solar and geothermal, we'd see the geothermal heat pump industry given a massive kick-start quite similar to that once experienced by the solar industry. If we had tax credit parity, we'd see the development of TPO for GHP.
In every survey that has ever been done, "high up-front costs" are cited as the primary reason that geothermal heat pumps are not adopted. So, GHP faces today exactly the same problem that was overcome by introducing TPO for solar panels -- but there is no TPO for heat pumps and there won't be as long as Congress writes laws preferring solar panels to heat pumps. Biden should recognize that he has the opportunity to kick-start the conversion of 100 million homes and buildings to efficient, sustainable, cheap heating and cooling.
The core of any rational approach to addressing climate change should prioritize these three actions:
1. Decarbonize electricity
2. Adopt electric vehicles
3. Replace furnaces and boilers with heat pumps (preferably GHP)
Achieving those three things will address the bulk of our problem. The first two have received vast amounts of funding and attention. It is time that we addressed the third.
We must have parity between tax treatment of solar and GHP!
I get that a lot needs to happen before this is *firmly* in "good news" territory, but DANG if it isn't nice to see something hopeful!!
It's awesome news. I'm glad rail is mentioned - though I too would like to see a far more aggressive approach to mode shift of long haul freight. A friend with the renewable energy branch of Union of Concerned Scientists shared the quote about RR rights-of-way for transmission. We had collaborated on testimony to the Select Comm on the Climate last year. Seeing that emerge in this plan is very satisfying. A lot of people have done a lot of work to move these ideas forward. They've had to be very patient with less technical folks like me. I think the collaborations are paying off.
For anyone who is interested, I submitted a PPT to USDOT policy staff last night to help keep the conversation evolving. You can access it at https://drive.google.com/file/d/1Qtgrf4Tk27VSd8a1Q0Lmfd-h6gS0LW4A/view?usp=sharing
Another piece I did in response to Siemens Electric Highways work and other discussions about balancing efficiencies and modes of electrification is here:
https://docs.google.com/document/d/12nVv6kjkfn5Z6TQ-oouJb5EM7oemnBGWeAPIMF4FDkE/edit?usp=sharing
Keep up the great work all!
"the exact structure of the taxes that will pay for the bill," -- taxes will not pay for the bill. The Federal government which has a monopoly on our currency will pay. It's a myth that taxes are required for social spending. They weren't required for the CAREs Act and they are not required for any of the wars we fight. If you want to learn about this watch one of the Stephanie Kelton youtubes or read her book The Deficit Myth or any of the other wonderful books by economists like L. Randall Wray.
Fascinating article breaking down the key provisions of the Bill. I learn everytime I read your emails. Thank You!
Very insightful and exciting overview, thank you David! Question: do we have any more details on the competitive grant program rewarding jurisdictions that ditch exclusionary zoning? Trying not to get too excited, but very curious about how this would be structured. Thanks!
Adding to the benefits of cutting air pollution, I saw a poster for this paper about the effects of the COVID shutdown in the SF Bay Area. Low pollution = less heat trapped at surface. Large paved areas & big surfaces like large building rooftops were significantly cooler. Nice. https://www.sciencedirect.com/science/article/abs/pii/S2212095521000584
For the first time I listened to the podcast instead of reading, and you have the most beautiful speaking voice! However, I still read faster than anyone can talk, so I'll probably go back to that. Thanks for all your hard work, keeping up to date and analyzing this stuff for us.
You wrote: "President Biden will establish an Energy Efficiency and Clean Electricity Standard (EECES) aimed at cutting electricity bills..."
That is a really stupid, uninformed, and counter-productive goal. The goal should be to *raise* electricity bills while cutting energy bills! Beneficial Electrification, which should be the overall driver of our energy policy, will result in people using more electricity and less fossil fuel. Thus, we should expect, and hope, that *more* is spent on electricity. Certainly, we may wish to find ways to reduce electricity rates (i.e. the per unit cost of electricity), but the expectation should be that electricity bills will increase, not decrease. What should decrease, if not end entirely, is spending on non-electrical energy and energy from polluting, filthy, fossil fuels.
Here is the key question: is this or is this not, a BFD?
I think it is?
"Yes, a serious transition to sustainability would probably take closer to $10 billion"
Should this be $10 trillion? I'd love for it just be $10 billion, though...