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HOUSE DEMOCRATS’ PLANS: A new green energy tax plan proposed by Democrats of the House Ways and Means Committee provides a first real glimpse of how the party is aiming to accomplish the twin goals of reducing emissions as fast as possible while building up U.S. manufacturing of clean energy to create jobs.
The massive package, part of Democrats’ reconciliation spending plan, features a host of clean energy tax credits worth a combined $273.5 billion over 10 years, including extending wind and solar incentives through 2033.
It would also extend and modify the 45Q carbon capture credit while providing a big new incentive for direct air capture.
There are several new subsidies, including production tax credits for existing nuclear plants and “clean” hydrogen, an investment tax credit for transmission and energy storage, and a bonus ITC for solar projects deployed in low income areas.
Several of these incentives would be eligible for “direct pay,” a main demand made by clean energy companies, allowing companies to monetize credits without tapping the tax equity market, which has frozen because of the economic fallout from the pandemic.
String attached: But the package also represents a overhaul of Congress’ methods for doling out clean energy tax credits in the past by conditioning the value of many of the incentives on two factors: (1) whether workers on projects are earning prevailing wages and trained through apprentices and (2) whether the materials used for projects are domestically-produced.
For example, projects only get full value of direct pay if they meet domestic content requirements.
And the plan would massively expand subsidies for electric vehicle purchases, with the largest benefit — worth up to $12,500 — available only for cars built in the U.S. with union labor (compared with a $7,500 incentive for most other EVs). The bill would reduce the value of benefits for higher income people, and create a separate new tax credit for purchasing used EVs.
Attaching strings to a tax subsidy-driven push for more clean energy by prodding companies to source domestically and pay workers more could raise their costs, and slow the buildout of emissions-free power, a potential problem I wrote about just last week.
“Joe Biden is not the first politician to write energy policy at cross purposes with itself,” Kevin Book, managing director of ClearView Energy Partners, told me. “The administration wants to green the industrial base, power sector, and the vehicle fleet, it wants to create local jobs, and it wants to protect human rights. There is trade-offs with every one of these things.”
Nodding to the potential conflict of its goals, House Democrats’ clean energy tax proposal does contain domestic content exceptions if either the inclusion of U.S. products increases the costs of projects by more than 25% or whether these products are not manufactured in the U.S. in “sufficient reasonably available quantities or of a satisfactory quality.”
The process of verifying these qualifications could be “complicated,” Book said. Providing significant exemptions, meanwhile, might not inspire the scaling up of domestic manufacturing Democrats are hoping for.
“The problem with exceptions is they take away incentives for new investment,” Book said. “If you keep letting people buy foreign products, companies will say we won’t make them.”
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writer Josh Siegel (@SiegelScribe). Email [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.
MANCHIN NOT DOWN WITH CEPP (REALLY): The man of every hour, Sen. Joe Manchin of West Virginia, threw cold water again over the weekend on Democrats’ plans to pay utilities to generate more clean electricity, while penalizing companies that fail.
“The transition is happening. They want to spend billions of dollars to have utilities do what they are already doing,” Manchin said on NBC’s Meet the Press. “It makes no sense to me to pay a utility to do what they are going to do anyway.”
Asked if the U.S. needs a policy to accelerate the transition from fossil fuels, Manchin, the chairman of the Senate Energy Committee, raised the specter of having a “situation by 2030 where we are not going to have reliability.”
We have heard Manchin generically speak against mandate-like clean energy policies that hasten the switch to renewables and other zero-carbon energy sources. But these are the most explicit comments we’ve seen from Manchin dunking on the entire concept of the clean electricity payment program.
BERNIE VS. MANCHIN: Manchin reiterated yesterday that he will not vote for a spending package worth $3.5 trillion, prompting Vermont Sen. Bernie Sanders to call his decision “absolutely not acceptable.”
The West Virginia Democrat suggested the price tag of the legislation should be lowered to around $1.5 trillion, raising concerns that “eight million people are still unemployed” and citing the national debt ceiling.
Sanders rejected Manchin’s suggestion that the price tag be lowered.
“I don’t think it’s acceptable to the president, to the American people, or to the overwhelming majority of the people in the Democratic Caucus,” he told CNN.
AD WARS HEAT UP: A host of climate, clean energy, and industry groups are launching ad campaigns today related to Democrats’ infrastructure and social spending plans.
Evergreen Action, a newish environmental group with ties to the White House, started its first ever TV ad campaign on Washington D.C. cable — worth six-figures — calling on Democrats to not back down from passing the clean electricity payment program.
“Congress must pass the Build Back Better Act with a strong CEPP and the full suite of critical climate investments,” said Jamal Raad, the group’s executive director.
American Clean Power Association, a renewables and battery storage industry group, is running ads in seven states and D.C. urging Congress to pass infrastructure legislation with “smart and predictable incentives” (I.E. tax subsidies).
On the other side of the ad wars, the American Petroleum Institute is starting the latest part of its ongoing seven-figure national TV and digital campaign running in 140 congressional districts. The latest ads, aimed in swing states such as Pennsylvania and Arizona, lobby against policies taxes targeting the oil and gas industry (hello, methane fees).
PELOSI PUSHES SHORT TIMELINE: House Speaker Nancy Pelosi told fellow Democrats in a visual conference call on Friday that she hopes to begin consideration of the spending package as soon as Sept. 20, the day lawmakers return from their summer recess, the Washington Examiner’s Susan Ferrechio reports.
“In a couple of weeks, we will have made a transformative difference,” Pelosi told her colleagues.
Senate Democrats are on track to finish writing legislation by Sept. 15, Pelosi told Democrats, which leaves the two chambers in a position to complete the package quickly.
Pelosi is sticking to her pledge to first pass the Democratic-only spending package before taking up the bipartisan infrastructure measure, meeting a demand made by her majority liberal caucus.
BIDEN VISITS WILDFIRE-STRICKEN WEST: Biden is in both Idaho and California today where he will pitch Democrats’ climate-heavy budget plan and survey damage in a pair of states currently working to manage a total 35 wildfires.
Biden is scheduled to speak at the National Interagency Fire Center in Boise before heading on to Sacramento to observe damage caused by the Caldor Fire, the second largest of 13 burning in California. He approved a disaster declaration yesterday in response to the blaze, which covered 219,267 acres as of this morning.
The president’s visit coincides with congressional Democrats’ ongoing efforts to iron out their reconciliation bill and its clean energy provisions.
“We can stop it from getting worse,” Biden said last week in New York, where Tropical Storm Ida’s floodwaters ravaged homes and businesses.
ILLINOIS TO PASS CLEAN ENERGY BILL WITH NUCLEAR AID: Illinois is poised to pass a bill providing nearly $700 million in subsidies over five years to save unprofitable nuclear plants that are slated to shut down as part of a massive clean energy package, as I report for a story this morning.
The state Legislature is slated to close the deal today, as Democratic Gov. J.B. Pritzker, state legislators of both parties, environmental groups, and labor unions are motivated to preserve thousands of jobs associated with the plants and to maintain Illinois’s status as the largest producer of nuclear power — a central element of the state’s clean energy ambitions.
“The only way we can get to zero-carbon and provide good, reliable electricity to the grid in Illinois is through nuclear,” Rep. David Welter, a leader for state House Republicans, who are in the minority, told me. “We don’t have the technology and capability to build wind and solar that quickly.”
The nuclear aid is part of a larger clean energy bill putting Illinois on the path to a carbon emissions-free electric grid by 2045, one of the fastest timelines in the nation.
DOMINION ENERGY TO TURN FORMER COAL MINE INTO SOLAR FARM: Dominion Energy is teaming up with environmental group The Nature Conservancy to turn a former surface coal mine in southwestern Virginia into a solar energy field.
The plan for the “Highlands Solar” project is to use roughly 1,200 acres of the former Red Onion mine and nearby properties to eventually generate approximately 50 megawatts of solar energy, or enough to service 12,500 homes.
“Southwest Virginia and the wider Central Appalachian coalfields have an important role to play in the renewable energy economy,” said Brad Kreps, director of The Nature Conservancy’s Clinch Valley Program. “Some of the region’s former mined lands are well suited for solar development and by directing development towards these areas it will help us conserve the region’s intact forests for wood products, carbon storage, wildlife habitats, outdoor recreation and tourism.”
The Rundown
Financial Times US adviser warns ‘lives at stake’ in European gas crunch
Wall Street Journal Energy prices in Europe hit record after wind stops blowing
Bloomberg Energy crunch deepens as US warns Europe isn’t doing enough
Politico ‘We will have a really long, long memory’: Greens calling businesses’ bluff on climate change
New York Times Can a green-economy boom town be built to last?
Calendar
MONDAY | SEP. 13
11 a.m. 2123 Rayburn. The House Energy and Commerce Committee will hold a markup on its portion of reconciliation bill.
WEDNESDAY | SEP. 15
9:30 a.m. 406 Dirksen. The Senate Environment and Public Works Committee will hold a business meeting and hearing on EPA nominees.
