US Build Back Better spending plan scuttled by Manchin, but push to pass continues

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