Congress Passes A 5,593 Page Spending Bill. What’s In It For Clean Tech?

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Every year about this time, the US Congress passes what is known to Washington insiders as a “Christmas Tree Bill” — an end of year spending package with enough ornaments on it to sink an aircraft carrier. Part of the new legislation — all 5,593 pages of it — authorizes emergency payments for Americans suffering financial hardship because of the Covid-19 pandemic but part of it contains last minute gifts for various clean tech and renewable energy initiatives as well.

“Let’s be clear. Are these provisions enough to meet the demands of science? No. But are they a significant step in the right direction? Yes,” says Chuck Schumer, the minority leader for Democrats in the Senate. The words “climate change” appear nowhere in the bill, because nobody wants to poke the bear in the Oval Office. But climate change considerations are baked into the bill at every level.

When you consider the words climate change were hardly ever uttered during the presidential campaign of 2016, it is fairly remarkable that just four years later a majority of Senators and Representatives from both parties were enthusiastic supporters of this latest legislation. Senator Schumer says the new legislative package is “the single biggest victory in the fight against climate change to pass this body in a decade.” Here’s what’s in it — and what’s not.

EV Incentives

For those of you hoping for a new EV incentive program that would allow you to save money on a shiny new Tesla, you’re out of luck. The new bill makes no mention of electric vehicle credits. That is not to say the Biden administration won’t get around to promoting EVs at some point, just not now. It has rather a lot on its place trying to clean up the stinking, fetid mess left behind by the outgoing maladministration. All we can tell our readers is, “Patience, grasshopper.” Your Christmas present from Uncle Sugar may be late arriving this year.

HFCs

Hydroflourocarbons, used extensively in air conditioning and refrigeration systems, are hundreds of times more powerful than carbon dioxide or methane when it comes to trapping heat in the atmosphere. Under the proposed rules contained in the legislation, HFC production in the US in 2036 will be cut to just 15% of what it was in 2012. That would bring the United States into compliance with the Montreal Protocol’s 2016 Kigali amendment, which Trump rejected despite widespread support from both industry and environmental groups.

It is unlikely the Senate will actually get around to ratifying the Kigali amendment, as that might be a bridge too far for Senate Republicans, but the new bill imposes the same requirements while avoiding the formal ratification process. Compliance with the Kigali amendment by all the world’s nations is expected to lower global heating by a half degree Celsius. Climate scientists say we need to limit global heating to no more than 3.5 degrees Celsius in order to avoid a climate catastrophe, so a half degree reduction just from lowering HFC production is a huge step in the right direction.

The New York Times reports the limits on HFC refrigerants could send a signal to the rest of the world that the United States is ready to rejoin the global effort to slow the warming of the planet. The coolant reduction timetable would be one of the most significant federal policies ever taken to cut greenhouse gas emissions, according to an analysis by the Rhodium Group, a research and consulting firm.

Renewable Energy Tax Credits Extended

The new law extends the end date for several renewable energy tax credits. Investment tax credits are tricky to implement. If there is no end date, developers tend to put projects off until later. If they are too short, there may not be enough time to find available land, get the necessary permits, and get started. Through experience, 5 years has come to be accepted as the optimal length of time for ITC programs.

The existing tax credits have been extended several times over the past two decades. Congress passed a one-year extension for the wind energy tax credit (but not the solar tax credit) as part of the year-end 2019 government spending bill. This latest bill extends the existing tax credit — 26% — for both another two years. It will now step down to 22% for projects that are begun after December 31, 2022.

Offshore Wind

Offshore wind gets a big boost in the new bill. Offshore developers can now elect to claim a production tax credit of 1.5 cents per kilowatt-hour for energy produced during the first 10 years after a facility is placed in service, so long as construction begins before the end of 2021 — an extension of 1 year from existing law — and commercial operation starts by 2024. Or the developer can elect to take advantage of a 30% investment tax credit so long as construction begins by the end of 2025 — a 5 year extension — according to Forbes.

$35 Billion For Clean Energy

The New York Times adds the new legislation authorizes $35 billion in existing government funding to be spent on clean energy programs over the next five years, including $1 billion for energy storage technology that could serve as batteries for wind and solar power, $1.5 billion for demonstration projects for new solar technology, $2.1 billion for advanced nuclear energy technology and $450 million for technology to remove carbon dioxide from the atmosphere. It also directs federal agencies to update government programs that oversee renewable energy spending.

“Some of these will be the first updates to these programs since the iPhone was first in use,” says Josh Freed, an energy policy analyst with Third Way, a center-left research organization. “It’s critically important because energy systems looked a lot different 10 years ago. There were almost no EVs on the road, very little solar panels on roofs, Tesla didn’t exist.”

Included in the energy package are roughly $4 billion for solar, wind, hydro power, and geothermal research and development; $1.7 billion to help low-income families install renewable energy sources in their homes; $2.6 billion for the Energy Department’s sustainable transportation program; and $500 million for research on reducing industrial emissions, according to the Washington Post.

It also authorizes $2.9 billion for the Advanced Research Projects Agency – Energy, a program that funds high-risk, high-reward research and which America’s so-called president tried many times to eliminate. Lastly, the bill directs the Department of Interior to set a goal of producing at least 25 gigawatts of solar, wind and geothermal energy on public lands by 2025, according to Reuters. That’s a big improvement over Tramp’s push to expand oil and gas drilling on public lands.

“It doesn’t have regulations or mandates in it,” says Sasha Mackler, director of the energy project at the Bipartisan Policy Center of the new policy initiative, “but from the bottom up it’s advancing the technology that’s needed. This is definitely a bill that creates the enabling conditions for decarbonization.”

Half A Loaf Is Better Than None

There are also billions of dollars in the bill for research and development to advance technologies such as carbon capture and storage, direct air capture, nuclear energy, and fuel cell systems. Those who shudder at such provisions need a tutorial on how the political process works. You give some to get some. Toby Short, vice president of federal affairs for the Environmental Defense Fund, tells the Washington Post, “It’s not something necessarily we would have written.” But he thinks the investments in renewables outweigh the negatives. “You can’t let the perfect be the enemy of the good,” he added.

The new legislative package won the support of key Republican senators such as Lisa Murkowski of Alaska, John Borrasso of Wyoming, and John Kennedy of Louisiana. Is this a hint that Biden’s climate agenda will be able to garner bipartisan support in Congress? “We’ll see,” said the Zen master.