Over the weekend the Washington Spectator published my essay, Diary of a Transit Miracle, recounting the arduous march of NYC congestion pricing from a gleam in a trio of prominent New Yorkers’ eyes at the end of the 1960s, to the verge of startup at the upcoming stroke of midnight June 30, the startup time announced by the MTA last Friday.
Landing page for this post’s original version.
I’m cross-posting it here — the third post on the subject in this space in the past 12 months (following this in December and this post last June) — because the advent of congestion pricing in the U.S. is “a really big deal,” as a number of friends and colleagues have told me in recent weeks. As my new essay makes clear, charging motorists to drive into the heart of Manhattan isn’t just a rejection of unconstrained motordom, it’s a new beachhead in “externality pricing” — social-cost surcharging — of which carbon taxes are the ultimate form.
The essay features two governors, two mayors — one of whom I served a half-century ago as a lowly but admiring data cruncher — a civic “Walter Cronkite,” a Nobel economist, raucous transit activists, a gridlock guru and yours truly, plus a cameo appearance by Robert Moses. It includes footage of the historic 1969 press conference in which Mayor John Lindsay and two distinguished associates enunciated the core idea of using externality pricing to better balance automobiles and mass transit that animated the arduous but ultimately triumphant congestion pricing campaign.
— C.K., April 29, 2024
Diary of a Transit Miracle
A miracle is coming to New York City. Beginning on July 1, and barring a last-minute hitch, motorists will soon pay a hefty $15 to enter the southern half of Manhattan — the area bounded by the Hudson River, the East River and 60th Street.
An anticipated 15 percent or so of drivers will switch to transit, unsnarling roads within the “congestion zone” and routes leading to it. The other 80 or 90 percent will grumble but continue driving. That is by design. The toll bounty, a billion dollars a year, will finance subway enhancements like station elevators and digital signals that will increase train throughput and lure more car trips onto trains.
The result will be faster, smoother commutes, especially for car drivers and taxicab and Uber passengers, who will pay a modest surcharge of $1.25 to $2.50 per trip. Drivers of for-hire vehicles will benefit as well, as lesser gridlock leads to more fares.1
The miracle is three-fold: Winners will vastly outnumber losers; New York will be made healthier, calmer and more prosperous; and that this salutary measure is happening at all, after a half-century of setbacks.
Obstacles to congestion pricing
Congestion pricing, as the policy is known, faced formidable obstacles even beyond the difficulty inherent in asking a group of people to start forking over a billion dollars a year for something that’s always been free.
Congestion pricing also had to contend with: an ingrained pro-motoring ideology that casts any restraint on driving as a betrayal of the American Dream; a general aversion to social-cost surcharges (what economists call “externality pricing”); exasperation over the region’s balkanized and convoluted toll and transit regimes; and, of late, a decline in social solidarity and appeals to the common good.
The advent of congestion pricing in New York is, thus, cause not just for celebration but wonderment. How did this wonky yet radical idea advance to the verge of enactment?
Origins
The trail begins in the waning days of 1969, when newly re-elected mayor John Lindsay recruited two well-regarded New Yorkers to devise a plan to fend off a 50 percent rise in subway and bus fares.
William Vickrey, a Canadian transplant teaching at Columbia and a future Nobel economics laureate, was a protean theorist of externality pricing. New York-bred mediator Theodore Kheel was admired as a civic Walter Cronkite for his plain-spoken common sense.
Lindsay, too often dismissed as a lightweight, understood mass transit as key to loosening automobiles’ spreading chokehold over the city. He had made combating air pollution a pillar of his first term and was fast becoming an exemplar of urban environmentalism. From his municipal engineers, Lindsay knew that technology to clean up tailpipes still lay in the future. A transit fare hike that would add yet more vehicles to city streets imperiled his clean-air agenda.
The triumvirate proposed a suite of motorist fees to preserve the fare. Their program ― higher registration fees and gasoline taxes, a parking garage tax, doubled tolls ― though mild in today’s terms, threatened powerful bureaucracies and their auto allies. Newly dethroned “master-builder” Robert Moses opined that Kheel, in his zeal to save the fare, had “gone berserk over bridge and tunnel tolls.”2 The program went nowhere.
L to R: Kheel, Lindsay, Vickrey. Click arrow to view (please excuse two brief garbled passages toward end).
Moses was right to be alarmed. From a City Hall podium on Dec. 16, 1969, Mayor Lindsay showcased Kheel’s and Vickrey’s respective reports, “A Balanced System of Transportation is a Must” and “A Transit Fare Increase is Costly Revenue.” (Click link in still photo above to view 27-minute video.) The trio propounded a new urban doctrine rebalancing automobiles and public transportation: “Automobiles are strangling our cities… Starving mass transit imposes costs that are difficult to measure, yet real… Correcting the fiscal imbalance between transit and the automobile is key to enhancing our environment and quality of life…”
Their remarks set generations of urbanists on course toward congestion pricing.
Setbacks
Quantifying those precepts became my research agenda 40 years later. In the interim, two creditable attempts to enact congestion pricing crashed and burned.
The central element of Lindsay’s 1973 “transportation control plan” was tolls on the city’s East River bridges, a measure designed to eliminate enough traffic to satisfy federal clean-air standards. Though the plan’s formal demise didn’t come until 1977, in legislation written by liberal lawmakers from Brooklyn and Queens, the toll idea never stood a chance. Electronic tolling was 20 years away, and adding stop-and-go toll booths seemed more likely to compound vehicular exhaust than to cut it.
Three decades later, in 2007, Mayor Michael Bloomberg asked Albany to toll not just the same East River bridges but also the more-trafficked 60th Street “portal” to mid-Manhattan. Predictably, faux-populist legislators saw Bloomberg’s billionaire wealth as an invitation to denounce the congestion fee as an affront to the little guy.
The mayor may have hurt his cause by presenting congestion pricing primarily as a climate and pollution measure. The pollution rationale was no longer compelling in the way it had been in Lindsay’s day, as automotive engineers had slashed rates of toxic vehicle exhaust ten-fold. Appeals tied to global warming also fell flat; remember, congestion pricing contemplated that most drivers would stay in their fossil-fuel burning cars.
This isn’t to say that congestion pricing confers no climate benefits. Rather, the benefits are subtler ones that can be hard to convey to voters, such as making climate-friendly urban living more attractive. A further benefit may come as congestion pricing demonstrates the unique power of externality pricing, as explained below.
From the Rubble
Even as Bloomberg’s toll plan was faltering in Albany, new loci of support were germinating in the city.
Changing times demanded not just the intellectual leadership of think-tanks like the Regional Plan Association and the good-government Straphangers Campaign, but gritty, grassroots transit organizing. Enter the newly-minted Riders Alliance.
2017 subway handbill exemplified new militancy targeting Gov. Andrew Cuomo for failing transit.
As subway service began cratering in 2015, the inevitable result of budget-raiding by a skein of governors, the Alliance posted crowd-sourced photos of stalled trains and jammed platforms alongside demands for improved service from “#CuomosMTA.” Before long, the papers were pointing the finger at the governor not just in “Why Your Commute Is Bad” explainers but in tear-jerkers like the Times’ May 2017 classic, “Money Out of Your Pocket”: New Yorkers Tell of Subway Delay Woes.
The drumbeat was deafening. Cuomo finally blinked. On a Sunday in August 2017, he phoned the Times’ Albany bureau chief and handed him a scoop for the next day’s front page: Cuomo Calls Manhattan Traffic Plan an Idea ‘Whose Time Has Come’.
The “traffic plan” was congestion pricing.
Data Cruncher
Two months later, Cuomo’s staff summoned me to the midtown office of the consulting firm they had retained to “scope” congestion pricing ― essentially, to compute how much revenue tolls could generate. They wanted to see if an Excel spreadsheet model I had constructed and refined over the prior decade could aid their scoping process.
The model was called the Balanced Transportation Analyzer, a name bestowed in 2007 by Ted Kheel.
Ted, in his nineties, had recruited me to determine whether a large enough congestion toll could pay to make city transit free. The idea worked on paper but foundered politically. Nevertheless, Ted saw in my Excel modeling a way to capture phenomena like “rebound effects” (motorists driving more as road space frees up) and “mode switching” between cars, trains, buses and taxicabs, that he and Prof. Vickrey had identified in their 1969 work but lacked the computing ability to quantify.
Ted’s philanthropy enabled me over the next decade to expand, test and update my transportation modeling. With a hundred “tabs” and 160,000 equations, the “BTA” can instantly answer almost any conceivable question about New York congestion pricing, as well as these two central ones: how much revenue it will yield, and how much time will travelers save in lightened traffic and better transit.3
The BTA model aced its 2017 audition and became the computational engine for the congestion pricing legislation the governor’s team enacted into law in 2019. Its impact has been even broader.4 “Having the model helped make the case with the public, journalists, elected officials and others,” Eric McClure, director of the livable-streets advocacy group StreetsPAC, wrote recently, in part by helping congestion pricing proponents push back on opponents’ exaggerated claims of disastrous outcomes and their incessant demands for special treatment. The model may also have influenced the detailed toll design adopted by the MTA board earlier this year, which hewed close to the toll design I had recommended last summer.5
The BTA also provided sustenance during congestion pricing’s seven lean years ― the 2009-2016 period in which the torch was kept lit by a new triumvirate known as “Move NY” ― traffic guru “Gridlock” Sam Schwartz, the very able campaign strategist Alex Matthiessen, and myself. The model helped our team evangelize congestion pricing’s transformative benefits to elected officials and the public. This, I believe, was a key element in mustering the critical mass of support that ultimately swayed not one but two governors.
The Hochul Factor
New York Lieutenant Governor Kathy Hochul’s ascension to governor in August 2021 could have been congestion pricing’s death knell. The toll plan was adrift in the federal bureaucracy, and its latter-day champion Andrew Cuomo had exited in “me-too” disgrace. His successor, from distant Buffalo, wasn’t beholden to New York or congestion pricing.
Hochul, who as governor controls city and regional transit, could have disowned congestion pricing as convoluted, bureaucratic and tainted. Instead, she became a resolute and enthusiastic backer. Her spirited support, both in public and behind the scenes, became the decisive ingredient in shepherding congestion pricing to safety.
Why the new governor went all-in on congestion pricing awaits a future journalist or historian. Had she spurned it, the opprobrium from downstate transit advocates would have been intense; but there doubtless would have been cries of “good riddance” as well. Vickrey, Kheel and Riders Alliance notwithstanding, it’s not clear how closely New Yorkers — including transit users — connect congestion tolls to improved travel and a better city.
What makes Hochul’s embrace especially impressive is that congestion pricing is, in a real sense, an attack on a jealously guarded entitlement: the right to inconvenience others by usurping public space for one’s vehicle. The classic lament about entitlements’ iron grip is that “losers cry louder than winners sing.”6 Yet in this case, it seems, potential losers — actual and aspiring zone-bound drivers — are being out-sung by transit interests seeking, in Kheel’s 1969 words, a better balance between public transportation and automobiles.
Credits and Prospects
Let us now praise Andrew Cuomo’s crafting of the legislation that teed up congestion pricing’s successful run.
Rather than specifying a dollar price for the tolls, or a precise traffic reduction, his 2019 bill established a revenue target: sufficient earnings to bond $15 billion in transit investment — which equates to $1 billion a year to cover debt service. This device trained the public’s focus on the gain from congestion pricing (better transit) instead of the pain (the toll). Equally important, with this deft stroke, any toll exemption that a vocal minority might seek would mathematically trigger higher tolls for everyone else. The effect was vastly heightened scrutiny of requests for carve-outs.
Which cities will follow on New York’s heels? No U.S. urban area comes close to our trifecta of gridlock, transit and wealth. Sprawling Los Angeles or Houston, or even Chicago for that matter, might be better served by more granulated traffic tolls than New York’s all-or-none model.
Perhaps Asia’s megalopolises will be swept up in our wake. In the meantime, my focus will be on the holy grail of externality pricing: taxing carbon emissions. Every economist knows that the surest and fastest way to cut down on a “bad” is by taxing it rather than subsidizing possible alternatives. Yet that approach remains counter-intuitive and even anathema to nearly everyone else.
A huge and important legacy that New York congestion pricing could provide is to prove that intelligently taxing societal harms need not be electoral suicide. This proof could help unlock a treasure-trove of prosperity-enhancing pricing reforms including, most prominently, robust carbon taxing.
The author, a policy analyst based in New York City, worked in Mayor Lindsay’s Environmental Protection Administration in 1972-1974. He met Bill Vickrey in 1991 and worked closely with Ted Kheel from 2007 to 2010.
Endnotes
- The new passenger surcharges of $1.25 for taxicabs and $2.50 for “ride-hails” (principally Ubers) apply to trips touching the congestion zone. These will be partially offset by lower fares owing to shorter wait-time charges due to faster travel speeds.
- Quote is from Moses’ August 23, 1969 guest essay in Newsday, “Is Rubber to Pay for Rails?” (not digitally available).
- The current version of the BTA is publicly available at this link: (18 MB Excel file).
- See Fix NYC Advisory Panel Report, Appendix B, 2019.
- A Congestion Toll New York Can Live With, July 2023, by Charles Komanoff, co-authored with Columbia Business School economist Gernot Wagner.
- As pronounced by University of Michigan economist Joel Slemrod, in Goodbye, My Sweet Deduction, New York Times, by Eduardo Porter and David Leonhardt, Nov. 3, 2005.
Carbon Footprint
The U.S. EV Supply Chain Race: Where Surge Battery Metals Fits in the National Critical Minerals Strategy
Disseminated on behalf of Surge Battery Metals Inc.
Electric vehicles (EVs) are central to the global shift away from fossil fuels. EV sales continue to rise each year. Analysts estimate that global lithium demand may grow to over 2.8 million tonnes of lithium carbonate equivalent (LCE) by 2030 as EVs and grid storage expand.
Battery energy storage systems (BESS) are another major source of demand. Shipments of stationary storage batteries are forecast to grow around 50% in 2025, driven by renewable energy and grid needs.
Growth in both EVs and energy storage is pushing demand for lithium and other battery minerals higher. Many forecasts suggest lithium demand could more than triple by 2030 versus today’s levels.
These trends are visible in price movements. Lithium prices have risen sharply in recent years. They might hit high levels if demand keeps exceeding supply growth.
Despite some volatility in the market, long-term demand remains robust because EVs and BESS use large amounts of lithium per unit. Cell chemistries like lithium-iron-phosphate (LFP) are expanding, further increasing lithium use across applications.
Tight Supply, Rising Risk: The Global Lithium Bottleneck
Global lithium supply is strained by rapid growth in demand. Supply forecasts have shifted from a modest surplus in 2024 to potential deficits as early as the mid-2020s.
BESS is a key factor. It could account for 30–36% of total lithium demand by 2030, according to major banking forecasts.
At the same time, much of the world’s lithium refining and battery production capacity remains concentrated outside the U.S., especially in China. This concentration raises supply chain risks for North American manufacturers and automakers.
Domestic supply development has not kept pace with demand. Historically, the U.S. produced only a small fraction of the total lithium supply, even though it sits on large known lithium resources.
These factors have pushed companies and governments to speed up new projects and improve local production skills.
Federal Strategy: Building a Domestic Supply Chain
The U.S. government has passed several policies to strengthen the EV supply chain and domestic critical minerals base. Key federal actions include incentives, regulations, and strategic planning. These efforts involve several agencies, like the Department of Energy (DOE) and the Department of Defense (DoD).
Programs like the Inflation Reduction Act (IRA) provide tax incentives for EV manufacturing and battery production. These incentives emphasize sourcing from the U.S. and allied countries to reduce reliance on foreign supply chains. The DOE also funds energy storage research, materials processing, and efforts to scale domestic industrial capacity.
The FY26 National Defense Authorization Act (NDAA) includes provisions that support critical materials production and supply chain resilience in the defense sector. It broadens the Defense Industrial Base Fund’s authority. Now, it includes support for domestic production and modernization projects, including batteries and related infrastructure.
The law sets rules on buying certain key minerals and advanced batteries from non-allied foreign sources. Over a phased timeline, DoD must avoid sourcing these materials from “foreign entities of concern,” such as those linked to China and other designated countries. They must expedite the qualification of compliant domestic and allied suppliers.
The NDAA also requires the Department of Defense to assess weaknesses in key material supply chains. It promotes programs for stockpiling, recycling, and reuse to reduce reliance on imports. These federal actions support U.S. projects that provide lithium, nickel, and other battery materials. They boost confidence for investors and the industry in the domestic supply chain.
Inside the Battery Metals Economy
Lithium’s role in the EV supply chain is clear: it is a core input for lithium-ion batteries. Long-term demand forecasts for lithium reflect this central position. Some market forecasts project global lithium demand to rise to 3–4 million tonnes LCE by 2030, depending on EV market growth assumptions.
Price forecasts vary but generally reflect tightening supply. Some analysts estimate lithium prices could continue to rise if supply fails to match demand growth. Lithium carbonate spot prices recently jumped to $24,086, a 191%+ increase from July 2025.
Nickel and cobalt remain important for certain battery chemistries, even as some EV makers move toward low-cobalt or cobalt-free chemistries. All these metals are part of the broader battery metals ecosystem that underpins the EV supply chain.
Beyond EVs, electric grid storage, industrial batteries, and portable electronics all contribute to long-term demand. Even conservative estimates show sustained growth in battery-grade materials over the coming decade.
Nevada’s Lithium Anchor: NILI and Its Role in the U.S. Supply Chain
Surge Battery Metals (TSX-V: NILI; OTCQX: NILIF; FRA: DJ5) stands out as a lithium exploration and development company focused on the Nevada North Lithium Project (NNLP).
NNLP hosts one of the highest-grade lithium clay resources in the United States. Its inferred resource of approximately 11.2 million tonnes of LCE at an average grade above 3,000 ppm positions it well above many domestic peers.
This high quality makes the resource attractive for future development. A Preliminary Economic Assessment (PEA) indicates strong economics. It shows a net present value of about US$9.2 billion and an internal rate of return of over 22%. This reflects the project’s strong potential.
The project’s operating cost metrics are also competitive, with estimated costs significantly lower than those of many North American rivals.
NNLP’s shallow geology and proximity to infrastructure help keep capital and processing costs down. The project sits near power lines, highways, and existing mining hubs in Nevada.
Recent drilling programs continue to show promising results. In 2025, the focus was on infill drilling and core sampling. These efforts aim to upgrade resources and prepare for prefeasibility work. Results show thick lithium clay layers, which boost confidence in the project’s size and consistency.
More recently, Surge reported additional strong drill results from Nevada North. The company announced a 31-meter intercept grading 4,196 ppm lithium from surface in a 640-meter step-out hole to the southeast. This step-out extends mineralization about 640 meters beyond the current resource footprint, confirming the strong continuity of high-grade lithium.
The intercept grade is well above the project’s current average resource grade of about 3,000 ppm lithium. Near-surface mineralization also reduces stripping requirements and supports efficient future development. These results strengthen the project’s scale and reinforce its role as a growing domestic lithium source.
Surge has also secured strategic partnerships. A joint venture with Evolution Mining will speed up exploration and development. This partnership will increase land holdings by over 21,000 acres of promising land.
The company has been recognized for performance in the market, including being named a Top 50 performer on the TSX Venture Exchange in 2024.
Surge Battery Metals plans to improve metallurgical testing for lithium chemicals with over 99% purity. This will help supply battery makers and energy storage companies with high-quality products.
Its management team brings both industry and policy experience, including executives with track records in lithium development and the energy sectors.
Live Nickel Spot Price
The New Energy Reality: Demand, Security, and Strategic Supply
Surge Battery Metals’ project aligns well with broader U.S. efforts to strengthen domestic supply chains for critical battery metals. With rising demand for lithium, NNLP provides a high-quality, near-surface resource. This could greatly benefit the EV and energy storage battery markets.
Domestic projects, such as NNLP, reduce reliance on imports. They can also gain from federal incentives that promote U.S.-based production and processing. This strategic fit makes the project more relevant to policymakers, investors, and supply chain planners.
For policymakers, projects such as NNLP help diversify sources of critical minerals and build resilience against global market disruptions. For investors, strong project economics and top-quality resources offer a way to create value as market demand increases.
The U.S. EV supply chain race centers on securing reliable sources of battery metals. Lithium remains at the heart of this transition, driven by both EV and energy storage demand. Strong long-term demand forecasts and tighter supply show the need for new domestic sources.
The federal strategy backs this shift with policy incentives, funding, and programs. These focus on resilient, locally sourced materials. This environment favors projects that are high quality, well-positioned, and strategically relevant.
Surge Battery Metals and its Nevada North Lithium Project represent one such opportunity within the U.S. critical minerals strategy. NILI has solid resources, low costs, and important partnerships. This enables the company to strengthen the U.S. supply chain for lithium and other battery metals. This alignment shows how market forces and policy priorities shape the future of EVs, energy storage, and clean energy infrastructure.
- READ MORE: Surge Battery Metals Strengthens Nevada North With High-Grade Expansion and Infill Success
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Battery energy storage has entered a new era. Costs have fallen to historic lows, and deployments are accelerating across major markets. According to BloombergNEF’s (BNEF) Levelized Cost of Electricity 2026 report, the economics of grid storage shifted dramatically in 2025 — even as other clean energy technologies became more expensive.
- The global benchmark cost for a four-hour battery storage project dropped 27% year-on-year to $78 per megawatt-hour (MWh) in 2025.
That marks the lowest level since BNEF began tracking the data in 2009. As a result, batteries are now reshaping how power systems balance renewable energy and meet rising electricity demand.
At the same time, solar and wind projects faced cost pressures. Supply chain constraints, weaker resource quality in some regions, and policy reforms in mainland China pushed up benchmark costs. However, despite these short-term headwinds, BNEF expects long-term clean energy costs to continue declining through 2035.
Battery Storage Breaks Records While Solar and Wind Stall
In 2025, battery storage clearly stood out. The $78/MWh benchmark for a four-hour system reflected a steep and rapid decline. Lower battery pack prices, stronger competition among manufacturers, and better system design all helped drive the drop.
By contrast, solar and wind moved in the opposite direction. The global benchmark cost for a fixed-axis solar farm rose 6%, reaching $39/MWh. Onshore wind increased to $40/MWh. Offshore wind climbed sharply to $100/MWh due to tight supply chains and financing challenges.
Thermal power also became more expensive. The levelized cost of electricity (LCOE) for new combined cycle gas turbine (CCGT) plants jumped 16% to $102/MWh — the highest level recorded. Equipment price increases and strong demand for gas turbines, partly fueled by data center expansion, kept costs elevated. Coal plants also faced higher capital expenses.
Yet even with solar and wind costs rising in 2025, BNEF projects that innovation and scale will push prices down again over the next decade. By 2035, the firm expects:
- Solar LCOE to fall 30%
- Battery storage to decline 25%
- Onshore wind to drop 23%
- Offshore wind to decrease 20%
These projections suggest the current cost increases are temporary rather than structural.
China’s Cost Advantage
Wind energy told a more mixed story.
Mainland China retained a cost advantage. However, projects built in lower wind-speed regions pushed up the global benchmark. Onshore wind projects outside mainland China saw a 4% cost decline, but the global average rose 2% due to Chinese market dynamics.
Offshore wind faced deeper challenges. Supply chain bottlenecks increased turbine and installation costs across major markets. In the United Kingdom, recently financed offshore wind projects now cost 69% more than they did five years ago. BNEF expects offshore wind costs to remain elevated until at least 2030.
Still, in the United States, wind power regained its position as the cheapest source of new electricity generation in 2025. Rising gas turbine costs pushed wind ahead of gas for the first time since 2023.
EV Overcapacity Slashes Battery Prices
One major factor behind the storage cost collapse is manufacturing overcapacity in the electric vehicle (EV) sector.
China’s lithium-ion battery production capacity surpassed 2 terawatt-hours in 2024. That was about 60% higher than total battery demand. As a result, manufacturers competed aggressively on price, which benefited grid-scale storage buyers.
Battery pack prices for EVs fell 8% in 2025 to a record low of $108 per kilowatt-hour, according to BNEF’s December survey. Lower pack prices directly reduced the cost of large storage projects. Meanwhile, system-level improvements — including better integration and optimized engineering — improved performance and reduced overall project expenses.
According to Amar Vasdev, senior energy economics associate at BNEF and lead author of the report, manufacturing overcapacity and better system designs are transforming the economics of large energy storage projects. In six markets, the LCOE of a four-hour battery system has already dropped below $100/MWh.
That threshold is critical. At those levels, battery storage becomes highly competitive with fossil fuel peaking plants.
- RELATED: China’s One Month Lithium Battery Energy Storage Installations Beat America’s One Whole Year
Lower Battery Costs Drive Renewables Plus Storage Boom Worldwide
Lower battery costs are accelerating hybrid renewable development. In 2025 alone, developers added 87 gigawatts of co-located solar and storage projects worldwide. These combined systems delivered electricity at an average cost of $57/MWh.
This model solves one of solar’s biggest challenges — intermittency. Batteries allow solar farms to store excess daytime generation and dispatch it later when demand peaks. As storage becomes cheaper, solar-plus-storage projects become more financially attractive and reliable.
BNEF expects annual global energy storage additions to reach 220 GW by 2035, growing at a compound annual rate of nearly 15%. If that projection holds, batteries will become central to grid balancing worldwide.
The U.S. Storage Boom Accelerates
The United States is emerging as a key growth engine for battery deployment.
According to the February 2026 Electric Power Monthly report from the U.S. Energy Information Administration (EIA), 86 GW of new utility-scale capacity is expected to come online in 2026. Of that total, 26.3 GW will come from battery storage.
That represents the largest single-year capacity expansion in more than two decades. Solar and battery storage together account for nearly 79% of planned additions.
Texas has become a hotspot for battery development. As of July 2025, the state had 12.2 GW of storage capacity operating. Developers rushed projects online ahead of summer peak demand, including nearly 1 GWh brought online by esVolta across three projects.
California continues to lead nationally, with more than 12 GW of operational storage capacity. Projects such as the Rexford solar-plus-storage facility in Tulare County strengthened the state’s position as a grid storage pioneer.
Meanwhile, New England expanded its footprint with large-scale additions to the ISO New England grid. These projects demonstrate that battery storage is no longer confined to a few early-adopter markets.
Australia’s Breakout Year
Australia also delivered a major milestone in 2025. The country commissioned 4.9 GWh of utility-scale battery storage during the year — more than the combined total installed between 2017 and 2024.
In the fourth quarter alone, over 1,000 MW of new capacity came online. Large projects, including the 500 MW Liddell battery system in New South Wales, highlighted the rapid pace of expansion.
Australia’s experience shows how quickly storage can scale once policy support, market design, and financing align.
Data Centers Drive the “Race for Electrons”
A powerful new demand driver is reshaping electricity markets: data centers.
The rapid expansion of AI and cloud computing has triggered strong demand for reliable power. Gas turbine orders surged as operators sought firm capacity. This demand doubled U.S. turbine capital costs in just two years.
However, higher gas costs are improving the competitiveness of renewables and storage. In regions like California and parts of Texas, co-located solar and four-hour battery systems can already meet a significant share of data center demand at lower cost than new gas plants.
Grid interconnection queues and gas turbine supply constraints are also slowing fossil fuel projects. In contrast, solar and storage systems can often deploy more quickly.
As Vasdev explained, the world is in a “race for electrons” to meet rising demand from electrification and data centers. In many markets, renewables are not only cheaper for new builds — they are now undercutting the operating costs of existing fossil fuel plants.
Solar beats new coal and gas across most Asia-Pacific markets. Wind is the lowest-cost new generation source in the U.S. and Canada. Solar consistently outcompetes fossil fuels in Southern Europe, while wind dominates in Northern Europe.
From Niche Technology to Grid Backbone
Battery storage has moved beyond its early-stage niche. It is now central to power system planning.
As storage costs fall, batteries strengthen renewable energy revenues, stabilize grids, and reduce reliance on fossil-fuel peaking plants. Instead of building new gas capacity for short-duration peaks, operators can increasingly rely on storage-led balancing.
BNEF’s annual LCOE report analyzed more than 800 recently financed projects across over 50 markets and 28 technologies. Its expanded coverage of the Middle East and Africa highlights how storage economics are improving globally, not just in mature markets.
The broader message is clear. While 2025 delivered mixed signals for clean power costs, battery storage emerged as the clear winner. Manufacturing overcapacity, technological learning, and intense competition have driven prices to record lows.
Looking ahead, continued cost declines could accelerate the global shift toward renewable-dominated grids supported by flexible storage. In that transition, batteries are no longer optional. They are becoming the backbone of a reliable, low-carbon electricity system.
The post Renewables Plus Storage Surge as Battery Costs Drop Record Low, BNEF Reports appeared first on Carbon Credits.
The Mercedes-AMG PETRONAS F1 Team has stepped up its climate action strategy with a major expansion of its global carbon dioxide removal (CDR) portfolio. The team has added seven new projects across multiple carbon removal pathways, making it one of the most diverse portfolios in global sport.
This move is a long-term, multi-year investment designed to support high-integrity, science-backed climate solutions. While emissions reduction remains the top priority, the team recognizes that some emissions cannot be eliminated. That is where durable carbon removals come in.
The expansion marks another milestone in Mercedes’ broader Net Zero journey — one built on practical solutions, data transparency, and industry collaboration.
A Clear Net Zero Roadmap
Mercedes tracks its carbon footprint in two ways. First, it measures Race Team Control emissions (RTCe). These include Scope 1, Scope 2, and selected Scope 3 emissions that the team can influence directly. Second, it reports its total emissions across Scopes 1, 2, and 3.
Unlike many companies that only focus on direct emissions, Mercedes extends its control boundary to include upstream transport, waste, fuel-related activities, business travel, employee commuting, and energy use. This broader approach aligns with Formula 1’s 2030 Net Zero commitment.
The team has set two major targets:
- Achieve Race Team Control Net Zero by 2030
- Reach Full Net Zero across all scopes by 2040
For its 2030 goal, Mercedes plans to cut 75% of RTC emissions compared to its 2022 baseline. The remaining 25% will be addressed through high-quality carbon removals, following the Oxford Offsetting Principles.
Progress so far is significant. By 2024, the team had already reduced its Race Team Control emissions by 35% compared to 2022.
Where the Emissions Cuts Came From
The 35% reduction came from targeted operational changes. During the European race season, 98% of logistics used HVO100 biofuel. This low-carbon fuel helped slash transport emissions. Meanwhile, 68% of aviation emissions were addressed through Sustainable Aviation Fuel certificates (SAFc).
At its Brackley factory in the UK, Mercedes reduced gas consumption and improved energy efficiency. The team also continued electrifying its company vehicle fleet.
However, not everything went smoothly. In 2024, an F-gas leak at the factory temporarily increased Scope 1 emissions. F-gases have high global warming potential, so even small leaks can have an outsized impact. While the team has already transitioned to lower-impact refrigerants where possible, some cooling systems still rely on high-impact gases. Mercedes has tightened monitoring systems and plans to shift to better alternatives as soon as viable options become available.
Despite this setback, the overall emissions trend remains downward. The team now aims to fully eliminate Scope 1 and 2 emissions by 2026, with any small residual amounts neutralized through removals.
Building a Long-Term Carbon Removal Strategy
Even with aggressive cuts, some emissions remain hard to eliminate — especially across global supply chains. Purchased goods and services represent a large share of Scope 3 emissions. These are complex and often outside direct control.
That is why Mercedes is investing in durable, verifiable, and scalable carbon removals.
In total, the team is investing in roughly 18,900 tonnes of CO2 equivalent across nature-based, hybrid, and engineered removal projects. These investments support the 2030 Race Team Control Net Zero goal.
Importantly, the strategy follows the Oxford Offsetting Principles. This means prioritizing permanent removals and gradually shifting from short-term nature-based offsets toward long-term engineered solutions.
A Diverse Portfolio Across Technologies
To reduce risk and build resilience, Mercedes has spread its investments across several technologies and geographies. The portfolio now spans:
- Direct Air Capture
- Biochar, Biomass Storage
- Bioenergy with Carbon Capture and Storage (BECCS)
- Ocean Alkalinity Enhancement
- Enhanced Rock Weathering
Frontier: One key partner is Frontier, supporting durable removal technologies. Through this agreement, Mercedes backs solutions such as direct air capture and enhanced weathering. These technologies aim to store carbon for more than 1,000 years and eventually reduce costs below $100 per tonne. The team expects to begin receiving credits from Frontier-backed projects as early as 2027.
Blaston Farm: In the UK, Mercedes works with Blaston Farm near Silverstone to support regenerative agriculture. This project removes carbon while restoring soil health and boosting biodiversity. The team signed a three-year agreement and used 2,000 tonnes of removals from the project against its 2024 footprint. Advanced soil monitoring combines direct sampling with AI-driven image analysis, improving both accuracy and scalability.
Chestnut Carbon: In the US, Mercedes partnered with Chestnut Carbon to restore degraded agricultural land in the southeastern region. The first project will convert 200 hectares into biodiverse forests by planting more than 260,000 native trees. Since 2022, Chestnut Carbon has planted over 17 million trees across 30,000 acres. The collaboration is expected to deliver 1,000 to 1,500 tonnes of carbon removals annually starting in 2027.
The broader portfolio also includes projects in Brazil, Canada, Denmark, and India. This geographic spread reflects the team’s goal to create impact in regions connected to the Formula One race calendar.
All projects are curated and verified by CUR8, a carbon removal marketplace that assesses durability, transparency, and methodology. This adds an extra layer of credibility to the portfolio.
- FURTHER READING: Frontier’s $31.3M Offtake with Planetary Signals a New Era for Ocean Carbon Removal
Collaboration Beyond the Track
Mercedes understands it cannot solve climate challenges alone. The team actively collaborates within and beyond motorsport.
It participates in the F1 ESG Working Group, sharing best practices across the grid. Internally, its Sustainability Working Group connects team partners to exchange ideas and tackle shared challenges.
Notably, Mercedes was the first motorsport team to sign The Climate Pledge, committing to Net Zero across total emissions by 2040.
Team partners such as Signify, UBS, and Nasdaq support high-integrity climate solutions as well. Meanwhile, companies like Meta and Microsoft have played a major role in scaling the carbon removals industry, helping create demand for early-stage technologies.
Speaking at Economist Impact’s Sustainability Week, Head of Sustainability Alice Ashpitel emphasized that emissions reduction remains the priority. However, she stressed that high-quality removals are essential for dealing with residual emissions. By investing early across different technologies and regions, the team aims to help scale durable climate solutions while delivering benefits to communities and ecosystems.
Engineering Change On and Off the Track
Formula One has committed to Net Zero by 2030. As one of the sport’s most prominent teams, Mercedes is positioning itself at the forefront of that transition.
The team’s approach combines aggressive emission reductions, early investment in permanent carbon removal technologies, and strong governance. Instead of relying on short-term offsets, it is helping build a long-term carbon removal market capable of delivering climate impact at scale.
This strategy reflects the same engineering mindset that drives success on the track: test, refine, optimize, and scale.
By cutting emissions where it has control and investing in durable removals where it does not, Mercedes is shaping a credible path toward Net Zero. The goal is not just to meet targets but to help raise standards across motorsport and beyond.
In a sport defined by speed and precision, Mercedes is proving that climate leadership also requires bold action and long-term thinking.
The post Mercedes-AMG PETRONAS Expands Carbon Removal Portfolio to Accelerate Net Zero Push appeared first on Carbon Credits.
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