Canadian grid needs $347 billion worth of repairs

Developing Countries Clean Energy investment fell as renewable energy financing slowed in China; solar and wind growth lagged while coal power hit new highs, raising emissions risks for emerging markets and complicating climate change goals.

Key Points

Renewables investment and power trends in emerging nations: solar, wind, coal shifts, and steps toward decarbonization.

✅ Investment fell to $133b; China dropped to $86b

✅ Coal power rose to 6,900 TWh; 47% generation share

✅ New coal builds declined to 39 GW, decade low

New clean energy investment slid by more than a fifth in developing countries last year due to a slowdown in China, while the amount of coal-fired power generation jumped to a new high, reflecting global power demand trends, a recent annual survey showed.

Bloomberg New Energy Finance (BNEF) surveyed 104 emerging markets and found that developing nations were moving towards cleaner, low-emissions sources in many regions, but not fast enough to limit carbon dioxide emissions or the effects of climate change.

New investment in wind, solar and other clean energy projects dropped to $133 billion last year from $169 billion a year earlier, mainly due to a slump in Chinese investment, even as electricity investment globally surpasses oil and gas for the first time, the research showed.

China’s clean energy investment fell to $86 billion from $122 billion a year earlier, with dynamics in China's electricity sector also in focus. Investment by India and Brazil also declined, mainly due to lower costs for solar and wind.

However, the volume of coal-fired power generation produced and consumed in developing countries increased to a new high of 6,900 terrawatt hours (TWh) last year, even as renewables are poised to eclipse coal globally, from 6,400 TWh in 2017.

The increase of 500 TWh is equivalent to the power consumed in the U.S. state of Texas in one year, underscoring how surging electricity demand is putting power systems under strain. Coal accounted for 47% of all power generation across the 104 countries.

“The transition from coal toward cleaner sources in developing nations is underway,” said Ethan Zindler, head of Americas at BNEF. “But like trying to turn a massive oil tanker, it takes time.”

Despite the spike in coal-fired generation, the amount of new coal capacity which was added to the grid in developing countries declined, with Europe's renewables crowding out gas offering a contrasting pathway. New construction of coal plants fell to its lowest level in a decade last year of 39 gigawatts (GW).

The report comes a week ahead of United Nations climate talks in Madrid, Spain, where more than 190 countries will flesh out the details of an accord to limit global warming.

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Canada Clean Electricity Expansion is urged by the IEA to meet net-zero targets, scaling non-emitting generation, electrification, EV demand, and grid integration across provinces to decarbonize industry, buildings, and transport while ensuring reliability and affordability.

Key Points

An IEA-backed pathway for Canada to scale non-emitting power, electrification, and grid links to meet net-zero goals.

✅ Double or triple clean generation to replace fossil fuels

✅ Integrate provincial grids to decarbonize dependent regions

✅ Manage EV and heating loads with reliability and affordability

Canada will need more electricity capacity if it wants to hit its climate targets, and cleaning up Canada's electricity will be critical, according to a new report from the International Energy Agency (IEA).

The report offers mainly a rosy picture of Canada's overall federal energy policy. But, the IEA draws attention to Canada's increasing future electricity demands, and ultimately, calls on Canada to leverage its non-emitting energy potential and expand renewable energy to hit its climate targets.  

"Canada's wealth of clean electricity and its innovative spirit can help drive a secure and affordable transformation of its energy system and help realize its ambitious goals," stated Fatih Birol, the IEA executive director, in a news release.

The IEA notes that Canada has one of the cleanest energy grids globally, with 83 per cent of electricity coming from non-emitting sources in 2020. But this reflects nationwide progress in electricity to date; the report warns this is not a reason for Canada to rest on its laurels. More electricity will be needed to displace fossil fuels if Canada wants to hit its 2030 targets, the report states, and "even deeper cuts" will be required to reach net-zero by 2050.

"Perhaps more significantly, however, Canada will need to ensure sufficient new clean generation capacity to meet the sizeable levels of electrification that its net-zero targets imply."

Investing in new coal, oil and gas projects must stop to hit climate goals, global energy agency says
The Liberals have promised to create a 100 percent net-zero-emitting electricity system by 2035, with regulating oil and gas emissions and electric car sales as part of the plan; by then, every new light-duty vehicle sold in Canada will be a zero-emission vehicle. The switch from gas guzzlers to plug-in electric vehicles will create new pressures on Canada's electrical grid, as will any turn away from fossil natural gas for home heating.

To meet these challenges, the IEA warns, Canada would need to double or triple the power generated from non-emitting sources compared to today, a shift whose cost could reach $1.4 trillion according to the Canadian Gas Association. 

"Such a shift will require significant regulatory action," the report states, highlighting the need for climate policy for electricity grids to guide implementation, and that will require the federal government to work closely with provinces and territories that control power generation and distribution.

The report notes that the further integration of territorial and provincial electrical grids could allow fossil fuel-dependent provinces, like Alberta, to decarbonize and electrify their economies.

The report, entitled Canada 2022 Energy Policy Review, offers what it calls an "in-depth" look at the commitments Canada has made to transform its energy policy. Since the IEA conducted its last review in 2015, Canada has committed to cutting greenhouse gas emissions by 40 to 45 per cent from 2005 levels by 2030 and achieving net-zero by 2050 under an extended national target.

The IEA is well-known for the production of its annual World Energy Outlook. The Paris-based autonomous intergovernmental organization provides analysis, data, and policy recommendations to promote global energy security and sustainability. Canada is a part of the intergovernmental body, which also conducts peer reviews of its members' energy policy.

Oil and gas emissions rising
Natural Resources Minister Jonathan Wilkinson responded to the report in the IEA news release.

"This report acknowledges Canada's ambitious efforts and historic investments to develop pathways to achieve net-zero emissions by 2050 and ensure a transition that aligns with our shared objective of limiting global warming to 1.5 degrees Celsius," Wilkinson's statement read.

The report notes that — despite that objective — absolute emissions from Canadian oil and gas extraction went up 26 per cent between 2000 and 2019, largely from increased production.

Minister of Natural Resources Jonathan Wilkinson responds to a question at a news conference after the federal cabinet was sworn in, in Ottawa, on Oct. 26, 2021. (Justin Tang/The Canadian Press)
"Canada will need to reconcile future growth in oil sands production with increasingly strict greenhouse gas requirements," the report states.

On the plus side, the IEA found emissions per barrel of oilsands crude have decreased by 20 per cent in the last decade from technical and operational improvements.

The improving carbon efficiency of the oilsands is a "trend that is expected to continue at even higher rates," said Ben Brunnen, vice-president of oilsands, fiscal and economic policy at the Canadian Association of Petroleum Producers.

That may become important, the IEA report notes, as energy investors and buyers look for low-carbon assets and more countries adopt net-zero policies.

Further innovation, such as carbon capture and storage, could help to turn things around for Canada's oil patch, the report says. The Liberals have also said they will place a hard cap on oil and gas emissions from production, but that does not include the burning of the fossil fuels. 

In 2021, the IEA released a report that determined to achieve net-zero by 2050, among many steps, investments needed to end in coal mines, oil and gas wells. Thursday's report, however, made no mention of that, which disappointed at least one environmental group.

"A glaring omission was that this assessment says nothing about production. We know that the most important thing we can do is to stop using and producing oil and gas," said Julia Levin, a senior climate and energy program manager at Environmental Defence.

"And yet that was absent from this report, and that really is a glaring omission, which is completely out of line with their [the IEA's] own work."

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Duke Energy Clean Energy Strategy advances renewables, battery storage, grid modernization, and energy efficiency to cut carbon, retire coal, and target net-zero by 2050 across the Carolinas with robust IRPs and capital investments.

Key Points

Plan to expand renewables, storage, and grid upgrades to cut carbon and reach net-zero electricity by 2050.

✅ 56B investment in renewables, storage, and grid modernization

✅ Targets 50% carbon reduction by 2030 and net-zero by 2050

✅ Retires coal units; expands energy efficiency and IRPs

Duke Energy says that the company will continue advancing its ambitious clean energy goals without the Atlantic Coast Pipeline (ACP) by investing in renewables, battery storage, energy efficiency programs and grid projects that support U.S. electrification efforts.

Duke Energy, the nation's largest electric utility, unveils its new logo. (PRNewsFoto/Duke Energy) (PRNewsfoto/Duke Energy)

Duke Energy's $56 billion capital investment plan will deliver significant customer benefits and create jobs at a time when policymakers at all levels are looking for ways to rebuild the economy in 2020 and beyond. These investments will deliver cleaner energy for customers and communities while enhancing the energy grid to provide greater reliability and resiliency.

"Sustainability and the reduction of carbon emissions are closely tied to our region's success," said Lynn Good, Duke Energy Chair, President and CEO. "In our recent Climate Report, we shared a vision of a cleaner electricity future with an increasing focus on renewables and battery storage in addition to a diverse mix of zero-carbon nuclear, natural gas, hydro and energy efficiency programs.

"Achieving this clean energy vision will require all of us working together to develop a plan that is smart, equitable and ensures the reliability and affordability that will spur economic growth in the region. While we're disappointed that we're not able to move forward with ACP, we will continue exploring ways to help our customers and communities, particularly in eastern North Carolina where the need is great," said Good.

Already a clean-energy leader, Duke Energy has reduced its carbon emissions by 39% from 2005 and remains on track to cut its carbon emissions by at least 50% by 2030, as peers like Alliant's carbon-neutral plan demonstrate broader industry momentum toward decarbonization. The company also has an ambitious clean energy goal of reaching net-zero emissions from electricity generation by 2050. 

In September 2020, Duke Energy plans to file its Integrated Resource Plans (IRP) for the Carolinas after an extensive process of working with the state's leaders, policymakers, customers and other stakeholders. The IRPs will include multiple scenarios to support a path to a cleaner energy future in the Carolinas, reflecting key utility trends shaping resource planning.

Since 2010, Duke Energy has retired 51 coal units totaling more than 6,500 megawatts (MW) and plans to retire at least an additional 900 MW by the end of 2024. In 2019, the company proposed to shorten the book lives of another approximately 7,700 MW of coal capacity in North Carolina and Indiana.

Duke Energy will host an analyst call in early August 2020 to discuss second quarter 2020 financial results and other business and financial updates. The company will also host its inaugural Environmental, Social and Governance (ESG) investor day in October 2020.

Duke Energy

Duke Energy is transforming its customers' experience, modernizing the energy grid, generating cleaner energy and expanding natural gas infrastructure to create a smarter energy future for the people and communities it serves. The Electric Utilities and Infrastructure unit's regulated utilities serve 7.8 million retail electric customers in six states: North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky. The Gas Utilities and Infrastructure unit distributes natural gas to 1.6 million customers in five states: North Carolina, South Carolina, Tennessee, Ohio and Kentucky. The Duke Energy Renewables unit operates wind and solar generation facilities across the U.S., as well as energy storage and microgrid projects.

Duke Energy was named to Fortune's 2020 "World's Most Admired Companies" list and Forbes' "America's Best Employers" list. More information about the company is available at duke-energy.com. The Duke Energy News Center contains news releases, fact sheets, photos, videos and other materials. Duke Energy's illumination features stories about people, innovations, community topics and environmental issues. Follow Duke Energy on Twitter, LinkedIn, Instagram and Facebook.

Forward-Looking Information

This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management's beliefs and assumptions and can often be identified by terms and phrases that include "anticipate," "believe," "intend," "estimate," "expect," "continue," "should," "could," "may," "plan," "project," "predict," "will," "potential," "forecast," "target," "guidance," "outlook" or other similar terminology. Various factors may cause actual results to be materially different than the suggested outcomes within forward-looking statements; accordingly, there is no assurance that such results will be realized. These factors include, but are not limited to:

• The impact of the COVID-19 electricity demand shift on operations and revenues;
• State, federal and foreign legislative and regulatory initiatives, including costs of compliance with existing and future environmental requirements, including those related to climate change, as well as rulings that affect cost and investment recovery or have an impact on rate structures or market prices;
• The extent and timing of costs and liabilities to comply with federal and state laws, regulations and legal requirements related to coal ash remediation, including amounts for required closure of certain ash impoundments, are uncertain and difficult to estimate;
• The ability to recover eligible costs, including amounts associated with coal ash impoundment retirement obligations and costs related to significant weather events, and to earn an adequate return on investment through rate case proceedings and the regulatory process;
• The costs of decommissioning nuclear facilities could prove to be more extensive than amounts estimated and all costs may not be fully recoverable through the regulatory process;
• Costs and effects of legal and administrative proceedings, settlements, investigations and claims;
• Industrial, commercial and residential growth or decline in service territories or customer bases resulting from sustained downturns of the economy and the economic health of our service territories or variations in customer usage patterns, including energy efficiency and demand response efforts and use of alternative energy sources, such as self-generation and distributed generation technologies;
• Federal and state regulations, laws and other efforts designed to promote and expand the use of energy efficiency measures and distributed generation technologies, such as private solar and battery storage, in Duke Energy service territories could result in customers leaving the electric distribution system, excess generation resources as well as stranded costs;
• Advancements in technology;
• Additional competition in electric and natural gas markets and continued industry consolidation;
• The influence of weather and other natural phenomena on operations, including the economic, operational and other effects of severe storms, hurricanes, droughts, earthquakes and tornadoes, including extreme weather associated with climate change;
• The ability to successfully operate electric generating facilities and deliver electricity to customers including direct or indirect effects to the company resulting from an incident that affects the U.S. electric grid or generating resources;
• The ability to obtain the necessary permits and approvals and to complete necessary or desirable pipeline expansion or infrastructure projects in our natural gas business;
• Operational interruptions to our natural gas distribution and transmission activities;
• The availability of adequate interstate pipeline transportation capacity and natural gas supply;
• The impact on facilities and business from a terrorist attack, cybersecurity threats, data security breaches, operational accidents, information technology failures or other catastrophic events, such as fires, explosions, pandemic health events or other similar occurrences;
• The inherent risks associated with the operation of nuclear facilities, including environmental, health, safety, regulatory and financial risks, including the financial stability of third-party service providers;
• The timing and extent of changes in commodity prices and interest rates and the ability to recover such costs through the regulatory process, where appropriate, and their impact on liquidity positions and the value of underlying assets;
• The results of financing efforts, including the ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings, interest rate fluctuations, compliance with debt covenants and conditions and general market and economic conditions;
• Credit ratings of the Duke Energy Registrants may be different from what is expected;
• Declines in the market prices of equity and fixed-income securities and resultant cash funding requirements for defined benefit pension plans, other post-retirement benefit plans and nuclear decommissioning trust funds;
• Construction and development risks associated with the completion of the Duke Energy Registrants' capital investment projects, including risks related to financing, obtaining and complying with terms of permits, meeting construction budgets and schedules and satisfying operating and environmental performance standards, as well as the ability to recover costs from customers in a timely manner, or at all;
• Changes in rules for regional transmission organizations, including FERC debates on coal and nuclear subsidies and new and evolving capacity markets, and risks related to obligations created by the default of other participants;
• The ability to control operation and maintenance costs;
• The level of creditworthiness of counterparties to transactions;
• The ability to obtain adequate insurance at acceptable costs;
• Employee workforce factors, including the potential inability to attract and retain key personnel;
• The ability of subsidiaries to pay dividends or distributions to Duke Energy Corporation holding company (the Parent);
• The performance of projects undertaken by our nonregulated businesses and the success of efforts to invest in and develop new opportunities;
• The effect of accounting pronouncements issued periodically by accounting standard-setting bodies;
• The impact of U.S. tax legislation to our financial condition, results of operations or cash flows and our credit ratings;
• The impacts from potential impairments of goodwill or equity method investment carrying values; and
• The ability to implement our business strategy, including enhancing existing technology systems.
• Additional risks and uncertainties are identified and discussed in the Duke Energy Registrants' reports filed with the SEC and available at the SEC's website at sec.gov. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than described. Forward-looking statements speak only as of the date they are made and the Duke Energy Registrants expressly disclaim an obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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Alberta wind power surpasses coal as AESO reports record renewable energy feeding the grid, with natural gas conversions, solar growth, energy storage, and decarbonization momentum lowering carbon intensity across Alberta's electricity system.

Key Points

AESO data shows wind surpassing coal in Alberta, driven by coal retirements, gas conversions, and growing renewables.

✅ AESO reports wind output above coal several times this week

✅ Coal units retire or convert to natural gas, boosting renewables

✅ Carbon intensity falls; storage and solar improve grid reliability

Marking a significant shift in Alberta energy history, wind generation trends provided more power to the province's energy grid than coal several times this week.

According to data from the Alberta Energy System Operator (AESO) released this week, wind generation units contributed more energy to the grid than coal at times for several days. On Friday afternoon, wind farms contributed more than 1,700 megawatts of power to the grid, compared to around 1,260 megawatts from coal stations.

"The grid is going through a period of transformative change when we look at the generation fleet, specifically as it relates to the coal assets in the province," Mike Deising, AESO spokesperson, told CTV News in an interview.

The shift in electricity generation comes as more coal plants come offline in Alberta, or transition to cleaner energy through natural gas generation, including the last of TransAlta's units at the Keephills Plant west of Edmonton.

Only three coal generation stations remain online in the province, at the Genesee plant southwest of Edmonton, as the coal phase-out timeline advances. Less available coal power, means renewable energy like wind and solar make up a greater portion of the grid.

EVOLUTION OF THE GRID
"Our grid is changing, and it's evolving," Deising said, adding that more units have converted to natural gas and companies are making significant investments into solar and wind energy.

For energy analyst Kevin Birn with IHS Markit, that trend is only going to continue.

"What we've seen for the last 24 to 36 months is a dramatic acceleration in ambition, policy, and projects globally around cleaner forms of energy or lower carbon forms of energy," Birn said.

Birn, who is also chief analyst of Canadian Oil Markets, added that not only has the public appetite for cleaner energy helped fuel the shift, but technological advancements have made renewables like wind and solar more cost-efficient.

"Alberta was traditionally heavily coal-reliant," he said. "(Now) western Canada has quite a diverse energy base."

LESS CARBON-INTENSIVE
According to Birn, the shift in energy production marks a significant reduction in carbon emissions as Alberta progresses toward its last coal plant closure milestone.

Ten years ago, IHS Markit estimates that Alberta's grid contributed about 900 kilograms of carbon dioxide equivalent per megawatt-hour of energy generation.

"That (figure is) really representing the dominance and role of coal in that grid," Birn said.

Current estimates show that figure is closer to 600 kilograms of CO2 equivalent.

"That means the power you and I are using is less carbon-intensive," Birn said, adding that figure will continue to fall over the next couple of years.

RENEWABLES HERE TO STAY
While many debate whether Alberta's energy is getting clean enough fast enough, Birn believes change is coming.

"It's been a half-decade of incredible price volatility in the oil market which had really dominated this sector and region," the analyst said.

"When I think of the future, I see the power sector building on large-scale renewables, which means decarbonization, and that provides an opportunity for those tech companies looking for clean energy places to land facilities."

Coal and natural gas are considered baseline assets by the AESO, where generation capacity does not shift dramatically, though some utilities report declining coal returns in other markets.

"Wind is a variable resource. It will generate when the wind is blowing, and it obviously won't when the wind is not," Deising said. "Wind and solar can ramp quickly, but they can drop off quite quickly, and we have to be prepared.

"We factor that into our daily planning and assessments," he added. "We follow those trends and know where the renewables are going to show up on the system, how many renewables are going to show up."

Deising says one wind plant in Alberta currently has an energy storage capacity to preserve renewably generated electricity during summer demand records and peak hours as needed. As the technology becomes more affordable, he expects more plants to follow suit.

"As a system operator, our job is to make sure as (the grid) is evolving we can continue to provide reliable power to Albertans at every moment every day," Deising said. "We just have to watch the system more carefully." 

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New Mexico EV Benefits highlight cheaper fuel, lower maintenance, cleaner air, and smarter charging, cutting utility bills, reducing NOx and carbon emissions, and leveraging incentives and renewable energy to accelerate EV adoption statewide.

Key Points

New Mexico EV Benefits are the cost, grid, and emissions gains from EV adoption and optimized off-peak charging.

✅ Electricity near $1.11 per gallon equivalent cuts fueling costs

✅ Fewer moving parts mean less maintenance and lifecycle costs

✅ Off-peak charging reduces utility bills and grid emissions

What would happen if New Mexicans ditched gasoline and started to drive on cleaner, cheaper electricity? A new report from MJ Bradley & Associates, commissioned by NRDC and Southwest Energy Efficiency Project, answers that question, demonstrating that New Mexico could realize $30 billion in avoided expenditures on gasoline and maintenance, reduced utility bills, and environmental benefits by 2050. The state is currently considering legislation to jump-start that transition by providing consumers incentives to support electric vehicle (EV) purchases and the installation of charging stations, drawing on examples like Nevada's clean-vehicle push to accelerate deployment, a policy that would require a few million dollars in lost tax revenue. The report shows an investment of this kind could yield tens of billions of dollars in net benefits.

$20 Billion in Driver Savings

EVs save families money because driving on electricity in New Mexico is the cost-equivalent of driving on $1.11 per gallon gasoline. Furthermore, EVs have fewer moving parts and less required maintenance—no oil changes, no transmissions, no mufflers, no timing belts, etc. That means that tackling the nation’s largest source of carbon pollution, transportation, could save New Mexicans over $20 billion by 2050 because EVs are cheaper to charge and maintain than gas powered cars, and an EV boom benefits all customers through lower rates.

Those are savings New Mexico can bank on because the price of electricity is significantly cheaper than the price of gasoline and also inherently more stable. Electricity is made from a diverse supply of domestic and increasingly clean resources, and 2021 electricity lessons continue to inform grid planning today. Unlike the volatile world oil market, New Mexico’s electric sector is regulated by the state’s utility commission. Adjusted for inflation, the price of electricity has been steady around the dollar-a-gallon equivalent mark in New Mexico for the last 20 years, while gas prices jump up or down radically and unpredictably.

$4.8 Billion in Reduced Electric Bills

While some warn that electric cars will challenge state power grids, New Mexico can charge millions of EVs without the need to make significant investments in the electric grid. This is because EVs can be charged when the grid is underutilized and renewable energy is abundant, like when people are sleeping overnight when wind energy generation often peaks. And the billions of dollars in new utility revenue from EV charging in excess of associated costs will be automatically returned to utility customers per an accounting mechanism that is already in state law that requires downward adjustment of rates when sales increase. Accordingly, widespread EV adoption could reduce every utility customer’s electric bill.

Thankfully, New Mexico’s electric industry is already acting to ensure utility customers in the state realize those benefits sooner rather than later. The state’s rural electric cooperatives have proposed an ambitious plan to leverage funds available as a result of the Volkswagen diesel scandal to build a state-wide public fast charging network that mirrors progress as Arizona goes EV across the Southwest. Additionally, New Mexico’s investor-owned utilities will soon propose transportation electrification investments as required by legislation NRDC supported last year that Governor Lujan Grisham signed into law.

$4.8 Billion in Societal Benefits from Reduced Pollution

The report estimates that widespread EV adoption would dramatically reduce emissions of greenhouse gases from passenger vehicles in New Mexico, and also cut emissions of NOx, a local pollutant that threatens the health off all New Mexicans, especially children and people with respiratory conditions. The report finds growing the state’s EV market to meet New Mexico’s long-term environmental goals would yield $4.8 billion in societal benefits.

The Bottom Line: New Mexico Should Act Now to Accelerate its EV Market

Adding it all up, that’s more than $30 billion in potential benefits to New Mexico by 2050. Here’s the catch: as of June 2019, there were only 2,500 EVs registered in New Mexico, which means the state needs to accelerate the EV market, as the American EV boom ramps up nationally, to capture those billions of dollars in potential benefits. Thankfully, with second generation, longer range, affordable EVs now available, the market is well positioned to expand rapidly as the state moves to adopt Clean Car Standards that will ensure EVs are available for purchase in the state.

Getting it right

New Mexico has enormous amounts to gain from a small investment in incentives that support EV adoption now. For that investment to pay off, it needs to send a clear and unambiguous signal. Unfortunately, the same legislation that would establish tax credits to increase consumer access to electric vehicles in New Mexico was recently amended so it would not be helpful for 80 percent of consumers who lease, instead of buying EVs. And it would penalize EV drivers at the same time—with a $100 annual increase in registration fees, even as Texas adds a $200 EV fee under a similar rationale, to make up for lost gas tax revenue. That’s significantly more than what drivers of new gasoline vehicles pay annually in gas taxes in the state. Consumer Reports recently analyzed the growing trend to unfairly penalize electric cars via disproportionately high registration fees. In doing so, it estimated that the “maximum justifiable fee” to replace gas tax revenue in New Mexico would be $53. Anything higher will only slow or stop benefits New Mexico can attain from moving to cleaner cars.

To be clear, everyone should pay their fair share to maintain the transportation system, but EVs are not the problem when it comes to lost gas tax revenue. We need a comprehensive solution that addresses the real sources of transportation revenue loss while not undermining efforts to reduce dependence on gasoline. Thankfully, that can be done. For more, see A Simple Way to Fix the Gas Tax Forever.

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California energy rebate freeze disrupts heat pump incentives, HVAC upgrades, and climate funding, as federal uncertainty stalls Inflation Reduction Act support, delaying home electrification, energy efficiency gains, and greenhouse gas emissions reductions statewide.

Key Points

A statewide pause on $290M incentives for heat pumps and HVAC upgrades due to federal climate funding uncertainty.

✅ $290M program paused amid federal funding freeze

✅ Heat pump, HVAC, electrification upgrades delayed

✅ Previously approved rebates honored; new apps halted

California’s push for a more energy-efficient future has hit a significant roadblock as the state pauses a $290 million rebate program aimed at helping homeowners replace inefficient heating and cooling systems with more energy-efficient alternatives. The California Energy Commission announced the suspension of the program, citing uncertainty stemming from President Donald Trump’s decision to freeze funding for various climate-related initiatives.

The Halted Program

The energy rebate program, which utilizes federal funding to encourage the use of energy-efficient appliances such as heat pumps, was a crucial part of California’s efforts to reduce energy consumption and greenhouse gas emissions. By providing financial incentives for homeowners to upgrade to more efficient heating and cooling systems, the program aimed to make green energy solutions more accessible and affordable to residents. The rebate program had been popular, with many homeowners eager to participate in the initiative to lower their energy costs and improve the sustainability of their homes.

However, due to the uncertainty surrounding federal funding, the California Energy Commission announced on Monday that it would no longer be accepting new applications for the program. The agency did clarify that it would continue to honor rebates for applications that had already been approved. The pause will remain in effect until the Trump administration provides more clarity regarding the program's future funding.

The Trump Administration’s Role

This move highlights a broader issue regarding access to federal funding for state-level energy programs. The Trump administration’s decision to freeze funding for climate-related initiatives has left many states in limbo, as previously approved federal money has not been distributed as expected. Despite federal court rulings directing the Trump administration to restore these funds, states like California are still struggling to navigate the uncertainty of climate-related financial support from the federal government.

California’s decision to pause the rebate program comes after similar actions by other states. Arizona paused a similar program just a week prior, and Rhode Island had already paused new applications earlier this year. These states are all recipients of funding from a larger $4.3 billion initiative under the Inflation Reduction Act, which is designed to help homeowners purchase energy-efficient appliances like heat pumps, water heaters, and electric cooktops.

Impact of the Freeze

The pause of California's rebate program has serious implications for both consumers and the state’s energy goals. For residents, the halt means delays in the ability to upgrade to more energy-efficient home systems, which could lead to higher energy costs in the short term, a concern amid soaring electricity prices across the state.

The $290 million program was a significant step in encouraging homeowners to invest in energy efficiency, and its suspension leaves a gap in the availability of resources for those who were hoping to make energy-saving upgrades. Many of these upgrades are not just beneficial to homeowners, but they also contribute to the state’s overall energy efficiency goals, helping to reduce reliance on non-renewable energy sources, even as California's dependence on fossil fuels persists, and decrease greenhouse gas emissions.

Federal and State Tensions

The freeze in funding is just one of many points of tension between the Trump administration and states like California, which have pursued aggressive environmental policies aimed at reducing emissions and combating climate change. California has often found itself at odds with the federal government on environmental issues, especially under the leadership of President Trump. The state’s ambitious environmental policies have sometimes clashed with the federal government's approach, including efforts to wind down its fossil fuel industry in line with climate goals.

In this case, the freeze on climate-related funding appears to be part of a broader strategy by the Trump administration to limit federal spending on environmental programs, and as regulators weigh whether the state may need more power plants, planning remains complex. While the freeze impacts states that are working to transition to clean energy, critics argue that such moves undermine efforts to tackle climate change and could slow down progress toward a greener future.

The Path Forward

For California, the next steps will depend heavily on the actions of the federal government. While the state can continue to push for climate funding in the courts, the lack of clarity around the release of federal funds creates uncertainty for state programs that rely on these resources. As California continues to navigate this funding freeze, it will need to explore alternative solutions to keep its energy efficiency programs on track, such as efforts to revamp electricity rates to clean the grid, even in the face of federal challenges.

In the meantime, California residents and homeowners who were hoping to take advantage of the rebate program may have to wait until further clarification from the federal government is provided, even as officials warn of a looming electricity shortage in coming years. Whether the program can be restored or expanded in the future remains to be seen, but for now, the pause serves as a reminder of the ongoing struggles that states face when dealing with shifting federal priorities.

As the issue unfolds, other states facing similar challenges may take cues from California’s actions, and with California exporting energy policies to Western states, broader conversations about how federal and state governments can collaborate to ensure that energy efficiency initiatives and climate goals are not sidelined due to political or budgetary differences.

California’s decision to pause its $290 million energy rebate program is a significant development in the ongoing struggle between state and federal governments over climate-related funding. The uncertainty created by the Trump administration’s freeze on energy efficiency programs has led to disruptions in state-level efforts to promote sustainability and reduce emissions. As the situation continues to evolve, both California and other states will need to consider how to move forward without relying on federal funding that may or may not be available in the future.

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