Tempered techno-optimism is the theme for 2023

Jan 03, 2023 View in browser   By Debra Kahn THE BIG IDEA Hydrogen is getting ready for its closeup. | Image Courtesy of Air Products and Chemicals, Inc. HYDROGEN HYPE — 2022 was a big year for policy victories. This year will be about implementation and jockeying over the details that separate winners from losers. The Inflation Reduction Act, with its $369 billion in tax incentives for clean energy, will live up to its billing and buffer the broader economic slowdown that's starting to infect climate tech. "Any space the IRA touches — there's a rising tide for everyone in there," said Apoorv Bhargava, CEO of WeaveGrid, a Bay Area software company that helps utilities handle electric vehicles' impact on the grid. "However, if there was a specific carveout for you, you're probably screaming with happiness." The law's hydrogen benefits are particularly buoyant: A production tax credit of up to $3 per kilogram, the highest in the world, could encourage petroleum refiners, fertilizer manufacturers and eventually other industries to source their hydrogen from low-carbon electricity or sequester the emissions generated from producing it from natural gas. It's a sign of where we are in the energy transition that it could either transform industry or backfire spectacularly. The Treasury Department and the IRS are taking comments on how they should structure the rules, and they're getting an earful about the risks of failing to account for pipeline leaks and the mix of electricity used to make the hydrogen, as David Iaconangelo reports for POLITICO's E&E News. (One concern recently flagged by Princeton University researchers: Even if the hydrogen is made from renewable electricity, it could end up increasing emissions if more renewables don't come online to fill the increased demand.) In the meantime, the Department of Energy is getting ready to hand out $7 billion from the bipartisan infrastructure law for regional hydrogen "hubs" that combine production, transportation, storage and consumption. DOE sent "notices of encouragement" last week to 33 hydrogen consortiums across the country, as David reports. Full proposals are due in April. GOOD NEWS FOR CARBON CRUNCHERS — The hydrogen buzz could also recharge interest in the carbon-accounting field, which got a boost last year from the SEC's proposed climate risk disclosure rule. (The timeline for a final SEC rule is TBD, and economically chastened tech companies are now less likely to be interested in supporting carbon-footprint analysis.) "Billions and billions of dollars will hinge on how the rules get interpreted," said Eric Gimon, a senior fellow with the think tank Energy Innovation. "That's really going to supercharge that field of lifecycle analysis and carbon analysis." BUILDING BLOCKS NEW LEASE ON LIFE — Treasury and the IRS released tentative guidance last week for the IRA's electric vehicle tax credits that includes a clever way to evade Sen. Joe Manchin's domestic-content manufacturing requirements: exempting commercial leased vehicles from the rules. Foreign automakers and U.S. allies alike have bristled at the IRA's domestic supply-chain aims and have seized on the commercial lease loophole as a potential work-around. Manchin is furious, as Benjamin Storrow reports for POLITICO's E&E News. The guidance "bends to the desires of the companies looking for loopholes and is clearly inconsistent with the intent of the law," the West Virginia Democrat said in a statement. "It only serves to weaken our ability to become a more energy secure nation." The agencies are defending their move. Final rules are due out in March. WASHINGTON WATCH WHITHER GENSLER? — Speaking of the SEC's climate disclosure rule, we're still waiting on a finalized version, along with another half-dozen or so pending federal rulemakings aimed at incorporating climate change into financial regulations. The SEC is dealing not only with thousands of public comments and a near-guarantee of litigation, but a heavy agenda, with 26 rules proposed in 2022 alone. Climate disclosure experts and advocates say there's no way to say for sure when the agency will finalize their rules, but think it's likely it will happen at some point this year. "I would expect to see it sometime this year," said Corinne Snow , counsel at Vinson & Elkins LLP who focuses on environmental law and regulatory compliance. "I know the SEC is trying to do a lot, but they've indicated in the past that this is a really high priority for them. And if it's a high priority they're also going to want to be the ones to defend it [in court] during the Biden administration." Avery Ellfeldt of POLITICO's E&E News has a handy status update. AROUND THE NATION A self-driving vehicle holding its own on the streets of San Francisco. | Debra Kahn / POLITICO CRUISE CONTROL — The future is here, it's just not evenly distributed. Long Game took a ride in an autonomous vehicle over the holidays. It was...fine! Between EVs from Cruise and Waymo and San Francisco's hollowed-out vibe, driverless vehicles seemed to make up the majority of traffic in the not-very-Blade Runner-y quadrant of the city where Cruise is permitted to operate commercially from 10 p.m.-5:30 a.m. Aside from a couple instances of hard braking, our ride felt nearly indistinguishable from a human-powered one — and it was a couple of dollars cheaper. GM-owned Cruise just got approval from the DMV to expand autonomous commercial service to the rest of San Francisco, although it still needs one more signoff from the California Public Utilities Commission. Ride-sharing drivers aren't that concerned about AVs taking their jobs yet — they're engaged in a more immediate fight over worker benefits. A decision is expected in the next few months on a California lawsuit challenging an Uber/Lyft-sponsored ballot initiative that classified drivers as independent contractors rather than employees. "There's a lot of threats to labor," said Nicole Moore, president of the nonprofit Rideshare Drivers United. "One is removing all labor rights, the second is automating jobs." SF Gate weighs in on Waymo: "I found myself wondering ... does anyone need this?" YOU TELL US GAME ON — Today's newsletter is brought to you by way too many rounds of Among Us over the break. Welcome back to the Long Game, where we tell you about the latest on efforts to shape our future. We deliver data-driven storytelling, compelling interviews with industry and political leaders, and news Tuesday through Friday to keep you in the loop on sustainability. Team Sustainability is editor Greg Mott, deputy editor Debra Kahn and reporters Jordan Wolman and Allison Prang. Reach us all at gmott@politico.com, dkahn@politico.com, jwolman@politico.com and aprang@politico.com. Want more? Don't we all. Sign up for the Long Game. Four days a week and still free! WHAT WE'RE CLICKING — Short people are more sustainable, the NYT argues. — Southern states are reaping a wave of automaker investment thanks to their cheap electricity and developable land, the WSJ reports. — The WSJ also reports that the International Sustainability Standards Board is on track to finish its two climate-disclosure rules soon.   Follow us on Twitter Debra Kahn @debra_kahn Greg Mott @gwmott Jordan Wolman @jordanwolman Allison Prang @AllisonPrang   Follow us

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