Why a gas tax holiday won’t help lower prices or save the planet
Hello, good day. Your Protocol Climate team is itching to get away for the summer, really to anywhere that doesn’t smell like garbage. (Sorry, New York, but you know it’s true.) We’re also side-eying gas prices and pondering Biden’s gas tax holiday proposal. Today, we’re exploring alternatives to the tax reprieve as well as a startup that’s making homes more energy- and cost-efficient. With gas prices like these, you’re going to want to read on!
Please, anything but a gas tax holiday
It feels like we’ve reached the “throw policies at a wall and see what sticks” phase of gas prices. With $5 per gallon gas the norm, Joe Biden has proposed a federal gas tax holiday to ease the cost at the pump. It’s a nice thought that, if implemented, would do next to nothing to address the problem. And it shows that our continued reliance on fossil fuels isn’t just a climate problem, it’s a political one as well. But, as always, there are fixes.
The gas tax holiday would do basically nothing. The problems that ail prices at the pump are not the 18- and 24-cent federal taxes on gas and diesel, respectively. Oil refinery capacity is in short supply, and the Russian war in Ukraine has added further pressure, ratcheting up prices. Kill the tax for three months and demand would likely go up anyway, assuming oil companies don’t just pocket the difference.
There are no short-term fixes for gas prices. The Biden administration has tried basically every quick fix it can.
- Biden tapped the Strategic Petroleum Reserve in late March as gas prices kept on their inexorable rise.
- The Environmental Protection Agency allowed for more ethanol to be blended with gas, a move that could lower prices but increase pollution.
- Biden has also asked oil companies to drill for more oil, sent them a sternly worded letter and invited them to the White House, all in order to cajole them to produce more of that sweet, sweet planet-frying crude.
- A more fruitful option to help people and the planet could be waiving public transit and Amtrak fares, though the benefits of that would accrue unevenly.
But there are long-term fixes that will make the price of gas irrelevant. Ultimately, a gas tax holiday is political window-dressing at a time when the U.S. needs more substantive policies that end the combustion engine’s hegemony. It’s like showing up at a wedding with a birthday card. Sicko behavior, really. Rather than toying with the tax on a gallon of gas, policymakers need to be full steam ahead on the electric transition.
- The gas price crisis is the latest reminder that being tethered to fossil fuels is a recipe for economic disaster, as well as climate damage.
- Speeding up the electric transition won’t suddenly make gas cheaper or make this summer any easier. But it needs to be a priority if we want to avert the same type of crisis down the road.
- Electric vehicles come with their own set of constraints, of course. Notably, the critical minerals that make EVs tick have had their own wild price ride in recent years.
- But smart policies that subsidize the price of EVs could help ensure that the vehicles are more accessible.
- Electric automakers, notably Rivian, have also indicated that the worst of the supply chain issues that have gripped the industry (and every other one, for that matter) are almost over. That means the road is opening up to cruise into the electric sunset.
- Policies that kick cars to the curb in favor of public transit, e-bikes and other ways of getting around would be decarbonization rocket fuel (sustainable, of course).
- There are a number of plans for how to go about doing that, drawn up by think tanks, policy shops and researchers as well as the hippies at *checks notes* the, uh, International Energy Agency.
There’s just one problem. Congress actually has to do something. Just as Biden needs the Senate and House to enact a gas tax holiday, he also needs Congress to approve any new EV subsidies or other spending that would speed up their adoption.
- Republicans are in lockstep against the gas tax, and they seem pretty opposed to EV tax credits. And so does Sen. Joe Manchin: Without his support, any reconciliation bill is DOA.
Despite the pretty dim outlook for relief at the pump and the future of EVs, at least some analysts are bullish that we could be closer to an electric tipping point than it seems. And that’s good news, because another summer of everyone complaining about $5 gallons is the last thing anyone wants.
Own a home? Need it decarbonized? Enter Sealed.
The market for heat pumps is growing slowly but surely, and home decarbonization startup Sealed is trying to speed up the process with a unique business model. And it’s doing the improbable: convincing homeowners to take a longm hard look at their oft-ignored HVAC systems (and their home insulation, to boot!) in order to save both energy and money.
Sealed is on an energy efficiency mission. Weatherization and converting heating and cooling systems to electric heat pumps may not be a glamorous endeavor, but it’s one that’s vital to cleaning up existing buildings’ carbon pollution.
- Building a new climate-friendly home with an induction stove and heat pump is (relatively) easy. But convincing homeowners to make potentially costly upgrades? That’s a bit harder.
- Still, with roughly 80 million owner-occupied homes in the U.S., there’s a big potential customer base out there for Sealed.
The company has grabbed attention in part because of its unconventional funding model. Sealed’s central premise is that it will eat its own costs if its upgrades don’t succeed in cutting a home’s energy bill.
- Once complete, the price of the upgrades are amortized over time, assuming they result in cost savings; if they don’t, Sealed doesn’t get paid.
- It’s a model that appears to have worked so far, in that the company has grown steadily since its 2012 launch.
- Sealed currently operates in the Northeast, but it’s looking to expand following a recent $29.5 million funding round. (The company’s model works best in places with extreme seasonal heat, cold or both, according to CEO and co-founder Lauren Salz.)
The key to Sealed’s success? Its accurate predictions of future energy use. Sealed combines its analysis of a home’s age, location, layout and energy usage history with data from third-party sources like Zillow and Google Maps to present its customers with personalized proposals.
- The company then partners with local contractors to make the upgrades happen. In most cases, the projects are completed in a matter of days, though the timeline, of course, depends on the scope.
- Certain homeowners just need their houses to be weatherized to avoid energy loss, while others replace their entire HVAC systems with gas-free heat pumps that promise to heat and cool more efficiently, all while using electricity rather than fossil fuels.
The pandemic has been an “accelerant” for Sealed, according to Sealed president and co-founder Andy Frank. With people spending more time at home, their focus turned to comfort. That doesn’t just mean more nappable couches; a big part of comfort is heating, cooling and general home efficiency, Frank said.
- “The only way to really drive mass adoption of these types of technologies is … a really strong customer value proposition that isn’t about either saving money or saving the planet,” Salz said. (Though, of course, we love both of those things!)
- But Salz said that the promise of improved control over a home’s temperature is one of the primary factors that convinces people to turn to Sealed.
The key to growing further: education. The Sealed team is putting new emphasis on teaching customers about the merits of decarbonization — and what the heck a heat pump is, anyway.
- “Most of the people we encounter in the market don’t know a lot about heat pumps, but it’s better than it was a couple of years ago,” Frank said. “It's really a matter of first educating them on what [a heat pump] is, and then making it easy and affordable for them to be able to install those technologies.”
Curious for more about what a Sealed home looks like? Keep an eye on Protocol Climate for more on Sealed in the days to come.— Lisa Martine Jenkins (email | twitter)
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How to build an equitable and inclusive future
At the same time that the pandemic demonstrated all that is possible in an interconnected world, we saw in new and increasingly stark ways how certain communities continue to be marginalized and harmed by a persistent digital divide and how effectively that divide exacerbates our society’s other inequities.
Make it rain
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Connected Energy, a British company that turns old EV batteries into stationary storage, raised over $18 million from five investors, including the venture capital arms of both Volvo and Caterpillar.
The climate-focused podcast outfit Post Script Mediaraised $2 million in a seed funding round led by Prelude Ventures.
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Canadian asset manager Brookfieldraised $15 billion for an impact fund focused on the energy transition, which drew commitments for over 100 other investors as well.
U.K.-based Kiko Ventureslaunched its own $450 million venture capital fund devoted specifically to cleantech investments.— Brian Kahn and Lisa Martine Jenkins
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A famously embattled nuclear project is somehow even more embattled. The co-owners of the Vogtle plant are suing Georgia Power Company, alleging the utility is trying to put them on the hook for $700 million they shouldn’t have to pay.— Brian Kahn and Lisa Martine Jenkins
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How to build an equitable and inclusive future
There is so much more we need to do to make sure our future is more equitable and inclusive and maximizes America’s potential. It is not enough just to ensure everyone is connected. We also need to extend the full scope of digital opportunity to the people, the communities, and the institutions.
Thanks for reading! As ever, you can send any and all feedback to email@example.com. See you Thursday!