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One of the most discussed and carefully crafted bills of the Joe
Biden presidency is on life support, as Senator Joe Manchin,
Democrat-West Virginia, announced on 19 December that he will not
support the Build Back Better Act as
currently proposed.
With a 50-50 split in the US Senate and every Republican
seemingly opposed to a signature accomplishment for Biden, the
10-year, $1.75-trillion bill lacks a path to passage without a
reduction in scope or unexpected change in one or more senator's
vote. It could pass a split Senate because it's considered a budget
resolution measure that needs only a majority vote, and Vice
President Kamala Harris could break a tie.
How the legislation can be passed without Manchin's backing is
murky, but reports indicate that parts of it could be passed
individually, such as the spending to support renewable energy
investments.
"We understand that Democrats are working to put together
smaller pieces of legislation that might be able to pass by the end
of the year, including certain green energy proposals that have
wide support," wrote the Vinson & Elkins law firm in a
statement on 20 December. "We remain optimistic that some version
of green energy tax credit extension and/or expansion will be
enacted either this year or on a retroactive basis early next
year."
Another tactic that appears likely to be used is to pressure
Manchin and perhaps a few Republicans by emphasizing the benefits
that the bill would present to various constituencies. Senate
Majority Leader Chuck Schumer, Democrat-New York, said he will
"hold multiple floor votes" in January on the bill. "We are going
to vote on a revised version of the House-passed Build Back Better
Act—and we will keep voting on it until we get something done,"
he said on 20 December.
Renewable power to get hundreds of
billions
The bill that passed the US House of Representatives on
18 November would be a boon for companies engaged in manufacturing
and installing renewable power and battery storage, expanding the
electric vehicle (EV) manufacturing base and charging network, and
providing energy-efficiency services. It would contribute to
Biden's numerous climate priorities, such as a
50-52% GHG emissions reduction
from 2005 levels by 2030; 500,000 EV chargers nationwide
by 2030; and a net-zero emissions power sector by 2035.
Of the $1.75 trillion-plus in the spending plan, $555 billion
would be allocated for investments in clean energy and tackling
climate change. According to a breakdown of the general categories
provided by the White House, $320 billion would support clean
energy tax credits, such as the 45Q credit to sequester CO2 and to
install wind and solar power, or create new ones for generating
nuclear power, producing hydrogen (particularly from renewable
sources), installing stand-alone energy storage systems, and new
transmission lines.
Another $110 billion would be invested in clean energy
manufacturing and supply chains; $105 billion will be for
"resilience" investments, including energy efficiency; and $20
billion will go to federal government procurement of clean
energy.
The bill also includes for the first time a fee on methane,
starting at $60/metric ton of CO2-equivalent above permitted
thresholds, beginning in 2023. This would add another method to
methane emissions reduction beyond the draft regulations from the
US Environmental Protection Agency on methane from oil and natural
gas production that are expected to be finalized in 2022. The US
signed a pledge at the COP26 meeting in Scotland to cut methane emissions globally by
30% from 2020 levels by 2030.
Potentially, Build Back Better would move the US away from its
current levels of oil and gas production by canceling leases in the
Arctic National Wildlife Refuge, which was opened for limited
leasing in the 2017 Tax Cuts and Jobs Act, passed by all-Republican
votes. It would raise the minimum royalty rate for oil and gas
production on federal lands to 18.75% from 12.5%.
Manchin
Manchin, it should be noted, voted against the 2017 tax cut bill
for a similar reason that he cited for blocking Build Back Better:
the US debt level.
As he has done for the last month, Manchin blamed his own party
for not disclosing the true cost of the legislation. He said the
Congressional Budget Office determined the cost to be upwards of
$4.5 trillion, compared with the official $1.75-trillion price tag
that is based on the first 10 years of its enactment. "They
continue to camouflage the real cost of the intent behind this
bill," he said in a statement posted on his website
on 19 December.
Manchin also tied his opposition to the rise in inflation over
the last year, which has exceeded 6%, saying: "I cannot take that
risk with a staggering debt of more than $29 trillion and inflation
taxes that are real and harmful to every hard-working American at
the gasoline pumps, grocery stores, and utility bills with no end
in sight."
As a representative from one of the nation's leading coal mining
states and one that's clinging to coal-fired power generation,
Manchin also was critical of the emphasis placed in the bill on
renewable energy. "If enacted, the bill will also risk the
reliability of our electric grid and increase our dependence on
foreign supply chains," he said, the latter a reference to China's
leadership in many renewable energy technologies and its access to
critical minerals for batteries.
While stating that he as chairman of the Senate Energy and
Natural Resources Committee has supported billions of dollars of
investments in renewables, Manchin said the energy transition has
exposed flaws in the US power network. "But to [shift to
renewables] at a rate that is faster than technology or the markets
allow will have catastrophic consequences for the American people
like we have seen in both Texas and California in the last two
years," he said, repeating the disproven claim that renewable power
was the source of the Texas outages in February 2021 that killed
more than 100 people.
But renewables have a strong constituency that could help them
survive under salvaged legislation, observers said. Not only has
Manchin backed renewables in the past, but "the US does have an
embedded and bipartisan coalition for solar and wind tax credits,"
Peter Gardett, IHS Markit research and analysis executive director,
pointed out in a client memo on 21 December.
"The new year could bring a revised package that includes the
tax credits, but the anticipated scale and speed of federal
government support for both traditional renewables and advanced
cleantech like storage must be dialed back," Gardett wrote. "The
best bet is that the future shape and scale of renewable supporting
tax credits looks more like the program's past, in which roughly
$4-5 billion was available to wind and solar each tax year, rather
than the $40-50 billion that would conceivably have been available
to the entire cleantech sector under the Build Back Better
program."
Reaction
Reaction to Manchin's statements from the White House,
Democrats, and progressives in general was swift and angry. Manchin
committed "a breach of his commitments" to the president, said White House spokesperson Jen
Psaki on 19 December. "We will continue to press him to see if
he will reverse his position yet again, to honor his prior
commitments, and be true to his word," she said.
The White House statement pointed to independent analysis
released in December that found that the bill, contrary to
Manchin's concerns, "will have virtually no impact on inflation in
the short term, and, in the long run, the policies it includes will
ease inflationary pressures."
For environmental groups, the bill is critical to the future of
the US fight against climate change. "It's an unprecedented level
of investment. It's historic. And it will absolutely make a
difference," said Melinda Pierce, Sierra Club legislative
director.
The bill has interlocking positions that bring other benefits,
she said, citing as an example $15 billion in tax incentives for
EVs that includes a $4,500 bonus credit for cars made with union
labor. Manchin has stated that he opposes the union bonus.
For the solar industry, the bill would provide an immense shot
in the arm, said the Solar Energy Industries Association (SEIA),
which vowed to pursue its passage.
"Passing the Build Back Better Act will spark an avalanche of
solar development and economic activity in every state across the
country," SEIA said a few days prior to Manchin's announcement.
"The amount of solar deployed in the US will triple to 300 gigawatts in just the next five years if the
bill becomes law. This would drive $234 billion into the economy
and require at least 450,000 American workers."
Posted 21 December 2021 by Kevin Adler, Chief Editor
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