While the new agreement, dubbed the Inflation Reduction Act of 2022would make some concessions to Manchin on fossil fuel production, it still represents the largest piece of climate legislation in the nation’s history.
“This is the most significant action we’ve taken on climate, that we will take on climate and clean energy, ever,” said Sen. Tina Smith (D-Minn.), one of Congress’s most vocal climate hawks.
But the new agreement falls short of the $555 billion in climate spending that Democrats had initially hoped to enact through the budget reconciliation package, formerly known as the Build Back Better Act. And it would mandate new oil and gas lease sales in the Gulf of Mexico and off the coast of Alaska — an apparent concession to Manchin, who has championed an “all-of-the-above” approach to energy policy that includes fossil fuels.
Still, the package would cut America’s greenhouse gas emissions by roughly 40 percent by 2030, according to a one-page summary.
- That would bring the nation substantially closer to President Biden‘s goals of cutting emissions in half by 2030 and reaching net-zero emissions by 2050.
- However, the 40 percent reduction is less than the 45 percent cut that Schumer had previously touted in August 2021.
In case you don’t have time to read the entire 725-page agreement, which is expected to reach the Senate floor next week, here’s a summary of what’s in the package and what’s out when it comes to climate and clean energy:
In: Tax credits for electric vehicles
In recent months, Manchin has repeatedly voiced concerns about providing tax credits for Americans who purchase electric vehicles, saying the subsidies could benefit foreign adversaries like China that dominate the supply chain for EV batteries.
In light of these comments, it is notable that the package includes EV tax credits at all. The agreement would provide a $4,000 tax credit for consumers to buy used EVs and up to a $7,500 tax credit for consumers to buy new EVs.
Still, the agreement would limit the incentives to lower- and middle-income individuals in an effort to satisfy Manchin’s additional concerns about the credits benefitting wealthy Americans.
- For new EVs, the income threshold would be $300,000 “in the case of a joint return or a surviving spouse,” $225,000 for a head of the household and $150,000 for single filers.
In: Tax credits for clean energy
The agreement also contains many of the tax credits for clean energy championed by the Senate Finance Chair Ron Wyden (D-Ore.), including:
- $30 billion production tax credits to bolster US manufacturing of solar panels, wind turbines, batteries and critical minerals processing.
- $10 billion investment tax credit to build clean technology manufacturing facilities, such as factories that make electric vehicles, wind turbines and solar panels.
In: Methane reduction program, green bank
The package includes a Methane Emissions Reduction Program to reward oil and gas companies that slash their emissions of methane and penalize those that don’t.
The program, which was crafted by Senate Environment and Public Works Chair Thomas R. Carper (D-Del.), originally would have provided $775 million upfront to oil and gas companies to cut their methane emissions. The agreement doubles that money to $1.5 billion, according to a Senate Democratic aide.
The agreement also retains a Clean Energy and Sustainability Accelerator, commonly referred to as a green bank, which would leverage public and private funds to invest in clean energy technologies and infrastructure. However, the total funding of the green bank was lowered from roughly $30 billion to $27 billion.
Out (for now): Permitting reform
The deal came in part because of Biden, Schumer and House Speaker Nancy Pelosi (D-Calif.) agreed to seek and pass new legislation easing the federal permitting rules for pipelines and other infrastructure in the coming months.
The permitting legislation would run afoul of the rules governing budget reconciliation, the process Democrats are using to advance their party-line spending bill. That means the measure would need to attract at least 10 Republican votes.
Out: clean electricity program
Of course, Democrats already abandoned a pivotal program last year that would have punished electric utilities that did not deploy more clean energy.
The initiative, known as the Clean Electricity Performance Programwould have accounted for nearly 42 percent of the original bill’s emissions cuts, according to a chart released by Schumer’s office last year.
But Smith, who led Democrats on the clean electricity program before Manchin blocked it, said Wednesday that the agreement is still a “big deal” for efforts to slow the Earth’s catastrophic warming.
“I have always said what matters less to me is now how we get there,” she said, “but whether we’re getting on the right path.”
House set to pass wildfire and drought resilience package
The House on Thursday is expected to pass the Wildfire Response and Drought Resiliency Acta package of 48 bills that could have sweeping implications for communities hit hard by drought and wildfires, particularly in the American West.
The legislation comes as much of the West faces soaring temperatures, historically low water levels linked to prolonged extreme drought, and large wildfire seasons exacerbated by human-caused global warming.
“If we’re going to be able to respond to climate change and the impacts that are already happening, we really need crucial tools,” Rep. Melanie Ann Stansbury (DN.M.), who introduced much of the water-related legislation included in the package, told The Climate 202.
“We are not prepared for the change that is coming our way, and that’s why we have to put into place meaningful legislation, tools, resources and science to help our communities get ready for what’s about to head our way,” she added.
Stansbury introduced the following bills included in the package:
- The Rio Grande Water Security Actwhich would help develop a long-term, community-based resilience plan for the Rio Grandewhich recently ran dry for the first time in 40 years, shrinking the amount of clean water available to residents and farmers.
- The Water Data Actwhich is meant to help standardize the way water is managed across the West, making it easier to share resources, plan ahead for dry, hot weather, and mitigate risks.
- The WaterSMART Access for Tribes Actwhich seeks to eliminate barriers for Native American tribes to receive funding for water infrastructure projects.
The package would also establish minimum pay for firefighters fighting wildfires. And it contains the National Wildland Fire Risk Reduction Program Actwhich would provide $2 billion to federal agencies over five years to support better understanding and prediction of wildfires.
After passing the House, the package still has to clear the Senate, where it faces an uncertain future. A Senate Democratic aide, who spoke on the condition of anonymity because they were not authorized to comment publicly, said it appears unlikely that the package will pass the Senate in its current form, despite bipartisan interest in addressing the drought parching the West.
House Natural Resources Committee passes environmental justice bill
The House Natural Resources Committee on Wednesday passed the Environmental Justice for All Act by a vote of 26-21. The legislation from the Chair Raúl M. Grijalva (D-Ariz.) and Rep. A. Donald McEachin (D-Va.) marks the most comprehensive environmental justice bill in US history.
The measure seeks to ensure that environmental justice communities — including communities of color, tribal and indigenous communities, and low-income communities — have access to clean air and water. It would require federal agencies to consider the cumulative effects of pollution in an area when making permitting decisions under the Clean Water Act or Clean Air Actamong other things.
“Today was a historic day — not just for Congress, but for the millions of Americans who have been demanding and fighting tirelessly for environmental justice for decades,” Grijalva said in a statement Wednesday. “Environmental justice communities wrote this bill, they crafted these solutions, and after today, we finally have a chance to bring their voices to the House floor and pass this bill into law.”
Biden unveils program to reduce utility bills for low-income homes
The Biden administration on Wednesday launched a program aimed at connecting low-income homes to solar power, a move that it says can save families about 10 percent per year on their electric bills while advancing President Biden‘s goal of reaching a zero-emissions grid by 2035, Zack Colman reports for Politico.
The Community Solar Subscription Program is meant to help bring the reliable, low-cost energy source to communities that have otherwise been shut out of the clean energy market. According to the Department of Energy, the program could help spur the development of 134 gigawatts of new solar capacity nationwide through local projects.
Energy Department gives major loan to critical mineral processing plant
The Department of Energy‘s Loan Programs Office on Wednesday announced that it is providing a $102 million loan to expand a mineral processing facility in Louisiana, Rachel Frazin reports for the Hill. The move is meant to help bolster the domestic supply of critical minerals, such as those found in lithium-ion batteries used in electric vehicles and other clean energy technologies.
The agency said the expansion of the facility owned by Syrah Technologies could process enough of the minerals to support about 2.5 million electric vehicles by 2040, saving roughly 970 million gallons of gasoline.
“Securing critical materials, such as lithium and graphite, is essential to increasing domestic production of batteries to power the growing number of EVs on our roadways,” Energy Secretary Jennifer Granholm said in a statement, noting that this announcement builds on the Biden administration’s March invocation of the Defense Production Act to secure a reliable critical mineral supply chain nationwide.
This investment marks the first that the agency has issued through the Advanced Technology Vehicles Manufacturing Loan Program since 2011.