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The US House of Representatives Energy and Commerce Committee
pushed through a proposal on 14 September requiring utilities and
other retail power suppliers to make 4% annual increases over a
10-year period in their clean energy portfolios to receive federal
payments or face penalties.
Over the opposition of Republicans, the Democrat-controlled
committee voted 30-27 to recommend that a Clean Electricity
Performance Program (CEPP) be created under the Build Back Better
Act legislation that the committee released 9 September to
implement President Joe Biden's climate goals. The recommended
provisions from this legislation will be folded into the $3.5
trillion budget reconciliation measure that the full House plans to
take up by 27 September.
The recommendations now head to the House Budget Committee
enroute to a full vote before the full House.
"The Build Back Better Act will create a clean energy future
that produces millions of good paying jobs right here at home,"
Committee Chairman Frank Pallone, Democrat-New Jersey, said at the
start of the committee's debate and vote on the bill.
In contrast, the committee's top Republican, Representative
Cathy McMorris Rodgers of Washington, slammed the legislation,
calling it a "Build Back More Inflation Act," and stopped short of
acknowledging the climate change-related causes of hurricanes that
Pallone said one-in-three Americans are experiencing already.
Instead, Rodgers focused her remarks on the recovery from
Hurricane Ida, which slammed Louisiana and Mississippi in late
August, warning the American public to expect more "blackouts,
unaffordable electricity bills, tax hikes, entire American
industries and jobs destroyed" as a result of the legislative
guidelines.
The Democrats' legislation also includes billions of dollars for
expanding the transmission grid, boosting adoption of electric
vehicles (EVs), improving the energy efficiency of buildings, and
reducing GHGs through pollution reduction programs backed by state
and local financing institutions.
In addition, the bill includes a methane emission fee, which the
committee recommended 13 September, again along party lines, as
part of the Build Back Better Act. Biden sought this methane
emission fee and it is similar to legislation approved 9 September
by the House Natural Resources Committee, again over the opposition
of committee Republicans.
The fee, if adopted, would be imposed on drillers, pipelines,
and other oil and natural gas facilities that fail to plug leaks of
methane, a GHG that is at least 80 times more potent than CO2 over
a 20-year period. That bill also would increase fossil fuel royalty
rates and repeal the Arctic oil and gas leasing program the Trump
administration pushed through.
Carrot and stick
However, it is the centerpiece of the energy provisions—the
$150 billion CEPP—that attracted the fiercest ire of Republican
lawmakers. The CEPP is designed to reduce carbon emissions from the
power sector between 2023 and 2030 and is part of efforts to meet
Biden's goal of an 80% emissions-free generation sector by 2030 and
a zero-carbon one by 2035.
Utilities and other retail power suppliers would receive federal
payments of $150 for each megawatt-hour (MWh) of "certified" clean
electricity produced—or pay a penalty of $40/MWh—starting
in 2023, based on how much qualified clean electricity each
supplier provides to customers.
Overall, the bill directs electricity suppliers to increase the
amount of clean electricity they supply by at least 4% from the
previous year, with each supplier's baseline set at the average
percentage of clean energy in its portfolio in 2019 and 2020.
"The grant amount will be $150 for each MWh of qualified clean
electricity between 2.5% above the baseline and its 2023 certified
clean energy percentage," according to a memorandum and fact sheet
provided by House Energy and Commerce Committee Democrats.
Exclusive use of CEPP grants for
ratepayers
The grants are to be used exclusively for the benefit of utility
ratepayers, such as direct bill assistance, investments in
qualified clean electricity, energy efficiency, and worker
retention. For those that do not meet the 4% annual progress
threshold, a penalty would be paid to the US Department of Energy
(DOE), calculated at $40/MWh of qualified clean electricity below
the 4% year-on-year increase.
The CEPP provisions define certified clean electricity as power
plants that produce no more than 0.10 metric tons (mt) of
CO2-equivalent per MWh. Notably, that would exclude natural
gas-fired power plants, unless they have carbon capture equipment
installed, which currently is very costly.
During the committee debate on the bill, Representative David
McKinley, Republican-West Virginia, pointed out that not one
utility has said it can meet the 80% GHG reduction goal by 2030,
and 100% reduction goal by 2035. He said no utility can build
enough wind and solar capacity to meet that goal, let alone have a
grid that can support this capacity.
"Is anyone listening?"
"The electrical grid will collapse! Is anyone listening?"
McKinley said, adding that Congress should instead be investing
more in carbon capture and advanced nuclear technologies, as well
as streamlining permitting.
Agreeing with McKinley was Representative Michael Burgess,
Republican-Texas, who criticized the methane fee, which he said is
"a tax" that will hurt an oil and gas industry that directly
supports 2.5 million jobs in the state he represents.
Countering the Republican critique, Representative Anna Eshoo,
Democrat-California, said "any society that doesn't move away from
fossil fuels will have a heavy price to pay."
Gas groups were critical of the bill's treatment of gas-fired
power, which is strongly opposed by environmentalists and
green-leaning congressional Democrats.
Also, the National Rural Electric Cooperative Association, which
sold 466 billion kWh, or 12% of the US electricity delivered in
2019, said the clean energy targets in the bill were "too
aggressive."
In a 13 September statement, NRECA President Jim Matheson said
"a year-over-year 4% increase in clean electricity deployment is
not attainable for many of our members."
The exclusion of gas-fired generation also may draw opposition
from moderate Democrats, most notably Senate Energy and Natural
Resources Committee Chairman Joe Manchin (Democrat-West Virginia),
who has touted carbon reductions from gas-fired plants replacing
carbon-heavy coal plants.
'Makes no sense'
In a 12 September Meet the Press interview on NBC, Manchin made his opposition to the CEPP
clear, as well as his refusal to support the $3.5 trillion
reconciliation measure.
"It makes no sense to me to pay utilities to do what they are
going to do anyway," he said.
Noting that coal's share of the US power generation mix is down
from 52% in 2000 to 19% in 2021, while that of gas is up from 16%
to 40%, and renewables' slice of the pie has more than doubled 9.5%
to 20%, Manchin said "the transition is happening."
However, Senator Tina Smith (Democrat-Minnesota), a leading CEPP
advocate in that chamber, said the House Democrats' language is
similar to what she and other Democratic senators have been
crafting for a clean electricity program that would be included in
the Senate's budget package, according to news reports. Smith has
vowed to work with Manchin, a key swing Democratic vote on the
budget bill, to craft a workable CEPP.
If the clean electricity standard provisions are passed through
budget reconciliation, many of the costs of the clean energy
transition would shift to the federal government and utility bill
impacts for customers would be cushioned, according to think tank
Resources for the Future that co-authored a study with Syracuse
University.
The CEPP as planned by the House Democrats would provide more
time for utilities with heavier carbon emission profiles to move to
cleaner electricity resources, while those with clean profiles
already can continue to make progress and improve the emissions
profile for the US as a whole, environmental groups and others
said.
Methane fee
The legislation would have the US Environmental Protection
Agency establish a methane emission fee that would be applied to
producers of offshore and onshore oil and gas, including LNG, and
other sectors of the industry involved in storing and transporting
the fossil fuels at different emission intensity levels.
For instance, the producing sector would have the fee applied to
CO2-equivalent mt of methane emissions that exceed an intensity
threshold of 0.2% of gas sent to sales, while non-producing
industry segments—such as pipelines—would have the fee
applied for methane emissions above an intensity threshold of 0.5%
of gas sent to sales.
EPA is to establish methane fee regulations within two years
under the plan.
"After that period, [the bill] imposes a fee of $60/mt CO2
[equivalent] on applicable facilities' reported emissions above the
intensity thresholds in 2022," according to the memo.
During the debate, Representative Kathy Castor,
Democrat-Florida, said the methane fee would "incentivize companies
to find and fix methane leaks," which saw a huge increase in
2020.
In contrast, McKinley called the fee "an unadulterated assault
on the oil and gas industry." He said this "tax" would negatively
affect West Virginia, which holds the fourth largest gas reserves
of any state and is the sixth largest producer in the country.
Gas groups disappointed
The Natural Gas Supply Association (NGSA), American Gas
Association (AGA), and other industry groups once again objected to
the Energy and Commerce Committee measure. A week earlier they
opposed the methane fee language when House Natural Resources
Committee Democrats released their draft language for the budget
reconciliation package,
NGSA spokesperson Hinson Peters said the producer group supports
an economywide price on carbon as the most efficient approach to
meeting clean energy targets. "Although we are disappointed that
the conversation on the Hill right now does not include carbon
pricing, we nonetheless hope that any legislation appropriately
recognizes the contributions of natural gas to a cleaner energy
future," Peters said.
AGA spokesperson Jake Rubin said the group examined the
legislative text from the Energy and Commerce Committee and
calculated that the methane fee "could result in the average
customer seeing an approximate increase of 18-34% in their natural
gas bill, or $128 to $242 per year for the average American
family."
Other elements of the committee legislation provide $27.5
billion for EPA to administer a GHG reduction fund to rapidly
deploy low- and zero-emission technologies by leveraging investment
from the private sector, with at least 40% of the investments
earmarked for low-income and disadvantaged communities.
Funding for grid upgrades, EV
infrastructure
The bill also would give DOE $13.5 billion for various EV
provisions and charging infrastructure investments; $9 billion for
grants to expand long-distance transmission lines; and $100 million
to perform transmission planning and modeling analyses for
interregional and offshore wind transmission projects.
In addition, it calls for $100 million to go to DOE "for the
purpose of providing states with technical assistance and grants to
evaluate forming, expanding, or improving organized wholesale
electricity markets, and aligning the policies of organized
wholesale electricity markets with relevant state policies."
DOE and the US Federal Energy Regulatory Commission would be
given $200 million and $100 million, respectively, to provide for
more efficient and effective reviews under the National
Environmental Policy Act, which Democrats want to tighten for
fossil fuel infrastructure.
--Contributions from Tom Tiernan, of the Energy
Daily.
Posted 15 September 2021 by Amena Saiyid, Senior Climate and Energy Research Analyst