Bill Gates Behind the Scenes on IRA // Rail Strike Update

Bill Gates Behind the Scenes on IRA

How did it happen that the Inflation Reduction Act was passed not long after it had been declared dead? Nothing in the world is monocausal, but one of the major reasons is a single man: Bill Gates.

Gates has been lobbying for greater climate action, specifically investment in new technological research, since 2019, according to a new piece from Bloomberg. While a broad coalition of Democratic constituents from labor unions to progressive NGOs pressured Manchin, there's no downplaying Gates's role in the effort. 

"The [IRA] expands tax credits that Gates and others sought to support that reach beyond renewable power and batteries to also encompass nuclear plants, carbon capture technology, sustainable aviation fuels, hydrogen, and upgrading the grid," writes Bloomberg. "It includes a tax credit for advanced manufacturing pushed by renewable and auto interests as a way to nurture a domestic production of solar modules and electric vehicles."

While Gates said he didn't want to take credit for his efforts, he did describe the act's passage as one of the "happier moments" of his "climate work." “I have two things that excite me about climate work. One is when policy gets done well, and this is by far the biggest moment like that," he told Bloomberg.

But it's unclear that the IRA will achieve its aims. Climate scientist Roger Pielke, Jr. doubts it will make much of a dent in global emissions. According to Robert Bryce, the wind and solar industries could make "$126.9 billion in new federal tax credits between now and 2031. If that occurs, the total cost of federal giveaways for wind and solar will more than double — and could total nearly $240 billion by 2031."

Rail Strike Update

Joe Biden's Presidential Emergency Board to settle the dispute between rail workers and the railroad companies issued its recommendations yesterday. 

The board was created last month to diffuse tensions between labor and management that threatened to culminate in a strike that would shut down America's railroads. The 1926 Railway Labor Act constrains the power of rail unions to legally strike, even though the tensions have been mounting over overwork, lean crews, low pay, and other issues for years.

The PEB recommended a 22% pay increase. The Dallas Business Journal reports, "Wage increases would range between 3% and 7% per year through 2024, retroactive to 2020, according to the emergency board's 124-page report published late Tuesday and released to the public on Wednesday. Workers would also get an annual $1,000 "service recognition" bonus each year during the five-year term of the contract. The board's recommendation is less than what the unions asked for but higher than what the railroads proposed." The PEB also recommended workers get an additional paid day off per year. 

But the unions were hoping for a 28% raise and wanted different attendance policies and the limitation of one-man crews, which the industry favors. The unions are considering the recommendations. For a detailed overview of the situation, check out this piece in Railway Age. It should be noted that the Federal Railroad Administration is "proposing a rule to mandate two-man crew minimums, a major demand of rail workers," according to Labor Notes' Who Gets The Bird? Substack. 

For deeper background on the conditions that led to this strike, Jacobin has recently published a piece on it here. 

And though a strike cannot legally happen until September, it would shock the American grid, which is already under intense strain. 

When it comes to coal, US freight railroads, "moved 3.3 million carloads of coal, with each rail car carrying enough coal to power 19 homes for an entire year," in 2021. For crude oil: "the 91,152 carloads of crude oil originated by U.S. Class I railroads in 2021 was equivalent to around 162,000 barrels per day, or approximately 1.5% of U.S. production." (For a greater breakdown of rail logistics and energy, check out our coverage of these negotiations from last month.)

Here's a snapshot of the Midcontinent Independent System Operator's energy mix on a typical late afternoon in August with the usual renewable underperformance. Notice how vital coal is to keep the lights on in a region the North American Electric Reliability Corp. deemed in danger of blackouts. A prolonged strike could leave parts of the American Midwest with depleted coal reserves going into winter. 

Like what you're reading? Click the button below to get Grid Brief right in your inbox!

Conversation Starters

• Chinese hydropower is struggling during the hottest heat wave in the last six decades. "The heatwave is reducing water levels on the Yangtze River to the lowest on record for this time of the year, threatening crops and power supply in the Sichuan province, which relies on hydropower generation for a large portion of its electricity supply. Sichuan also typically sells hydropower-generated electricity to other provinces," reports Oilprice.com.

• Australia's Santos Energy surprised the industry by approving an Alaskan oil project. "Santos, as operator of the Pikka Unit joint venture, today announced a final investment decision (FID) has been taken to proceed with the US$2.6 billion gross (US$1.3 billion Santos-share) Pikka Phase 1 oil project located on the North Slope of Alaska," reads their press release published yesterday. 

• Ireland has issued a power supply alert. "Ireland’s power grid warned of tight electricity supplies for a second day, raising the risk of power cuts as concerns mount over energy shortages this winter," reports Bloomberg. 

Crom's Blessing