Transportation and Infrastructure

Two-thirds of the U.S. is at risk of energy shortfalls this summer—and that share is only going to grow “[u]nless reliability and resilience are appropriately prioritized,” the North American Electric Reliability Corporation warned the Senate at a recent hearing, according to CBS Austin.

What’s going on: In most of the country, “there is the potential of running low on resources including electricity,” CBS reports. “The causes include an overwhelmed electric grid, the slowing use of fossil fuels like coal and natural gas to balance the use of the grid and new regulations like a lengthy permitting process that makes developing new energy take too long.”

• The NERC recently released its 2023 Summer Reliability Assessment, in which it details how, in the current push toward greater use of renewables, “the pace of change is overtaking the reliability needs of the [transmission grid] system,” NERC President and CEO James Robb told the Senate Energy and Natural Resources Committee last week.

​​​​​​​ Why it’s important: “The hearing comes as more and more Americans are expected to rely on electricity, even being rewarded by switching to electric cars,” according to CBS. “‘When electricity is unreliable, the potential consequences are catastrophic, including loss of human life,’ said Sen. Joe Manchin, D-W.Va., the committee chairperson.”

What can be done: NERC suggests a multipronged plan to shore up grid reliability. This includes:

• Better management of the “pace of change” to mix in more renewables and continued use of traditional energy;
• More natural gas infrastructure to make the grid more resilient; and
• Increased investment in energy storage technologies “and/or hydrogen production and delivery systems.”

​​​​​​​The last word: “Manufacturers rely on access to reliable and affordable energy to power their operations—so if the grid is unreliable, not only will manufacturers suffer, but American families will suffer, too,” said NAM Vice President of Energy and Resources Policy Brandon Farris.

• “The NAM supports an all-of-the-above energy approach that includes renewables, natural gas, nuclear, clean hydrogen and others, as well as efforts to shore up grid reliability.”
• “We must also continue to work on permitting reform to ensure we can build new energy projects in a timely manner and get them connected to a stable grid.”

House Republicans are taking the first steps toward restoring tax provisions important to manufacturers, according to The Wall Street Journal (subscription).

What’s happening: Legislators are working to get a bill through the House Ways and Means Committee, potentially as soon as this month, though it’s unlikely to ever reach President Biden’s desk. Instead, this effort might ultimately lead to bipartisan negotiations later this year.
 
What’s in it: The bill hasn’t been released yet, but we do know something about tax writers’ intentions.

• The package would “reverse three business-tax increases that took effect over the past few years, aides said. Those changes limited the deductions companies could claim for interest, research costs and capital expenses.”
• Democrats may be willing to negotiate, especially about reinstating immediate expensing for R&D, undoing a 2022 tax change that has forced companies to deduct R&D costs over a period of years and made innovation more costly.

NAM at work: The NAM has been leading the charge to restore immediate R&D expensing, to enable manufacturers to continue financing growth and make permanent a key incentive for capital equipment purchases.

What we’re saying: As NAM Managing Vice President of Tax and Domestic Economic Policy wrote this week to the House Small Business Subcommittee on Economic Growth, Tax and Capital Access:

• “Several harmful tax changes have gone into effect recently that make it more costly to perform research, buy machinery and finance capital investments. If not reversed, these policies will hurt manufacturers’ ability to innovate, create jobs in the United States, invest in their communities and effectively compete in the global economy.”

As part of the NAM’s advocacy campaign, the NAM recently released the Full Expensing Action Center. This action center, which is in addition to the existing R&D and interest deductibility action centers, features a tool enabling manufacturers to send customized messages directly to Congress.
 

The U.S. government and automakers are on a mission to supply the nation with better, faster charging for electric vehicles, according to The Wall Street Journal (subscription).

What’s going on: The Biden administration “is trying to spur the buildout of so-called fast chargers that can charge EVs in about 15 to 40 minutes. That’s still slower than a traditional fill-up at a gas station, but faster than the hours-long experience at public chargers … ”

• Across the U.S., labs including the National Renewable Energy Lab are coming up with designs capable of fully charging an EV in under half an hour. Some trucking firms and charger makers have piloted systems capable of charging trucks in 15-20 minutes.

The challenges: There is debate over the best way to get more people into EVs, however: is it faster chargers or more slower chargers installed “where people park … in order to make charging a car a convenient and ubiquitous experience”?

• Most current EV charging takes place at owners’ homes, typically garages or driveways where the cars can “sip” energy for hours. However, “those in multifamily housing have less access to charging.”
• The more commonly used EV charger, called level 2, will charge a battery to about 80% in four to 10 hours.

Faster charger, bigger issues: “Fast chargers require costly utility infrastructure and charging equipment; ultra-rapid charging would be even more expensive. ‘Higher power costs more,’ [Dan Bowermaster, head of electric-vehicle research at the Electric Power Research Institute] says. ‘You get to a point where for these higher power levels you’d need bigger and bigger wire. At some point the wire gets so big that not only it’s heavy, but it can’t readily bend to curve around the charging port.’”

How to solve it: Mechanical assists could lessen the cables’ weight with robotic arms, according to one fast-charging company.

• Another possible fix? A “solid-state battery in which the electrolyte that conducts the electric current is a solid, rather than a liquid as used in most batteries today.”
• Some automakers are switching to 800-volt charging systems over the more common 400-volt ones, “doubling the power that the same current would provide”—but it’s a move that will require “the highest-level charging equipment.”​​​​​​​

Companies are turning to seemingly unlikely sources for the lithium needed to make electric vehicles, according to The Wall Street Journal (subscription): oil-and-gas reservoirs.

What’s going on: “These oil-and-gas sites harbor not only hydrocarbons, but also brine that contains metals including sodium, calcium and some lithium. When drillers poke holes into oil-saturated formations, the brine flows back to the surface along with the molecules that end up as fuel, and companies have been prompt to discard the earthy marinade.”

• “But now that the EV battery material has become a prized commodity, lithium companies are developing technologies to remove it from this brine—and oil-and-gas companies are also taking a second look.”
• Lithium companies in the U.S. and Canada are working with oil-and-gas firms to get the metal out of old oil fields and produce it from wastewater pumps.

Skyrocketing demand: U.S. demand for lithium is expected to increase to nearly six times its current size by 2030, to $52 billion, according to Boston Consulting Group.

Why it’s important: Most lithium today comes from China, Chile and Australia, with the three countries providing around 92% of the lithium extracted globally last year. But in the U.S., the process would be more environmentally friendly.

• “Because energy companies have drilled millions of oil-and-gas wells and collected subsurface data in the process, lithium prospectors know where to look.”

A faster process: The direct extraction method could significantly speed lithium production. In it, “brine is sent to a processing unit, where chemicals, a resin or a membrane, among other technologies, are used to capture the lithium ions. The water is then reinjected into the aquifer where it originated. The process takes at most a few days, and recoveries are up to 90%.”

• Some are hoping direct extraction will allow lithium producers to get the metal in the Permian basin of West Texas and New Mexico.

New orders for manufactured products rose for the second month in a row in April, according to the U.S. Census Bureau.

What’s going on: New orders inched up 0.4% in April, following a 0.6% gain in March.

• Durable goods orders increased 1.1%, owing mostly to a rise in defense aircraft and parts orders, which can be volatile from month to month.
• Excluding transportation equipment, factory orders dipped 0.2% in April, the third straight month of declines.

The big picture: Overall, orders for new manufactured goods have declined 2.6% since peaking a year ago.

• With factory orders (excluding transportation) down 4.3% over the past 10 months, manufacturing activity has contracted notably since last summer.

The good news: New orders for core capital goods (nondefense capital goods excluding aircraft) rose 1.3% in April after two straight months of declines.

• Core capital goods orders are considered a proxy for capital spending in the U.S. economy. These totaled $73.982 billion in April, just under the record $73.985 billion in December and signifying 2.5% year-over-year growth.

Factory shipments: Factory shipments decreased 0.4% in April, the third straight month of declines.

• Overall, total factory shipments have declined 2.9%—or 4.2% excluding transportation equipment—since peaking a year ago.
• However, core capital goods shipments rose 0.5% in April to $73.848 billion, just slightly under January’s record of $73.850 billion. Core capital goods shipments have risen 4.1% year-over-year.

As the Federal Energy Regulatory Commission prepares to issue a final rule that would change the way new energy projects connect to the U.S. electrical grid, some are concerned the regulation may be insufficient, according to E&E News’ ENERGYWIRE (subscription).

What’s going on: “Speeding up the grid connection system is critical for the success of the Biden administration’s signature climate initiatives and for many states’ clean energy goals. Today’s protracted process for linking new energy projects to the transmission system is widely considered one of the chief hurdles to deploying more carbon-free energy.”

The problem: Developers of clean energy undertakings and others say FERC’s coming changes likely won’t have the effect of getting new projects online sooner.

• Some policies—such as the direction of regional transmission lines to study interconnection requests in groups, not individually—have already been implemented to little effect, they say.
• And some potential issues slowing grid connection aren’t covered by the regulations, including grid operators’ difficulty in hiring sufficient numbers of experienced engineers to process all the requests.
• Then there are network-upgrade costs, which “are rising sharply” and may not be “meaningfully address[ed]” by FERC’s proposed rule.

Too long a wait: Before being able to deliver power to businesses and households, new energy projects need to be connected to the transmission system—and getting approval for that connection can take years.

• “As of last year, it took an average of five years for a new energy project in the United States to move through that study process and reach commercial operation, according to the Department of Energy’s Lawrence Berkeley National Laboratory. That’s up from an average of three years in 2015 and less than two years in 2008.”
• What’s more, “[i]n the current interconnection process in most of the United States, projects are sometimes restudied up to 10 times before they’re approved to connect,” one source told ENERGYWIRE.

Prioritizing projects: The proposed regulation tries to prioritize projects by commercial viability and construction readiness to cut down on the number of “possible” projects in the lineup.

• However … some in the renewables industry say “it’s unrealistic to expect project developers to have most of their permits and contracts in place before they have gone through the interconnection process,” another source told the news outlet.

A fundamental change: FERC has its work cut out for it given the foundational changes that have taken place in the U.S. energy system in the past few decades.

• “Historically, the electric grid was dominated by large, centralized power plants. But as the clean energy transition continues,” that is likely to change.

The NAM’s take: “Manufacturers depend on access to reliable and affordable energy to expand—which is why we support reforms that would foster transparent, streamlined and timely federal regulatory processes for the siting, permitting and licensing of energy delivery infrastructure of all types,” said NAM Vice President of Energy and Resources Policy Brandon Farris.

Advanced nuclear reactors got some good news Wednesday when a measure to speed their development and deployment passed the Senate Environment and Public Works Committee, according to E&E News’ GREENWIRE.

What’s going on: “The ‘Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy (ADVANCE) Act,’ S. 1111, passed 16-3, with Chair Tom Carper (D-Del.) and ranking member Shelley Moore Capito (R-W.Va.) leading the effort to revitalize American leadership on nuclear energy.”

What it would mean: Through a series of awards, the bill would encourage companies to develop advanced-reactor technology. In addition, it would seek approval easing for reactor projects on brownfield sites, land that is underused or has been abandoned because of industrial waste.

• “The proposal would also give the Nuclear Regulatory Commission, the nation’s chief nuclear regulator, additional authorities to increase hiring. Lawmakers say current staffing is not enough to effectively deal with the high number of applications for new reactors.”
• And it would supplement “early licensing work” to deploy the reactors more quickly “at critical national security infrastructure sites.”

Some manufacturers are reconsidering their dependence on China in the face of growing security concerns and worries about potential military conflicts, according to The Wall Street Journal (subscription).

What’s going on: “Executives are plotting alternate supply chains or devising products that can be made elsewhere should China’s hundreds of thousands of factories become inaccessible. That prospect became more conceivable, they said, after the 2022 invasion of Ukraine prompted companies to sever ties with Russia, sometimes taking huge write-downs.”

• China’s government recently banned key Chinese firms from purchasing products made by U.S. semiconductor firm Micron Technology, saying the company posed a national security risk to China.

Why it’s important: “China’s access to raw materials and ability to produce components for finished goods remains unmatched, and its dense supplier networks have yet to be replicated elsewhere.”

What manufacturers are doing: Some manufacturers that rely heavily on China for revenue and inputs are using extra discretion when it comes to their data and intellectual property in that country.

• Manufacturers’ caution levels have risen since April, when China revised an espionage law that lets its authorities inspect the facilities and electronic equipment of any companies they suspect of spying.
• Some manufacturers are aiming to assemble new supply chains to circumvent China. These companies are “brac[ing] for higher prices and slower service than [they receive] in China” but “won’t be cut off by the threat of war or a trade embargo.”​​​​​​​

The bill passed in the House Wednesday to raise the nation’s debt limit and avert a default makes some of the most significant revisions to U.S. environmental law in years, “potentially accelerating new renewable-energy investments championed by the Biden administration,” according to The Wall Street Journal (subscription).

What’s going on: The Fiscal Responsibility Act, which boosts the U.S. debt ceiling until after the 2024 presidential election and now heads to the Senate, includes several energy infrastructure-related moves.

• Expedites permitting for MVP: The legislation hastens permitting for the Mountain Valley Pipeline, an Appalachian natural-gas project that would bring affordable energy to the Mid- and South Atlantic regions.
• Shortens timelines: It also “tightens the scope of environmental reviews required under the National Environmental Policy Act of 1970 and allows more projects to win approval without having to undergo the most complex types of reviews. It also sets time limits of no more than two years to complete the studies.”
• Streamlines processes: In addition, the bill assigns review of each project to one federal agency rather than multiple agencies and allows infrastructure undertakings “to piggyback on existing reviews for similar projects rather than starting from scratch.”

“Unlocking resources”: Rep. Garret Graves (R-LA), who joined NAM President and CEO Jay Timmons at the recent NAM Competing to Win Tour stop in Harahan, Louisiana, and who wrote a previous measure from which the Fiscal Responsibility Act drew, said the legislation is “all about unlocking America’s resources.” This is a point the NAM has long stressed to Congress, too.

• On Tuesday, after the NAM consistently applied pressure on lawmakers to reach a deal, Timmons urged the House to pass the measure, citing its ability “[t]o strengthen manufacturing in our nation, reach our industry’s full potential and outcompete other nations like China” through permitting reforms.
• Bureaucracy and red tape hamstring plans for critical infrastructure, resulting in “yearslong delays on energy projects, making them unfeasible. The most rigorous type of review takes an average of 4½ years to complete, according to the White House,” the Journal reports.

Something we can all agree on: “‘We see an enormous amount of demand for new clean energy projects that are being held up,’ said Sasha Mackler, who directs the energy program at the Bipartisan Policy Center. ‘That reality has brought Republicans and Democrats together here.’”

The debt ceiling bill finalized on Sunday—and set to go to a vote in the House this evening—includes meaningful permitting reform measures, according to E&E News (subscription).

What’s going on: The legislation would approve the Mountain Valley pipeline and enact changes to the National Environmental Policy Act.

• In addition, “a one-year deadline would be placed on the production of environmental impact assessments for new energy projects seeking permits. A two-year maximum would be applied for environmental impact statements.”
• “The agreement would also expand an existing program to expedite federal permitting for infrastructure projects, known as Fast-41.”
• And last, though the bill will not include provisions for a large-scale transmission buildup, it will call for a study of grid challenges and recommendations that might fix them.

The NAM says: NAM President and CEO Jay Timmons commended policymakers on reaching an agreement:

• “Manufacturers have been a leading voice for permitting reform, so we are encouraged that this legislation takes critical steps to improve our broken permitting system, helping us more fully leverage our domestic energy sources and expand manufacturing in the United States.”
• “We will work with Congress and the administration to build on this progress and create a comprehensive bipartisan permitting reform package that also helps unlock the full potential of laws meant to encourage the growth of manufacturing in America, such as the historic infrastructure law and the CHIPS and Science Act.”

The bigger bill: In case you missed it, the debt legislation as a whole would suspend the borrowing limit for the next two years, while also making some spending cuts, according to The Wall Street Journal (subscription).

• “It would cut spending on domestic priorities favored by Democrats while boosting military spending by about 3%. It also would extend limits on food assistance to some beneficiaries to prod them to find jobs.”

NAM in the news: Timmons’ statements on the debt-limit agreement were picked up by CNN Business and The Hill.