Biden’s clean energy loan program will give tomorrow’s Tesla a shake

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When the US Department of Energy granted a loan of $ 465 million in 2010 to a newcomer called Tesla Motors, controversy erupted. But the Obama administration wanted to revive the green energy economy. And the loan was the perfect vehicle to accelerate the cause. Tesla kept its promise to repay the loan – a decade ahead of schedule. Today it employs thousands of people.

But the same loan guarantee program had also made some bad bets. The one that aroused the most anger from critics was Solyndra, a solar company that has not paid off its $ 528 million debt. Skeptics said Solyndra characterized the government’s generosity and favoritism – comments that smacked of hypocrisy, given that those same lawmakers backed tax breaks and backing their favorite projects.

The Biden administration is stepping up the pace of the green energy economy. It thus creates a basis for achieving carbon neutrality by 2050. A relaunched loan guarantee program is one of the pieces. And last week, Energy Secretary Jennifer Granholm said the fund would start with $ 40 billion and be managed by Jigar Shah, a clean energy entrepreneur. About half of that money will be spent on renewables and alternative fuel vehicles, while the other half will go to carbon capture projects and advanced nuclear designs, which will dampen some of the expected noise. Already, bipartisan COVID relief is passed in December 2020, which allocates $ 35 billion for green energy technologies.

“Let’s focus on the necessary research and development: green hydrogen, carbon capture and sequestration, advanced nuclear, grid modernization and battery storage technologies,” said Arshad Mansoor, CEO of the Electric Power Research Institute, in an interview with this writer. “Technologies to achieve the net zero goal by 2050 are neither scalable nor affordable. We need oversized funding and innovation. Jigar Shah is the best person to handle this process.

To be clear, a loan guarantee is not an outright grant. Rather, it is a form of insurance that is necessary to launch projects and encourage Wall Street to invest as well. In total, the Department of Energy had allocated around $ 30 billion to 42 alternative energy projects. Granholm says the previous program paid off the principal plus $ 500 million in interest to taxpayers.

The necessary shake

The Biden administration aims to reach 100% green power by 2035 and achieve net zero by 2050. It says a $ 23 trillion economy will be created as a result, an economy that will “rebuild better”. If these goals are to be achieved, then energy storage must be developed. The cost of producing green hydrogen from wind and solar power must also come down. And the continued use of nuclear energy is decisive; it represents about 55% of the carbon-free energy in this country.

Reach net zero does not mean the abolition of fossil fuels; it is more a question of offsetting their emissions. One of these mechanisms is carbon capture and sequestration. “It is wishful thinking that we will have no use for natural gas. This is where carbon capture and sequestration comes in, ”explains Mansoor of EPRI.

Indeed, a key path to decarbonization is the electrification of the economy: today, 20% of all energy used in homes and industry is electric, explains Mansoor. But he would expect that number to at least double – to potentially reach 60% – in 2050: not only the the electricity sector uses more renewable energy and battery storage but other sectors will deploy their own green energy tools, including buildings, cars, homes, ships and airplanes.

If we want to achieve carbon neutrality – and the goal of electrification – then the network must become more robust. It will have to manage up to four times the amount of renewable energy that is now transmitted. At the same time, Mansoor adds, electric vehicles will grow from 2% of the car market today to around 45% over the next two decades.

“We have to have smart grids,” he says. “Peak power consumption is double the average load. We need to reduce these peaks as this will free up new network capacity. We can do it smart and lower customers’ energy bills. That’s not to say that we won’t have to build the network – we will, mainly on the transmission side. It will also be necessary to quadruple the charging infrastructure. Utilities will have the excess revenues, which can be invested to prepare the network. ”

Mansoor goes on to say that reaching 80% of the net zero goals are within reach. But he stresses that the remaining 20% ​​will be the most daunting challenge, given that the tools to do so have yet to be invented or commercialized. And they are not yet affordable. Consider: The United States has reduced its CO2 emissions from 6 gigatons to 5 gigatons over the past 15 years. It is expected to drop to 3 gigatons in the next 15 years. But the “last step” until 2050 will be the most difficult.

EPRI is working with the Gas Technology Institute to achieve carbon neutrality by 2050. Their Low carbon resources initiative plans to raise $ 100 million and work with 100 companies: Alliant, Ameren, American Electric Power, CenterPoint Energy, ConEdison, Dominion Energy, Duke Energy, National Grid and Southern Company are among those involved.

The electricity and transportation sectors contribute more than half of the United States’ carbon emissions. But it’s an economy-wide dilemma that requires everyone on deck. The Biden administration is leading the charge and will bring back the loan guarantee program. It’s a potential shock for promising technologies, just like for Tesla. There is no doubt that the controversy will follow. But given the widespread support for carbon mitigation, those howling voices will become dull and reasonable minds will prevail.


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