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  • Green Aussie Gov’t Approves Coal Mine // US Gasoline Prices Set to Drop // IRS Guidance On Solar Tax Breaks Released

Green Aussie Gov’t Approves Coal Mine // US Gasoline Prices Set to Drop // IRS Guidance On Solar Tax Breaks Released

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Welcome to Grid Brief! Here’s what we’re looking at today: coal realism comes to Australia’s Labor government, America’s gasoline prices are set to drop for driving season, the IRS and Treasury issue guidance on renewable manufacturing tax credits, and more!

Green Aussie Gov’t Approves Coal Mine

Australia’s climate-conscious Labor government approved its first coal mine since coming into power last year.

“Bowen Coking Coal Ltd. said Friday that it had received approval to move ahead with its planned Isaac River Coal Mine, which will sit alongside several other projects in the Bowen Basin in Queensland,” reports Bloomberg. “The company plans to increase output of coal used in steelmaking to 5 million tons by 2024.”

Australia is one of the world’s biggest fossil fuel exporters, which also makes it a prolific polluter. The Labor government has pushed to get the country on track with the energy transition. As part of this commitment, they have set ambitious emissions targets aiming for a reduction of 43% from 2005 levels by 2030. Additionally, the government has allocated increased funding to hasten the transition towards renewable energy sources.

It’s not surprising, then, that the Labor government has come under fire for seemingly violating its own commitments. But the Australian Environment Minister, Tanya Plibersek, defended the coal mine approval.

“This is a small project,” Plibersek said. “It’s a project that produces metallurgical coal, which is the coal you need for steel making. There’s no renewable energy future that doesn’t have steel in it.”

US Gasoline Prices Set to Drop

Prices at the pump inched a few cents higher in America, but still sit a dollar lower than they were at this time last year. And prices are expected to keep falling.

According to GasBuddy, the average price for a gallon of gas was $3.51 yesterday. AAA estimated $3.535 per gallon. Either way, that’s 4 cents higher.

But driving season may welcome motorists with lower than expected prices.

“With oil prices bouncing back over $70 per barrel after reaching as low as $66 in early May, we’ve seen gasoline prices move higher in some states, while others have continued to decline- the national average has seen little change as a result, but overall, gasoline prices continue to see significant relief from year-ago levels,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “We’re likely to soon see gasoline prices slip to their largest year-on-year deficit since Covid hit, when prices fell over $1 per gallon from 2019.”

Barring major catastrophes like hurricanes our refinery outages, De Haan says its likely gas prices won’t peak over $4/gallon.

"Increasing demand for gasoline would usually drive pump prices higher, but the cost for oil has remained low lately, so drivers should benefit from stable pump prices as Memorial Day draws near,” said AAA spokesman Andrew Gross.

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IRS Guidance On Solar Tax Breaks Released

The IRS has made headway in defining the requirements for domestic content tax credits under the Internal Revenue Act (IRA) for renewable energy projects.

The recent guidance from the U.S. Department of the Treasury has grouped common components of renewable energy projects into two categories: one includes steel and iron components and the other includes manufactured products.

Here’s how that breaks down: “Under the IRA, renewable energy projects must incorporate 100% U.S.-made iron and steel to qualify for the 10% domestic content tax credit rider,” reports Utility Dive. “For project components considered ‘manufactured products,’ 40% of the equipment installed at solar and land-based wind projects must be made in the U.S.”

After 2026 and 2027, the minimum domestic content requirements for manufactured components increase to 55% for both types of projects.

The guidance clarifies that steel photovoltaic module racking falls under the higher 100% domestic content standard, while the photovoltaic modules themselves are considered "manufactured products" subject to the lower standard. In other words, the equipment that houses solar panels will be held to a higher standard than the solar panels themselves.

Renewable energy boosters and industry trade groups have lauded the progress the IRS and Treasury have made. But the guidance has also met criticism.

Senate Finance Chairman Ron Wyden said the rules are too weak. “I wrote the Inflation Reduction Act to make an historic investment in rebuilding domestic solar manufacturing, but the rules the Biden administration put forward today do not go far enough to make the most of that opportunity.”

Sen. Joe Manchin said that the Treasury’s guidance “rewards the continuation of this Chinese dominance” in polysilicon wafer production.

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