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Climate Activists Cheer Biden Plan Though See Jockeying Ahead

Oct. 28, 2021, 7:38 PM

Clean energy advocates cheered the $1.75 trillion tax and spending plan President Joe Biden unveiled Thursday, even as some said they’d try to tweak it before the package is enacted.

The plan strikes a balance, the advocates said, on climate action between congressional Democrats and the White House. In particular, they cheered 10-year extensions for wind and solar energy, multi-year extensions for carbon capture, and new provisions on environmental justice.

“What we’ve been saying is this is our last, best chance to address the climate crisis,” said Greg Wetstone, president and CEO for the American Council on Renewable Energy. “And this is a package that I think Congress could deploy to actually rise to the moment.”

The framework includes a new Civilian Climate Corps putting hundreds of thousands to work shoring up public lands and communities against climate impacts.

The plan also includes a new Clean Energy and Sustainability Accelerator to invest in climate and clean energy projects around the country. The accelerator is a tool to deliver 40% of benefits from climate and other funding to disadvantaged communities, as Biden has pledged to do.

Carbon Capture Requirement

But carbon capture advocates—on the verge of securing a six-year extension of Section 45Q tax credits—are battling congressional efforts to add a requirement that they say could be counterproductive. The requirement would peg the incentives for power plants to only projects capturing 75% of “facility-wide” emissions and industrial operations that are able to cut their emissions in half.

Many environmental groups said the package offers a blueprint for Democrats to steer the reconciliation package through Congress, including what is just a majority vote needed for Senate passage.

“This down payment on our clean-energy future cannot be overstated—it is a historic investment that puts us on track to reach our climate goals,” said Jim Kessler, executive vice president for policy for the Third Way think tank.

The compromises outlined in the package would put the U.S. on a path to halve its climate emissions by 2030 while ensuring direct investment in communities of color that haven’t seen the benefits of U.S. clean energy advancements, environmental groups and congressional Democrats said.

If enacted, the compromise would cut U.S. greenhouse gas emissions by well over a gigaton in 2030 and invest in emissions reductions in building, transportation, the electric power sector, and agriculture, said Sen. Chris Coons (D-Del.), who co-founded the bipartisan Senate Climate Solutions Caucus.

Little Margin for Error

But other groups pushing for more dramatic U.S. climate action were lukewarm—or say the package falls well short of action needed to slash U.S. emissions and begin tackling worsening climate change.

They said it appeared unlikely the plan would seek a repeal of oil industry tax breaks, which environmentalists say have long helped oil companies recover the costs of drilling even with their outsized contribution to warming the planet.

“We cannot rely on credits, grants, and loans to incentivize our way out of the worsening climate crisis,” Mitch Jones, policy director of the Food and Water Watch environmental group, said in an emailed statement. “Given the prime opportunity to cancel billions of dollars in domestic subsidies for oil and gas polluters, the president and congressional leadership have rolled over.”

Plenty of environmental and progressive groups are still cautious, given the months of twists and turns that have put the reconciliation package close to collapse.

“There is desperately little margin for error,” John Podesta, who was President Bill Clinton’s chief of staff and founder of the Center for American Progress, said in a statement. “But if these investments pass through Congress in short order, we keep alive the possibility of averting planetary catastrophe.”

Podesta said the tax and spending framework, which calls for a total of $555 billion to boost renewable power, electric vehicles and resilience to global climate change, “gives the administration the tools it needs” to make good on Biden’s pledge to cut U.S. emissions 50-to-52% by 2030 compared to 2005 levels.

The extension of the production tax credit brings a “significant risk” to short-term wind energy installations, said Jérôme Pécresse, CEO of GE Renewable Energy. Pécresse pressed the Biden administration to incentivize projects to be completed in the years 2022 and 2023.

“We welcome the long-term certainty a tax credit extension provides,” Pécresse said during a luncheon at the National Press Club in Washington. “But we also know there is also significant risk that may occur in the early years of an extension where onshore wind installations will initially decrease.”

More Jockeying Ahead

Biden’s unveiling of the framework won’t stop many groups from pushing for continued tweaks of the package in the days and weeks ahead.

Carbon capture advocates for example want to maintain gains from the House-drafted reconciliation package, including the six-year extension of the credit and a new “direct pay” option allowing projects to monetize the value of the credit immediately.

Direct pay could allow projects to bypass expensive outside tax equity typically required to get such projects off the ground.

But the Carbon Capture Coalition is “still very actively having conversations” to scrap the requirement for power plants and industrial facilities to capture the bulk of their carbon emissions to get the credit, said Jessie Stolark, the coalition’s public policy and member relations manager.

The facility-wide restriction—to require power plants to capture 75% of their emissions and industrial facilities to cut them in half to get the credit—were included in reconciliation language that cleared the House Ways and Means Committee in September. But it’s also in the Senate Clean Energy for America Act (S. 1298) introduced by Finance Committee Chairman Ron Wyden (D-Ore.).

Stolark said the prospect of new facility-wide capture requirements will kill efforts to get significant capture and storage of emissions from the very sectors—power plants and heavy industries such as cement and steel—which need to be addressed to put a significant dent in U.S. emissions.

“When we talk to project developers, that’s really concerning to them,” she said. “In most cases, that’s kind of a non-starter for doing carbon capture at a lot of these facilities.”

—With assistance from Daniel Moore.

To contact the reporter on this story: Dean Scott in Washington at dscott@bloombergindustry.com

To contact the editor responsible for this story: Rebecca Baker at rbaker@bloombergindustry.com; John Hughes in Washington at jhughes@bloombergindustry.com

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