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CLIMATE DOWNPAYMENT: The Senate voted yesterday to advance a $1.2 trillion infrastructure package ($550 billion in new spending) after weeks of stalled efforts to reach a bipartisan deal, with 17 Republicans supporting the agreement.
Democrats and climate activists hope Senate passage of the infrastructure measure — which could happen as soon as next week — will serve as a springboard to approve a second and larger spending package unilaterally through reconciliation.
Democratic climate hawk Sen. Sheldon Whitehouse of Rhode Island, speaking at an event hosted by C2ES, said the bipartisan infrastructure agreement “doesn’t accomplish much on climate, but opens the gateway” to a reconciliation package that “does accomplish much on climate.”
There is a bunch of climate stuff though. President Joe Biden is touting the bipartisan infrastructure agreement as a significant down payment on his aggressive pledges to combat climate change.
While we are still awaiting bill text, a summary of the deal posted by Politico contains clean energy and climate measures that largely mirror a framework the bipartisan negotiating group agreed to a month ago.
The bipartisan bill would spend $7.5 billion on the first federal effort to build a network of EV chargers across the country, about half of what Biden originally asked for to build 500,000 electric vehicle charging stations nationwide.
The spending on charging falls way short of the $174 billion Biden’s American Jobs Plan promise to “win the EV market” from China, including by providing rebates for consumers (those will likely be targeted for the reconciliation bill).
The bipartisan bill would fully fund more than a dozen clean energy demonstration projects originally authorized under the Energy Act of 2020 approved at the end of last year, including for energy storage, advanced nuclear reactors, carbon capture, direct air capture, and renewables.
It also creates a $5 billion program to combat methane emissions by employing oil workers to plug leaking “orphan” oil and gas wells, and establishes a $6 billion five-year credit program providing subsidies to help financially struggling nuclear plants stay alive. Both of these ideas are key Biden priorities.
The bipartisan bill provides funding for pipelines to transport captured carbon dioxide, and to support the creation of hydrogen and direct air capture infrastructure hubs.
Going big on transmission: The legislation includes $73 billion toward improving and modernizing the country’s electricity grid, enabling “the building of thousands of miles” of electric transmission lines, critical to expanding the use of renewable energy.
It would set up a new “Grid Authority” within the Energy Department to speed the approval process, which can take up to a decade, and also gives leeway for DOE to designate corridors of national interest, permitting quicker construction. Under the bill, FERC could also issue construction permits for some interstate transmission if states deny applications.
Where it falls short: The new agreement appeared to cut spending in a few areas compared to the original framework, including reducing money for public transit to $39 billion from $49 billion, and eliminating a $20 billion “infrastructure bank.”
Liberal climate activist group Evergreen Action noted the agreement allocated $2.5 billion for electric buses, short of the $7.5 billion negotiators had previously committed to invest.
Manchin gets his: The clean energy provisions in the deal are based on infrastructure legislation authored by key centrist Democratic Sen. Joe Manchin of West Virginia that was recently approved by the Energy Committee he chairs.
Manchin successfully got the bipartisan agreement to include an expansion of the 48C tax credit to retool manufacturing plants to build clean energy products, including a $4 billion carveout for use in areas where coal mines or plants have closed (i.e. West Virginia).
“Growing climate change impacts in the U.S. helped motivate moderate Democrats and a surprising number of Republicans alike to support smart grid and EV infrastructure funding in the package,” Paul Bledsoe of the Progressive Policy Institute told me. “The bipartisan deal seems to lay the policy and political ground for ambitious measures in the fall, with Biden creating trust with moderates like Manchin and Synema for more far-reaching clean energy incentives.”
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HURDLES FOR PASSAGE: Speaking of Sen. Kyrsten Sinema, the Arizona centrist irked liberals by declaring yesterday she opposes spending the $3.5 trillion Democrats have earmarked for their reconciliation package.
Liberal House lawmakers slammed Sinema’s comments and are threatening to hold up approval of the bipartisan package “without a reconciliation package that meets this moment,” as Rep. Mondaire Jones of New York put it.
“Good luck tanking your own party’s investment on childcare, climate action, and infrastructure while presuming you’ll survive a 3 vote House margin,” Rep. Alexandria Ocasio-Cortez of New York tweeted.
While the bipartisan bill appears to be cruising to approval in the Senate, liberals lawmakers in the House — where Democrats only have a tiny majority — could derail its passage.
SHELDON WHITEHOUSE STILL WANTS A CARBON TAX AND BCA: The aforementioned Sen. Whitehouse is taking exception to those declaring the death of carbon pricing, and is arguing Congress must eventually set a domestic price on carbon in order to impose a border adjustment on polluting products imported from other countries.
“Carbon pricing is very much alive and well,” Whitehouse said at the C2ES event yesterday, where he was promoting legislation he co-sponsored imposing a carbon tax and methane fee. “Reports about the demise of carbon pricing are exaggerated.”
Why the optimism? Whitehouse said Democrats’ proposal to impose a carbon import tax as part of their reconciliation package is a “positive signal.”
Whitehouse says a border carbon adjustment is “very hard to do without carbon pricing because you don’t have a common denominator across the country” (an issue I have highlighted extensively).
The Rhode Island Democrat added that he doubts the parliamentarian would approve a BCA if Senate Democrats try to do it through reconciliation without passing a carbon price.
Legislation introduced by Sen. Chris Coons, Democrat of Delaware, would instead base the import tax on an existing patchwork of carbon regulations and state clean energy mandates.
Anna Yelverton, a climate policy staffer for Coons, acknowledged in remarks at yesterday’s event that their BCA proposal would be “better in every way” if Congress could pass a carbon price, but she said Democrats are aware of the political challenges of doing that. Coons was eager to start a conversation “reframing trade around climate change,” she said.
HOUSE DEMOCRATS PLOT MORE CLIMATE FUNDING IN SPENDING BILLS: House Democrats are preparing to pass a slate of spending bills that will fund parts of the government ahead of a looming deadline, moving to pump money into liberal priorities such as combating climate change, the Washington Examiner’s Sarah Westwood reports.
The seven bills make up what’s known as a “minibus,” or a more limited version of the omnibus spending packages that fund the entire government at once. Congress has until the end of September to fund the government in full, and lawmakers are juggling a number of other hot-button issues they hope to advance in that same time frame.
The Transportation Department portion of the spending bill pumps billions more into infrastructure. For example, the bill funds hundreds of “zero-emission buses” and diesel buses, setting aside $580 million for the purchase of the buses and for “transformative research for transit systems.”
The Department of Energy section of the bill increases the amount of funding for renewable energy programs by $906 million over last year.
The legislation would establish a new, $100 million grant program to hand out “Build Back Better Challenge Grants” focused on “novel methods for clean energy deployment” in impoverished areas.
Through the Department of Agriculture, the minibus would dedicate an additional $347.4 million “to address the impacts of climate change.”
The Department of Health and Human Services part of the package would give an enormous influx of cash to climate change research as well.
House Democrats set aside $110 million for “research on the impacts of climate change on human health,” a $100 million increase over last year.
SEC MOVING ON MANDATORY CLIMATE DISCLOSURE RULE: SEC Chairman Gary Gensler said yesterday he has directed agency staff to consider whether public companies should have to file climate-related disclosures in their annual financial reports, known as Form 10-K, crucial to investors, the Wall Street Journal reports.
Gensler, in comments before the group Principles for Responsible Investment, also said SEC staff will explore as part of a draft regulation due by the end of the year whether to require disclosure of Scope 3 emissions, or from use of a company’s products. The SEC chair said some companies voluntarily report their greenhouse gas emissions and the physical risks they face from climate change, but he said such disclosures are inconsistent and difficult to compare.
“Investors today are asking for that ability to compare companies with each other,” Gensler said. “Generally, I believe it’s with mandatory disclosures that investors can benefit from that consistency and comparability.”
MAPPING THE GROWTH OF CARBON CAPTURE: Since the passage of the 45Q tax credit in 2018, there has been huge growth in new carbon capture announcements in the U.S., according to the Clean Air Task Force, which published an interactive map today showing planned projects.
Companies and governments have announced more than 40 carbon capture and storage projects, including 10 in the first half of 2021. Carbon capture and projects have been announced in 12 different states, with Texas leading the way, followed by Illinois and Nebraska. A little more than half of announced projects are in the industrial sector, led by ethanol but also including investments in biofuels, cement, hydrogen, and gas processing facilities.
Power sector carbon capture projects have been primarily in natural gas power plants.
Finally, Texas will also be home to a large direct air capture project.
The Clean Air Task Force calls on policymakers to expand on that growth by providing direct payments to help small project developers that lack taxable income to utilize 45Q or other clean energy tax credits, increasing the value of the 45Q credit, and to expand its eligibility so smaller carbon-emitting sources can qualify.
BIDEN SIGNS CYBERSECURITY MEMO: Biden signed a memorandum yesterday to create new voluntary cybersecurity goals for critical infrastructure operators, the latest attempt by the administration to counter the exploding problem of hacks, the Washington Examiner’s Nihal Krishan reports.
The memo directs the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency and the Department of Commerce’s National Institute of Standards and Technology, in collaboration with other agencies, to develop cybersecurity performance goals for critical infrastructure operators such as those in the energy industry, food suppliers, hospitals, and key parts of the government.
It also establishes the President’s Industrial Control System Cybersecurity Initiative, a voluntary effort between the federal government and critical infrastructure operators, to facilitate the deployment of technology and systems that will provide better threat visibility, indicators, detections, and warnings when it comes to cyberattacks.
The Rundown
Reuters Desalination advances in California despite opponents pushing for alternatives
Wall Street Journal Washington’s most powerful oil lobby faces reckoning on climate change
Washington Post Biden wants to turn America’s auto fleet electric. It’s harder than it seems.
Wall Street Journal Climate-conscious banks stick with distressed polluters
Bloomberg Shell raises dividend and starts $2 billion share buyback
Calendar
THURSDAY | JULY 29
12 p.m. The American Council for Capital Formation will host a webinar conversation with Reps. Kurt Schrader, Democrat of Oregon, and David McKinley, Republican of West Virginia, on their clean electricity standard bill, the Clean Energy Future through Innovation Act.
12 p.m. The Bipartisan Policy Center will host David Hayes, White House advisor, and former Louisiana Gov. Bobby Jindal for a webinar conversation on “offshore wind’s important role in the expansion of zero-carbon energy production.”
