6 things to watch out for as panel votes on landmark environmental bill
The energy and trade committee will begin voting today on a landmark series of climate and energy programs, as the panel prepares its section of the $ 3.5 trillion reconciliation bill.
The markup will be closely watched by conservationists and industry interests, offering the first formal glimpse of the kind of policies Democrats want to use to deliver on President Biden’s climate and clean water promises.
At the center of the $ 456 billion portion of E&C is the $ 150 billion Clean Electricity Performance Program (PEPP). It is a policy intended to accommodate the narrow reconciliation rules that have evolved over the past eight months from a clean electricity standard to a clean electricity payment program to its current legislative nomenclature.
Administered by the Ministry of Energy, it proposes to distribute subsidies to electricity suppliers that increase clean electricity by at least 4% compared to the previous year. The subsidies would be calculated at $ 150 for each megawatt hour above 1.5 percent of the previous year’s own production. Suppliers who fail to meet the target would be fined $ 40 per MWh based on their lack of clean energy.
Energy and Natural Resources Senate Speaker Joe Manchin (DW.Va.), however, threw a wrench into the process over the weekend, voicing his opposition to the program in an interview on CNN (see related story).
“The transition is underway. Now they want to pay companies to do what they are already doing,” Manchin told CNN, in a decisive Senate vote. “It doesn’t make sense to me that we take billions of dollars and pay utilities for what they’re going to do during the market transition.”
E&C legislation also includes tens of billions for other priorities, including money to replace lead service lines, a new “greenhouse gas reduction fund” and funding for various government accounts. ‘EPA to reduce air pollution, according to a summary of the committee (Daily E&E, September 10).
1. Debate on CEPP
CEPP was the most anticipated element of the E&C proposal, given that advocates had been talking about it for months without legislation, but it faces major hurdles ahead of the final pass that could boil over today.
On the one hand, the CEPP as drafted by the Chamber panel would define clean energy as production with a carbon intensity of less than 0.1 metric ton of carbon dioxide equivalent per MWh.
“This means there is no unreduced natural gas,” said Lindsey Walter, deputy director of the climate and energy program at Third Way. “This leaves room for clean technologies like carbon capture and storage to play a role. “
It’s a point of potential controversy for moderates and in the Senate, especially given Manchin’s comments over the weekend and his repeated warnings against phasing out fossil fuels.
“Any Senate clean electricity bill that wants the support of the 50 Democrats will need to contain a larger role for carbon capture from natural gas and coal production, and likely include somewhat longer timeframes. long for the global transition to clean electricity, “Paul Bledsoe, a former staff member of the Senate Finance Committee, now at the Progressive Policy Institute, said in an email.
Beyond Manchin, the biggest challenge for CEPP in the future could be the parliamentarian of the Senate. The “Byrd” rule governing reconciliation only allows certain tax and expense provisions to bypass filibuster based on a set of six criteria.
Although the CEPP “terms and conditions” are related to expenditure, it is possible that some sections may be deemed superfluous under the Byrd rule once legislation is noted, as they have no associated costs or revenues. said G. William Hoagland, senior vice president of the Bipartisan Policy Center and budget expert.
“All I can say is this is going to drive the Senate parliamentarian crazy,” Hoagland said in an email.
“The expenses will go through Byrd, but honestly I don’t know if when the CBO or the JCT costs the legislation it will show that the specific sections or sub-sections have a cost associated with them,” Hoagland added. referring to the Congressional Budget Office and Joint. Tax Commission.
2. Tax on methane
The text of the bill, released late last week, also gives a first look at Democrats’ proposed fees on methane emissions from the oil and gas sector.
Observers had predicted that the fee could build on legislation introduced earlier this year by Sen. Sheldon Whitehouse (DR.I.) and other Senate Democrats (Daily E&E, March 10). But the version of E&C is different.
This would require the EPA to impose a fee on petroleum and natural gas facilities that report methane emissions under the greenhouse gas reporting program, including storage, production and processing facilities, calculated using a complicated formula.
Producers would be charged on methane emissions, expressed as carbon dioxide equivalent, that exceed 0.2 percent of the natural gas sold by the facility. The revenues would be used to help facilities reduce methane emissions and clean up legacy pollution.
3. ZEV cash
For the transportation sector, Democrats are looking to bolster Biden’s commitment to putting more electric vehicles on the road. This is despite the president’s promise that they will not “double down” in policy areas that were already included in the Senate bipartisan infrastructure bill.
E&C offers to fund a variety of electric vehicle and zero-emission vehicle programs at DOE. This includes $ 2 billion for rebates on electric vehicle supply equipment, $ 1 billion for electric vehicle-related subsidies in low-income communities, $ 4 billion for the plug-in electric vehicle program and $ 6 billion. of dollars for the electrification program of the transport sector in the short term, according to the language of synthesis of the committee.
The bill would also distribute $ 5 billion in grants and rebates to replace conventional heavy-duty vehicles with ZEVs.
The E&C Democrats have included $ 9 billion for transmission upgrades in an effort to update an aging grid system and better release more clean energy into the grid.
The bulk of that total, $ 8 billion, would go to DOE for grants and loans related to “building new long-distance transmission lines and upgrading interconnections between the various interconnections,” according to the committee’s summary. .
The focus on larger and faster transmission has sparked interest from both sides, as experts warn looming bottlenecks and shaky grid systems could hamper the transition to clean energy.
Calls for reform have become more pressing in the wake of grid problems in Texas and California, which left millions of people without power for days.
The committee noted that funding would go to “construction and upgrading of grid infrastructure through the joints between the east and west interconnects, national interconnections with the Electric Reliability Council of Texas and for offshore wind projects.” .
Wider connections between the east and west grids have the potential to generate up to $ 2 billion per year in operating savings for taxpayers through electricity sharing, according to a 2018 DOE study.
“These measures will reduce costs for consumers, maintain reliable delivery of electricity during extreme weather events and are essential to tackle the climate crisis,” the committee summary said.
The bill also includes $ 200 million for the DOE and $ 100 million for the Federal Energy Regulatory Commission to make National Environmental Policy Act reviews more efficient, potentially helping to accelerate the deployment of new transmission infrastructure.
5. DOE loan program
The bill would seek to give the DOE additional authority to issue loan guarantees to spur a cleaner deployment of energy and transmission.
The measure would extend DOE’s loan authorization to $ 30 billion for the full principal amount. The bill would also allocate $ 700 million for the costs of warranties “for renewable and / or energy efficient systems and manufacturing, and the production, transmission and distribution of distributed energy,” according to the committee’s summary.
Used as a clean energy and major economic engine as part of the Obama administration’s stimulus response to the 2008 financial crisis, the lending program has languished for the past four years due to administration reluctance. Trump to use it.
In one of her first speeches, Energy Secretary Jennifer Granholm called the loan program essential to the Biden administration’s efforts to turn the clean energy transition into an economic and employment engine (Green wire, 3rd of March).
In addition, the bill would allocate $ 3 billion to the DOE to use as direct loans under the advanced technology vehicle manufacturing program. It would also remove the cap on the total loans the department can make under the program. This funding could help boost a burgeoning electric vehicle industry, seen as another critical step in reducing emissions from the transportation sector.
The House bill includes $ 30 billion to cut lead service lines across the country. The money is seen as a big push to meet Biden’s initial call for $ 45 billion to get the job done, an amount that was clawed back during heated infrastructure talks earlier this year (Daily E&E, August 4).
The bill attempts to avoid controversy by specifying that funds cannot be diverted to other uses and that entire lead service lines must be replaced, not partial replacement. The bill also provides $ 700 million in grants to reduce lead contamination in schools and $ 100 million for drinking water infrastructure on tribal lands.
The House measure also includes $ 500 million to help low-income households pay their water bills, a move that many utilities and consumer advocates have called critical during the ongoing pandemic.
Calendar: Markup is Monday, September 13 at 11 a.m. at 2123 Rayburn and via webcast.
This story also appears in Climate wire and Energy wire.