Lately, the Biden administration has gone full throttle on clean energy, launching several low-carbon projects in quick succession. A month ago, the administration launched a $7 billion investment in seven regional hydrogen hubs in one of the government’s biggest clean energy drives. The funds aim to accelerate clean hydrogen production, reduce carbon emissions, and boost energy security, with the goal of achieving net-zero emissions by 2050.
Last week, the U.S. Department of Energy (DOE) unveiled over $444 million to support sixteen selected projects across twelve states that will develop carbon dioxide (CO2) storage infrastructure. According to the DoE, the United States will need to capture, transport, and permanently store hundreds of millions of tons of carbon dioxide each year if it is to achieve net-zero emissions by midcentury.
And now the government has gone on yet another clean energy drive albeit on a slightly bizarre route. The U.S. Department of Energy has announced that it will utilize the Defense Production Act to mobilize the production of heat pumps. The Defense Production Act gives the president the authority to mobilize a certain industry in pursuit of national security, meaning the government considers the development of climate-friendly energy as mission-critical. According to Giulia Siccardo, director of the Energy Department’s Office of manufacturing and energy supply chains, the $169 million in funding the department announced on Friday will allow companies to construct factories to build heat pumps to meet the needs of over 300,000 homes.
“The President is using his wartime emergency powers under the Defense Production Act to turbocharge U.S. manufacturing of clean technologies and strengthen our energy security,” said President Biden’s National Climate Advisor Ali Zaidi.
“This acceleration of electric heat pump manufacturing also shows how President Biden’s Investing in America agenda is advancing American innovation, cutting energy bills for hardworking families, and tackling the climate crisis – a win, win for our economy, our workers, and our planet.” Related: Coast Guard Says Up to 26,000 Barrels May Have Leaked Into Gulf of Mexico
Whereas close to 90% of U.S. households use air conditioning (AC), just 15% of U.S. households have a heat pump as their primary heating equipment. Heat pumps operate on a technology similar to that found in a refrigerator or an AC. They work by extracting heat from a source, such as the surrounding air, geothermal energy stored in the ground, or nearby sources of water or waste heat from a factory, according to the International Energy Agency (IEA). The pump then amplifies and transfers the heat to where it is needed. Heat pumps are far more efficient than conventional heating technologies such as boilers or electric heaters and also cheaper to run because most of the heat is transferred rather than generated. The energy output of heat pumps in the form of heat is usually several multiples greater than that required to power the heat pump. For instance, the coefficient of performance (COP) for a typical household heat pump is around four, meaning its energy output is 4x greater than the electrical energy used to run it. This makes most models 3?5 times more energy efficient than gas boilers. Heat pumps are frequently combined with other heating systems, commonly gas, in hybrid configurations.
Skyrocketing Energy Bills
Invoking a Cold War-era law to shore up the domestic heat pump industry might seem like overkill at first glance, but it’s pretty much in-line with the Biden administration’s energy policy up there with those SPR sales. Last year, the Biden administration conducted the largest-ever sale from the Strategic Petroleum Reserve (SPR) to the tune of 180 million barrels, in a bid to lower oil prices following a price spike in the aftermath of Russia’s invasion of Ukraine. The jury is still out whether the mammoth sale worked to the degree the government could have wished. According to an analysis from the Department of the Treasury, the release of oil from the SPR helped lower the price of gasoline by 13 to 31 cents per gallon, hardly anything beyond what market forces could have accomplished. Oil prices have been on a downward trajectory over the past couple of months but remain well above pre-covid levels.
Source: Y-Charts
The administration’s latest move with heat pumps likely borrows a leaf from the SPR playbook.
A summer of record-breaking heat dramatically increased electricity consumption for Americans in the current year and left many struggling to keep up with skyrocketing power bills. According to the U.S. Energy Information Administration (EIA), the average household spends about $262 a year on air conditioning, with costs going as high as $525 in the hot and humid Southeast. Siccardo has revealed that seven out of the nine companies that will benefit from the DoE funds are actually not yet manufacturing heat pumps here in the U.S., or heat pump components, in the U.S.A. at scale. By encouraging more rapid adoption of heat pumps in U.S. homes, the Biden administration is looking to lower heating and cooling bills for the average American. But only time will tell whether this experiment will work as intended considering that this Energy Institute working paper reveals that there is remarkably little correlation between heat pump adoption and household income, meaning cost alone might not be the main reason why 85% of American homes do not have one.
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By Alex Kimani for Oilprice.com
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