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Congressional action on moving the US towards a net-zero energy
future is gaining momentum, as House of Representatives and Senate
committees each held hearings this month on the Climate Leadership and
Environmental Action for our Nation's (CLEAN) Future Act, while
Republicans have offered their own energy plan that relies more
heavily on producing fossil fuels but with minimized emissions.
These energy-related bills are moving forward even as President
Joe Biden readies his announcement, expected on 31 March during a
speech scheduled in Pittsburgh, on an infrastructure bill that
could invest as much as $3 trillion in a range of measures that
could include support for electric vehicle (EV) charging
infrastructure, power system upgrades, mass transit, and other
means to reduce GHG emissions. In previewing his upcoming speech,
Biden said during a press conference on 25 March, "… there's so
much we can do that … makes people healthier and creates good
jobs."
Policy insiders are confident that funding will emerge this year
with a strong orientation towards moving the US towards net-zero
emissions. Taking a look at legislation in Congress right now,
policy insiders say that views seem to be coalescing around a few
core issues that could achieve bipartisan support: extension of tax
credits for clean energy technologies; EV infrastructure; and
technology to reduce methane and GHG emissions from oil and natural
gas operations and manufacturing. (See related IHS Markit coverage
here.)
Whether a more comprehensive slate of action could pass remains
highly uncertain, given the slim majority that Democrats hold in
the Senate, and Republicans' opposition to many elements of the
Democrats' preferred plans.
The CLEAN Future Act (HR 1512), sponsored by House Democrats
Frank Pallone, Paul Tonko, and Bobby Rush, would mandate
economy-wide national GHG emissions reductions of 50% from 2005
levels by 2030 and net-zero emissions by 2050. The bill would
create a Clean Electricity Standard that would require all retail
electricity suppliers obtain 100% of their electricity from
non-polluting sources by 2035, which matches a Biden campaign
pledge. Also, the bill would authorize the Securities and Exchange
Commission to require public companies to disclose information
about climate-related risks, a requirement the SEC already has started to explore
through rulemaking.
"The bill will set sweeping regulatory standards in the power,
transportation, and industrial sectors in addition to over $500
billion in federal spending aimed at decarbonization of the power
sector by 2035," said Cornerstone, a government affairs analysis
group.
The CLEAN Future Act ties emissions reductions to creating jobs
and generating economic growth — themes that Biden and
Democrats stressed on the campaign trail and since gaining control
of both chambers of Congress.
"Today's introduction of the CLEAN Future Act
promises that we will not stand idly by as the rest of the world
transitions to clean economies and our workers get left behind, and
that we will not watch from the sidelines as the climate crisis
wreaks havoc on Americans' health and homes. This legislation will
create millions of homegrown jobs in a climate-resilient economy,
ensuring our workers and businesses can compete in the 21st century
transition to clean technology that's already happening," Pallone
said when the legislation was introduced.
Republicans, however, say that a bill with such sweeping impact
is a jobs killer. They countered on 14 March with a package of
bills aimed at expanding US production and exports of oil and gas,
as well as investments in carbon capture and storage (CCS) and
hydrogen, in order to reduce or offset GHG emissions. Leading
Republicans on the House Energy and Commerce Committee -- Cathy
McMorris Rodgers, Fred Upton, and David McKinley -- called their "Securing Cleaner American
Energy" package a solution for staying competitive with
high-emissions countries such as China, while providing a path to
reducing emissions.
"Rather than Green New Deal-style regulations and job-crushing
actions like canceling the Keystone XL pipeline, we urge Democrats
to join us in a bipartisan way to advance these real, workable
solutions," they said in a joint statement. "Our plan is a much
better agenda to protect the environment, jobs, and our national
security than their unworkable pie-in-the-sky mandates that will
halt economic opportunities for millions of Americans."
The 18 bills grouped in the Republicans' package include
measures to reduce or eliminate gas flaring and venting; provide
federal loans for CCS; accelerate reviews of nuclear and hydropower
projects; streamline permitting for gas and LNG pipelines; and
secure critical materials for energy production and storage
technologies.
"Legislation being developed in the House sets a tone for what
the Democrats and the Biden administration are seeking in terms of
net-zero/climate policy. The real question is what will emerge in
the Senate and given the thin majority, what legislation can bring
over moderate Democrats, including those that represent fossil
energy producing states," said Jack Belcher, principal,
Cornerstone.
Tax credits
Provisions of the CLEAN Future Act make it clear that Democrats
are reaching out to Republicans, not just seeking to win points
from their supporters, said one lobbyist who asked not to be
identified. The lobbyist contrasted the bill with the Green New
Deal, which has attracted attention for its ambitious goals, but is
not considered politically feasible. "The CLEAN Future Act is a
serious bill. This is coming from the Democratic leadership, not
from people outside that framework," said the lobbyist.
From the lobbyist's perspective, having broad goals -- rather
than the specific strategy to reach them -- is the key to getting
legislation passed. "I think it's important that the mechanism of
choice to get in the game is 'a clean energy standard.' The details
still may not be workable [legislatively], but at least it gets all
the stakeholders in the game," he said.
Tax credits seem to be one area where there appears to be
bipartisan agreement. The CLEAN Future Act covers the same turf on
tax credits as bipartisan legislation introduced in December 2020,
the Clean Energy Future through
Innovation Act of 2020 (HR 9054), co-sponsored by McKinley and
Representative Kurt Schrader, Democrat-Oregon. That bill would
provide federal funding to accelerate development and
commercialization of CCS, hydrogen, advanced nuclear, and
renewables, with a goal of reducing power sector CO2 emissions by
80% by 2050. This bill has not yet been reintroduced in the current
congressional session, though McKinley has offered elements of it
through separate bills either with other Republicans or
Democrats.
Although HR 9054 expired at end of the last Congress, the broad
range of stakeholders who supported it -- including the US Chamber
of Commerce, United Mine Workers, Duke Energy, Southern Co.,
American Council for an Energy Efficient Economy, the National
Wildlife Federation, and the Bipartisan Policy Center -- indicates
that it could be revived.
New bills introduced this year push for some of the same
measures. For example, McKinley and Democrat Terri Sewell, Alabama,
introduced in March the "Storing CO2 and Lowering Emissions
Act," which would fund infrastructure to transport CO2 from
where it is captured to where it can be sequestered underground.
They also introduced the "Carbon Capture Modernization
Act," which they said "would make it easier for businesses to
retrofit coal facilities around the world with carbon capture
technologies." That bill has a companion measure in the Senate.
The American Petroleum Institute (API) also mentioned funding
for advanced technologies as one of five priorities in its Climate Action Framework, which it announced on
25 March. "We know you can't get [to net zero]
without new innovation and technology solutions," said Mike
Sommers, API's president and CEO, in a session with reporters about
the framework. "API and its member companies will continue to make
significant investments to make our future cleaner … and we know
that government is going to have to play a major role."
In his remarks, Sommers said Congress should extend tax credits
to support CCS projects, and he noted that it needs to appropriate
funds for CCS and hydrogen power that were authorized under the
Energy Act of 2020.
Another tax credit bill emerged on 25 March, as Democrats in the
Senate, Delaware's Tom Carper, Rhode Island's Sheldon Whitehouse,
and New Mexico's Martin Heinrich, introduced the Save America's Clean Energy Jobs
Act. The act would allow for temporary refundability of
Internal Revenue Service Section 45, 45Q, and 48 investment and
production tax credits, which are available for solar, wind, fuel
cells, and CCS. "This will enable clean energy companies to bypass
frozen tax equity markets and access these tax credits directly,
which in turn will help get stalled projects off the ground and
people back to work," the senators said in announcing the
proposal.
The American Clean Power Association (ACP) called the bill "an
essential down payment to fix the constrained tax equity markets
and ensure companies both large and small can continue to embrace
clean energy solutions and create jobs."
Added CEO Heather Zichal: "The availability of a 100% direct pay
option is crucial for clean energy deployment. Tax equity scarcity
is a long-term challenge."
On the EV infrastructure front, tax credits also are the name of
the game right now. The "Securing America's Clean Fuels
Infrastructure Act," introduced on 25 March in the Senate,
would extend the federal tax credit for installation of EV chargers
to 31 December 2029 and raise the cap for businesses to $200,000
from the current $30,000; the credit is due to expire at the end of
2021.
No carbon tax
While tax credits seem very much on the table, a carbon tax is a
glaring omission from the CLEAN Future Act.
"We know there's always a political price to be paid when taxes
are involved," the lobbyist said. "So, it's important that this
bill takes the most politically challenging piece off the
table."
Indicative of the lukewarm interest in a carbon tax, Senator
John Barrasso, Republican-Wyoming, ranking member of the Senate
Committee on Energy and Natural Resources, pronounced himself
squarely against it last week. "Proposals that impose a cost on
carbon will hurt American families. This will lead to higher
electricity bills and gas prices for American consumers," he said
in a press statement on 25 March.
API supports a price on carbon or an emissions cap-and-trade
program as the types of market-based mechanisms that would allow
industry to decide how to reduce emissions most efficiently, a
point Sommers reiterated in discussing the group's new climate
framework. API also provided a comment from the Laborers'
International Union of North America that it supports a federal
price on carbon "that reinvests revenue into
needed infrastructure projects that will reduce future emissions,
bolster resilience in the face of extreme weather events, and
improve the economic well-being of communities."
But Barrasso was having no part of that argument. "Spiking
Americans' energy costs while our economy recovers from a global
pandemic is a disastrous idea. That might be good for international
energy companies, but it's a cost the American people can't
afford," he said.
Congressional action must be both ambitious but also
bipartisanship, added Rich Powell, executive director of ClearPath
Action. "Clean energy policy must be rooted in political and
technical realism, like the Energy Act of 2020, which authorized
moonshot technology breakthroughs for the clean energy transition,"
he said. "Instead of partisan bills, we should focus on
implementing and funding that bipartisan success story along with
creating market incentives for more clean energy deployment."
Texas power outages
With grid reliability problems exposed in Texas in February when
record cold led to widespread power outages for at least five days
and more than 110 deaths, Democrats are saying that the CLEAN
Future Act can solve that problem as well.
Opening a hearing on 24 March about the
Texas power grid, Pallone blamed the outages on fossil fuel
generation. "First is a failure to properly winterize power
generation facilities, natural gas production facilities, and other
related energy infrastructure," Pallone said. "It's also clear that
natural gas facilities failed to perform as expected during extreme
cold conditions. During the 2014 polar vortex, natural gas
represented over 55% of the total outages, and in a similar cold
snap in 2018, natural gas generation represented at least 70% of
the unplanned outages. In this recent storm, natural gas outages
represented more than half the total generation forced offline in
ERCOT's territory."
During the hearing, Pallone referenced a bill to spend $7
billion over 10 years, the 21st Century Power Grid Program,
sponsored by Representative John Sarbanes, Democrat-Maryland. But
Karen Wayland, GridWise Alliance CEO, who was one of the witnesses
at the hearing, said that funding should be more than tripled from
the proposed $700 million/year to $2.6 billion/year.
Fellow witness Yvonne McIntyre, director of federal electricity
and utility policy for the Natural Resources Defense Council, said:
"Expanding our nation's transmission system may be the single-most
important action we can take to improve resiliency and affordably
decarbonize the nation's electric supply. Long-distance
transmission moves clean energy from where it is available to where
it is needed and enables balancing of the variability of wind and
solar power on a national scale. The National Academies recently
recommended an increase of 60% in the high voltage transmission
system by 2030 as part of the least-cost path to reduce
emissions."
Republicans appear to be onboard for some level of spending on
grid reliability and security, too. Representative Randy Weber, a
Republican from Texas, said he will reintroduce a bill he sponsored
in 2020 with Democrat Ami Bera of California to spend $829 million
on research on grid vulnerability, both from physical and cyber
risks.
CLEAN Future Act
It's not clear that a bill as broad as the CLEAN Future Act, and
with its ambitious targets for zero-carbon energy production, can
gather sufficient support, especially in the Senate. But if the
bill is viewed as the biggest feasible framework, its main
components show where Democrats intend to lead the discussion this
year:
Power: In addition to the clean electricity standard for 2035,
the bill would direct funds to distributed energy resources, grid
infrastructure, and microgrids.
Buildings: The bill would establish national energy savings
targets for buildings and direct billions of dollars to improve the
energy efficiency of new and existing buildings. By 2030, new
buildings would have to be "zero-emissions-ready," able to operate
on electricity only.
Transportation: Funding for EV purchases and infrastructure
expansion. Also, goals to decarbonize and electrify ports around
the country, seen as an environmental justice as well as climate
issue.
Government purchasing: Creation of a "Buy Clean Program" that
sets performance targets to steadily reduce emissions from
construction materials and products used in projects that receive
federal funding.
State programs: States would have to propose plans to reach net
zero by 2050 for federal approval.
Creation of a Clean Economy Federal Advisory Committee to
review how each federal agency is setting policies to implement
national climate goals.
Creation of an Office of Energy and Economic Transition in the
Executive Office of the President, responsible for managing
stakeholder input on the local level about how workers and
communities are affected.
Environmental justice: Throughout the act, environmental
justice investments are proposed, such as site cleanups and
strengthening oil, gas, and coal regulations in historically
affected communities.
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Jun 01
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