WASHINGTON, DC – APRIL 28: President Joe Biden speaks with Vice prior to a joint Congressional session … [+]
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With President Joe Biden’s huge $ 2.25 trillion spending plan potentially going through the House Transportation and Infrastructure Committee as early as this month, the United States may be on the verge of a moment of energy transformation.
Biden’s plan expands the definition of what infrastructure is preferred by many – repairing highways, railways, airports, ports, and bridges, and building new ones – by pledging hundreds of billions to accelerate the country’s transition to renewable energy. The macroeconomic benefits should be explored elsewhere. This begs the question of what the current package means for the US energy sector.
In calling for $ 174 billion to strengthen the domestic electric vehicle industry, the Democrats are proposing an accelerated departure from the internal combustion engine that has served US global and national needs over the past century. Leading electric vehicles like Tesla TSLA and Lucid Motors will benefit tremendously, as will Chevy, Ford, VW, BMW, and others entering the room.
Some of this massive investment will be used to provide various incentives for consumers and manufacturers, or to redesign the vehicles used by federal agencies. Efforts are already being made to modernize the aging postal service fleet. Wisconsin-based Oshkosh Defense could see a surge in sales.
The federal government would effectively quintuple the number of nationwide charging stations for electric vehicles from around 110,000 to 500,000 by the end of the decade. About a third of these existing charging stations are in California. Most Americans who drive know the local gas stations or are confident that they can find one in a pinch. Concerns about not finding a place to charge and getting stuck could lead to consumer reluctance even as EVs become more affordable. But why is that the job of the federal government?
Charger with Tesla logo on a Supercharger quick battery charging station for the electric vehicle … [+]
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It is currently estimated that 80% of vehicle charges are made up of residential properties. That this is both possible and affordable reduces the need for charging stations at each block. However, for longer trips, recharging from home can be just as important as topping up a tank of fuel. Even with technology improving, most plug-in vehicles have an expected charge of 250 miles. Without the charging infrastructure to support electric vehicles, they may not be suitable for cross-country journeys. The hesitation towards relatives with reduced range to ICE engines has a name in the industry: range anxiety. However, this expansion should be carried out by private sector companies such as ChargePoint Inc. and Blink Charging Co., including EV manufacturers, who should be allowed to make a profit from charging.
It is clear that the stations must continue to be strategically placed at popular destinations and community hubs to ensure that consumers can conveniently own and operate electric vehicles outside of their daily commute. Additionally, the package can promote the emerging vehicle-to-grid technology that enables more efficient charging as a core part of the investment package. For example, Virta and Nuvve, based in Europe, are global leaders in V2G transformation and are now active in the US.
Electric vehicles are not the be-all and end-all of the package. Biden has proposed a $ 50 billion investment in domestic semiconductor industries such as Intel INTC, Nvidia NVDA, and Texas Instruments TXN, which is being sold for both economic and security reasons. Semiconductor chips are an invisible but ubiquitous part of modern computers. Devices from vehicles to smartphones rely on them and the world is suffering from bottlenecks due to supply chain disruptions.
Development and production cycles are slow – far too slow to meet current demand. You can see the need to place semiconductor manufacturing in the US as competition with China intensifies. Semiconductors are at the heart of modern electronics and offer a wide variety of security applications, from satellites to airplanes to drones and missiles. China has invested heavily in chip manufacturing and is a world leader in extracting the rare earth elements that are essential to modern technology. America cannot rely on China for its computers.
Biden’s package includes a $ 35 billion request for new energy-related technologies that includes improvements in domestic rare earth extraction, particularly through MP Materials and Energy Fuels, as well as support for the advancement of nuclear reactor projects. Democrats and environmentalists have shied away from nuclear alternatives to fossil fuels in the past, but Biden and national climate adviser Gina McCarthy have spoken of nuclear alongside hydropower playing a role in the green transition. With the energy sector requiring a safe, carbon-free base load that is not weather dependent, like sun and wind, a nuclear renaissance is imperative.
In addition, the bureaucracy is reduced and not only money is made available for research work that would ease the stranglehold on the construction of new reactors. After all, the US needs a simple and reliable storage system for spent fuel. The federal government and both parties failed to deliver one to voters.
A car drives past the operational nuclear power plant on Three Mile Island operated by Exelon Generation … [+]
AFP via Getty Images
If the Biden Plan passes, the infusion of cash and trust could be a great boon to those already at the forefront of the transition. After his announcement, stock prices rose double digits for EV charging station owners like ChargePoint Holdings Inc. and Beam Global. Many existing vehicle manufacturers including Ford, GM, Volkswagen and others have already seen the writing on the wall and have promised their own transitions to EV production. However, federal support for new, environmentally friendly models is hardly needed, and ongoing research into battery technology could help accelerate the transition.
Biden promised to rule in a non-partisan way. So far he has spoken but has not delivered. The democratic majority in the House is narrow, but largely united behind the administration. In the Senate, as always, it’s getting harder. Senate MP Elizabeth MacDonough’s decision that the reconciliation process could be used for the infrastructure package a second time this year – after which only a simple majority is required – was a major coup for Senate Majority Leader Chuck Schumer’s Democratic caucus. Democrats still cannot afford to lose a single vote if this strategy is adopted.
Joe Manchin from West Virginia could be that voice. Manchin has made it clear to his colleagues that he is concerned about the size of the bill and his unwillingness to advance without the input of Republican officials. He praised a counter-proposal by a group of Republican senators – $ 568 billion specifically for traditional infrastructure measures, about a quarter of the amount proposed by Biden – and suggested setting the limits for a compromise package. He’s not the only Red State Democrat who may also oppose the party line. Both Arizona senators have held positions they are likely to need for re-election. But Manchin remains the most constant thorn in the side of his caucus.
After Minority Leader McConnell has just declared “complete unity of Susan Collins with Ted Cruz as opposed to Biden’s agenda,” Manchin may be the only person in Washington who believes in the old style of bipartisanism. But he also believes in the need for a real revitalization of the infrastructure, not pork or paying taxpayers’ money for an ideological agenda.
What the country needs is a bill that can get more than sixty votes – and go back to bipartisanism, horse trading and everything.
With the support of Danny Tomares and Jame Grant
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