Latest news with #TravisFisher
Yahoo
24-03-2025
- Business
- Yahoo
IRA repeal would increase energy costs, hurt jobs: Energy Innovation
This story was originally published on Utility Dive. To receive daily news and insights, subscribe to our free daily Utility Dive newsletter. Repealing the Inflation Reduction Act's tax credits and funding programs would increase U.S. household annual energy costs by $6 billion in 2030 and more than $9 billion in 2035, according to Energy Innovation Policy & Technology. Ending the IRA would also cost nearly 790,000 jobs in 2030 and reduce gross domestic product by more than $160 billion, mainly as the result of fewer clean energy manufacturing and construction projects, the energy and climate policy think tank said in a report released Thursday. The analysis comes as House and Senate Republicans are mapping out budget plans that could include cuts to the IRA. The outlook is unclear, with at least 21 House Republicans supporting the IRA's tax credits. The Republicans have several options, including a partial IRA repeal, the Tax Foundation said on Thursday, noting that the law appears to be more expensive than originally estimated. The IRA, which Congress passed in 2022, has sparked $600 billion in private investment across roughly 750 clean-energy projects, creating more than 406,000 jobs as of January, according to Energy Innovation. Texas, California, Pennsylvania, Florida and Georgia would be the biggest losers if Congress repeals the IRA due to lost jobs and increased household energy costs, Energy Innovation's state-by-state analysis finds. In Texas, the IRA has spurred about $17.2 billion in clean energy and transportation investments and nearly 26,500 jobs, alongside $9.9 billion in announced investments from federal grants and loans, Energy Innovation said. Companies have started developing more than 600 clean energy and transportation facilities, and 206 have begun making products in the state, according to the analysis. Energy Innovation estimated that repealing the IRA would increase average annual household electricity and fuel costs in Texas by more than $90 a year in 2030 and more than $370 a year in 2035. A repeal would drive up electricity bills because less low-cost clean energy would be available and fewer electric vehicles on the road would increase spending on gasoline, the policy firm said. However, the IRA's tax credits could cost $936 billion to $2 trillion over the next 10 years, in part because some of the law's tax credits are uncapped, according to analysis released March 11 by the Cato Institute. 'The IRA's energy subsidies are multiple times larger than initial estimates, and they expose American taxpayers to potentially unlimited liability,' Travis Fisher and Joshua Loucks, the report's authors, said. The authors called on Congress to repeal the IRA's energy subsidies — or at least cap total spending on energy subsidies — and to require the Congressional Budget Office and others to publish transparent and updated estimates of the law's long-term costs. 'The massive cash transfer from taxpayers to private firms under the guise of environmentalism creates an overwhelming and undue burden on taxpayers who continue to pay for fiscally irresponsible federal spending,' Fisher and Loucks said. Recommended Reading 21 House Republicans oppose cutting clean energy credits to pay for tax cuts
Yahoo
12-03-2025
- Politics
- Yahoo
Climate Activists Are Passing Laws To Tax the Past
Climate activists have found a new way to force us to pay more for energy. New York and Vermont passed laws that will raise the price of oil, gas, and electricity by taxing the past. New York's new law demands fossil fuel companies pay $75 billion for carbon emissions dating back to the year 2000. Other Democrat-controlled states plan to follow suit. In my new video, Travis Fisher, energy director at the Cato Institute, argues that taxing the past is wrong: "I've been filling up my gas tank for 25 years. Will they go after me for every time I've filled up my tank?" Maybe. A more honest way to punish burning of fossil fuel is a carbon tax. "If you want to change people's behavior," says Fisher, "you tell them that their behavior is going to be taxed. This is taxing behavior that's already occurred—perfectly legal at the time. So, there's no possible change in behavior." Politicians don't push a carbon tax because they know voters won't like it. So they pretend oil companies will pay. They know voters don't like oil companies. "The deceit from these companies," shouts California Gov. Gavin Newsom, "playing us for fools!" He blames fossil fuel companies for his own government's failures. "Wildfires and floods and droughts," he says, "this climate crisis is a fossil fuel crisis!" "That just absolves him from any responsibility for anything," says Fisher. "Power out, wildfires, everything is climate change. Nothing is Gov. Newsom's fault." But Big Oil is so rich, say activists, they can easily pay. A CNN correspondent claims, "The amount of money they are making, some will certainly see as obscene, unconscionable." "'Unconscionable' is actually in [New York's] text," says Fisher, adding that these new laws are an expansion of government power that "[sets] a precedent that they could tax anyone for anything going back as far as they want." And yet, the new tax won't change the climate. "If New York stopped using fossil fuels altogether," says Fisher, "what impact would that have on the global climate?…Zero." That's because the entire United States, let alone New York, emits just a fraction of the world's carbon. In their bill, New York politicians compare fossil fuel producers to tobacco companies, writing, "The actions of many of the biggest fossil fuel companies closely [reflect] the strategy of denial, deflection and delay perfected by the tobacco industry." Politicians and greedy lawyers did get tobacco companies to pay more than $200 billion. But was that justice? I don't think so. The lawyers grabbed $8 billion for themselves. But alleged Big Tobacco bad guys who misled people about cigarettes' risk aren't paying for the settlement. Most had left their companies long before. Today's smokers must pay the bill via costlier cigarettes. Likewise, we fossil fuel users will be the ones paying these new fines. Although there are big differences between oil and cigarettes. "If we all quit cigarettes," says Fisher, "nothing catastrophic happens. Quit fossil fuels, the world grinds to a halt." Eighty percent of our energy comes from coal, oil, and natural gas, and that won't change soon. Solar and wind power aren't reliable enough. So these new retroactive oil taxes are mostly a way for state politicians to grab more of your money—in my state's case, an arbitrary $75 billion. I ask Fisher, "Isn't it calculated based on things fossil fuel companies did?" "No," He replies. "There's sophisticated literature about the social cost of carbon. They decided to skip all of that. Skip the trial. You're just guilty." So, in New York and Vermont, everyone who uses fossil fuels will be punished. Those of you in California, New Jersey, Maryland, and Massachusetts will probably be hit by similar taxes soon. "They're coming after everyone's lifestyle. That's only made possible by fossil fuels," says Fisher. "It's a shame because really, when I think about what America could be, we could be so much more prosperous than we are." Much more prosperous. But many politicians just won't let that happen. COPYRIGHT 2025 BY JFS PRODUCTIONS INC. The post Climate Activists Are Passing Laws To Tax the Past appeared first on
Yahoo
11-03-2025
- Business
- Yahoo
Inflation Reduction Act exposes US taxpayers to 'potentially unlimited liability,' Cato Institute argues
The Biden administration's Inflation Reduction Act energy subsidies could cost US taxpayers some $4.7 trillion by 2050 and should immediately be repealed, the Cato Institute argued in a new analysis. The libertarian think tank has long criticized the IRA as a fiscally reckless example of 'crony capitalism' that is lining the pockets of well-connected energy companies at the expense of ordinary Americans. A growing number of House Republicans are reportedly warning they could oppose their colleagues' effort to pass a budget bill if IRA incentives are on the chopping block. Travis Fisher, a co-author of the Cato paper and the think tank's director of energy and environmental policy studies, said these lawmakers were 'no doubt receiving panicked calls from lobbyists,' adding that 'the longer these subsidies stick around, the more companies will grow to rely on them, and the more time and effort our brightest minds will waste harvesting subsidies rather than serving American consumers.' Because some of the largest IRA incentives — production tax credits, investment tax credits, and advanced manufacturing tax credits for critical minerals — are designed to expire only after the electricity sector meets its emissions reduction targets, that exposes taxpayers to 'potentially unlimited liability,' the report argued. And short of a full repeal, US President Donald Trump's executive order suspending wind leasing means these subsidies will take even longer to expire, Fisher told Semafor. He said that social cost of carbon estimates were 'too malleable' to be a solid foundation for policy. Climate action in the US and European Union isn't enough to prevent global damages, he added, so 'we could get the worst of both worlds — trillions spent on climate change mitigation and negligible impact on global temperatures.' Semafor spoke to several other analysts who questioned Cato's models. Methodology aside, taxpayers also shoulder the consequences of inaction on climate change, which 'totally exceed the costs of action,' said Brad Townsend, vice president for policy and outreach at the Center for Climate and Energy Solutions, citing a recent study by consulting firm ICF. Calling for the IRA's repeal 'is like complaining about waste management but ignoring that the alternative is leaving trash in the streets and inviting the disease that comes with it,' Townsend said.
Yahoo
13-02-2025
- Business
- Yahoo
The IRA Has Made a Little Climate Bang for a Lot of Taxpayer Bucks
From the Capitolism on The Dispatch Given my schedule and intense desire to avoid writing about tariffs again, now's as good a time as any to check in on the Inflation Reduction Act, which has been in the news lately because Republicans are considering whether to trim the law's subsidies as part of their big tax/spending package. As readers of Capitolism surely know, I am and remain skeptical of the IRA as an industrial policy bill designed to boost American manufacturing and make the United States a clean energy powerhouse (or whatever), and we'll surely revisit where those efforts stand later this year when more data are in about the factories and jobs at issue. For now, however, it's worth examining the IRA in terms of simply its budgetary cost and primary objective of reducing carbon emissions to fight climate change. As an excellent new report from the Breakthrough Institute documents, this is not going well. And none of it should be surprising. As the Breakthrough report documents, the IRA's subsidies have already become way more expensive than the already-high $383 billion price tag the Congressional Budget Office originally calculated (which itself was billions more than what Senate Democrats first claimed). 'More recent estimates,' the report notes, 'project the total cost of these programs to run closer to a trillion dollars, with the cost of wind and solar subsidies alone substantially exceeding the cost of the original estimates not only for the clean energy subsidies but for the entire cost of the package, inclusive of non-climate related spending.' Even these revised totals, however, substantially undershoot the IRA's actual costs because they stop counting after the 10-year budget window closes. Thus, as my Cato Institute colleague Travis Fisher discussed in 2023, energy firm Wood Mackenzie has estimated that the IRA's energy subsidies could hit $3 trillion through 2050, and his own forthcoming estimates push the number even higher—to as much as $4.7 trillion over the same timeframe. Even in Washington, that's a lot of money. As to why the subsidies' budgetary costs are so high, the Breakthrough report cites two big, fundamental drivers. First, the law subsidized 'mature, widely commercialized technologies,' meaning that public uptake (and thus taxpayer cost) would inevitably be substantial: Solar now accounts for roughly 5% of US electricity generation and almost 25% in California. Wind accounts for over 10% of US generation and almost 30% in Texas. EVs will likely account for around 10% of US vehicle sales this year. With federal tax credits covering a third (or more) of the cost of wind and solar installations and $7500 for every EV that automakers sell, the aggregate costs of this approach to bringing down the unit costs of clean energy gets really expensive really fast. Put simply, the IRA subsidizes stuff millions of Americans already want and can already access relatively easily. So, of course they're gonna take advantage, and the taxpayer tab's gonna climb—a lot. Second, the law transformed what were originally supposed to be temporary subsidies intended to drive the innovation of new energy technologies into 'quasi-permanent' subsidies intended to drive long-term reductions in CO2 (and, for technical reasons that we'll avoid digging into today, to keep the continuing deployment of wind and solar energy economically viable). So, even though wind and solar technologies are already relatively cheap and available (thus eliminating any need for innovation subsidies), the report notes that IRA's subsidies are 'scheduled to expire only when economy-wide US emissions are 75% below 2022 levels, which translates to almost 80% below 2005 levels, or 40 percentage points lower than the IRA's 2030 emissions goal.' (Emphasis mine.) That's a recipe for never-ending subsidization, especially because the IRA's emissions goal looks increasingly unlikely (again, emphasis mine): Despite this significant escalation in the projected cost of the IRA, US emissions appear likely to significantly undershoot the original emissions reduction estimates that proponents of the IRA argued the package would achieve. After passage, Princeton's Net Zero project estimated US emissions would fall 50% below 2005 levels by 2035. Last year, they softened this projection to 40% below 2005 levels. A 2024 report from Princeton, Rhodium, Energy Innovation LLC, and MIT found that deployment trends in low-carbon electricity were insufficient to achieve the goal of 40% reduction in emissions by 2030 established by the IRA. And as we found last year, taking these revisions into account, IRA investments would likely sustain the existing pace of US emissions reductions, not significantly accelerate them. Given that reducing carbon emissions is supposedly the IRA's No. 1 goal, missing this target is a rather serious problem—especially when the subsidies will continue until the target is reached! As to why the law has proven less effective at curbing emissions than was advertised, Breakthrough zeroes in on something we've discussed here repeatedly: the IRA's total failure to tackle supply-side impediments to the dissemination of renewable energy, particularly permitting, transmission, and interconnection regulations: Wind and solar are not economically viable without subsidies not because solar panels and wind turbines aren't cheap but because it has become increasingly difficult to site them in many places and to get the power they generate to the places where it is needed when it is needed. Democratic leaders in the last Congress ultimately abandoned the opportunity to pass a legislative package inclusive of permitting and transmission reform, at the behest of an unholy alliance of environmental groups adamantly opposed to any meaningful reform of the National Environmental Policy Act and investor-owned utilities wary of competition that grid interconnection would bring. These supply-side reforms, they add, were probably more important for U.S. renewable energy deployment and carbon emissions than the IRA's demand-side subsidies, and the policies' omission has contributed greatly to the law's failures (and cost): In the absence of forever subsidies for wind and solar, permitting reform and interstate transmission are essential if those industries are going to thrive. No one appears to have done any modeling directly comparing the emissions benefits of solar and wind with subsidies and without permitting reform and transmission versus with permitting reform and interstate transmission and without subsidies. But given that Jenkins' modeling at Princeton's Net Zero project, conducted shortly after passage of the IRA, found that 80% of the estimated total emissions reductions through 2035 vanished without major expansion of transmission, we suspect that transmission, interconnection, and cheap battery storage are much more critical to the future of wind and solar, and the emissions benefits that additional wind and solar deployment might bring, than are the IRA tax credits. In short, an IRA focused on supply-side reforms alone may have done more for the environment than the subsidy-focused law we got, while saving American taxpayers trillions in the process. And the fact that, as noted above, no one in power in 2021-2022 even considered modeling this alternative approach is a policy failure of epic proportions. Adding insult to injury are all the other things unmentioned by Breakthrough that are further inflating costs and slowing deployment of renewable technologies in the United States—some of them baked into the IRA itself. As we've discussed, for example, tariffs and 'Buy American' restrictions have dramatically inflated solar panel prices in the United States and have increased the cost of solar energy generation, too. Per the latest Energy Department report, in fact, U.S. solar modules at the end of last year were selling at a 190 percent premium over world market prices—driven, the agency notes, by U.S. tariffs and domestic production costs that are more than double those in Southeast Asia (where most solar imports come from these days): Protectionism—tariffs, the Jones Act, Buy America rules, etc.—and regulatory hurdles also have burdened the offshore wind industry and related U.S. manufacturers, whose struggles have only intensified since we examined the problems in late 2023. And, as Jeff Luse notes over at Reason, U.S. tariffs—both old ones and the brand new taxes Trump has proposed—hobble advanced nuclear power and transmission lines, too. As one energy expert said about the new tariffs, 'This really is one of the dumbest things we could be doing.' Indeed. Bureaucracy is also slowing things down. For example, various reports indicate that U.S. EV uptake would accelerate if charging stations were more widely available, but the rollout of a national EV charging station network has been smothered in red tape. As of November of last year, in fact, National Electric Vehicle Infrastructure program had only 214 operational chargers of the 500,000 that were promised when the initiative launched two years earlier. Bureaucracy is a big reason why: Under that program, states apply for funding and then private companies make bids to install chargers. However, the charging companies who receive NEVI funds must comply with a complex web of local regulations, work with utility companies and get required permits—a process that can vary wildly from community to community. The charging station rollout has been further slowed by a Federal Highway Administration rule 'requiring that workers for most projects be certified by the electricians union, or another government-approved training program'; federal guidance dictating silly things like the distance between charging stations in a state and the number of charging ports at each station; cumbersome Buy America requirements for certain iron and steel components; and a federal requirement that half of all grant money be set aside for 'disadvantaged communities that are marginalized by underinvestment,' instead of places with actual high EV usage rates. Industry players, meanwhile, have expressed confusion about various IRA tax credit conditions. In one particularly egregious example, 'billions of dollars' of potential investments were stalled because, 'Two years after President Joe Biden's landmark climate law promised to kick-start green hydrogen production with generous tax credits, companies still don't know who will qualify.' Most recently, American EV drivers have struggled to provide the paperwork needed to receive EV tax credits as part of their 2024 tax returns—struggles created by a midstream change to rules on how dealers report EV sales to the IRS. Finally, political uncertainty regarding the Trump administration's and congressional Republicans' plans for the IRA continues to weigh on the renewables sector and the law's implementation. As we discussed in October, investment in the U.S. clean energy sector had slowed because companies were waiting to see who won the 2024 presidential election, and, as economist Brian Albrecht reminds us in a new piece, policy uncertainty has a long and ignominious history of sapping U.S. business investment, industrial production, and employment. Now that Trump's in office, the Financial Times reports, uncertainty about the IRA's future has slowed things down even further: Dealmaking in the renewables sector has been hit particularly hard, according to one banker who specialises in energy deals. 'Green energy investments have been decimated because you've got a guy who's saying he doesn't like windmills and is pulling permits for wind energy. It's impossible for the big infrastructure funds, in particular, to get comfortable committing to multiyear projects,' said the person, who did not want to be named. These doubts should persist for much of 2025 (if not longer), as the Trump administration and Congress mull spending and tax cuts that could take a chunk out of the IRA or consider regulatory changes to various subsidy conditions they don't like. And, of course, this kind of uncertainty is all but inevitable in an energy market driven by government, not private, actions. So, the IRA costs much more than advertised and, in terms of its main goal of 'tackling climate change' (in the Biden White House's own words), delivers much less. These disappointing outcomes are owed to what's in the law (endless subsidies to common technologies and more protectionism), what isn't in the law (supply side reforms on permitting, transmission, interconnection), and other needless rules and regulations that further impede the rollout of supposedly critical goods and services. And none of it is the least bit surprising. As the Breakthrough report notes, for example, many energy experts in the late 2000s warned against trying 'to use public clean energy subsidies as a reverse carbon tax' because it would be 'an inefficient and expensive way to cut emissions,' and they're being proven right today. Meanwhile, as I detailed in a 2021 paper, U.S. industrial subsidies like those in the IRA have routinely fallen victim to budgetary overruns and failed objectives, thanks to poor (often politicized) design and implementation, political uncertainty, and pre-existing laws and regulations that contradict or thwart the subsidies' goals. Sounds familiar! But this is more than just a case of I-told-you-sos; it matters greatly for assessing the IRA's merits and future. At a piddly $400 billion (ha!), for example, the factories and jobs supposedly spurred by the law might be worth its cost, even if U.S. emissions reductions are meager. At a total price tag more than 10 times that original amount, such results—even assuming they materialize and are owed to the IRA—make far less economic sense, while repealing the IRA subsidies makes much more. According to one recent estimate, for example, 'Each new Inflation Reduction Act job 'created' costs taxpayers between $2 million and $7 million.' That is objectively not good deal, no matter how you slice it—but especially when you consider that, as the Breakthrough authors calculate, as much as three-quarters of all projected IRA spending over the next 10 years will go toward subsidizing just three mature technologies that don't need any more subsidization (wind, solar, and EVs). Cutting those subsidies could alone save American taxpayers between $300 billion and $650 billion over the same timeframe—a nice chunk of change in an era of trillion-dollar deficits—and could in the process put federal energy policy on a better, more sustainable path going forward. Or, we can just keep handing out billions to companies and people who don't need the money, while distorting U.S. energy markets and waiting for emissions reductions that never actually come about. Seems like an easy call to me. Wow. Make Libya Great Again Americans would like Trump to focus more on lowering prices: Ah, memories Inflation ate the infrastructure law Trump doesn't really want 'reciprocity' Documenting steel tariff costs The U.S. has never been a free trade fundamentalist country On the expensive futility of Trump's washing machine tariffs Inflation, tariffs, and supply chains New life for Nippon Steel? Trump isn't mainly arresting/deporting criminals OOPS: Trump suspends 'de minimis' import ban after millions of packages pile up at U.S. ports Protectionism will kill Detroit Anti-American backlash continues in Canada DeepSeek and the AI 'monopoly' The occupational licensing racket New data on AI and jobs Apparel companies leave China for places with lower quality The post-neoliberal delusion Another protectionist talking point bites the dust CEOs and bankers sour on Trump Fact v. fiction in Panama Vermont gets old because of high housing costs Growth alone can't fix the deficit
