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1st 100 Days: Biden turns to Congress to carry out climate, clean energy push

U.S. President Joe Biden's first 100 days in office brought a flurry of executive actions involving climate change and energy policy.


Biden's 1st 100 Days

Part 1: New FERC chair eyes power market reforms, environmental justice

Part 2: US agencies 'moving with remarkable speed' on energy, climate

Part 3: Biden turns to Congress to carry out climate, clean energy push

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Part 4: Interior sends 'clear signal' promoting wind, targeting oil, gas

But many pieces of Biden's climate agenda, including key parts of his 10-year, $2 trillion infrastructure-focused American Jobs Plan, will require approval from Congress, where partisan divides and parliamentary procedures could determine the fate of those proposals.

In the early weeks of Biden's presidency, Congress was consumed with passing additional coronavirus relief legislation. The president signed a $1.9 trillion COVID-19 spending package into law in March that increased funding for low-income households to pay their utility bills but was otherwise mostly absent of major energy and climate provisions.

But the American Jobs Plan, with its focus on "building back better" from the pandemic, offers Congress a chance to support Biden's goal of decarbonizing the power sector by 2035 and achieving net-zero greenhouse gas emissions economywide by 2050.

Infrastructure "is the policy priority, both on [Capitol] Hill and in the administration," said Sasha Mackler, director of the Bipartisan Policy Center's Energy Project. "So that I think is a really strong starting point for getting something done."

Among other things, Biden's infrastructure plan proposed $100 billion to "reenergize" the country's electric grid, including through upgrades and expansions to the transmission system, and endorsed the formation of a national clean electricity standard, or CES. The plan also sought 10-year extensions to production and investment tax credits for clean energy resources and called for $174 billion to boost the deployment of electric vehicles and related charging infrastructure.

Even before Biden's infrastructure pitch, Democrats had rolled out a wave of ambitious climate and infrastructure bills. Many of those bills mirror major components of the American Jobs Plan and could be incorporated into comprehensive infrastructure legislation.

Democratic leaders of the U.S. House of Representatives Energy and Commerce Committee introduced a major climate bill in March that included a CES aligning with Biden's goal for a carbon-free power sector by 2035. Lawmakers have also introduced measures to extend clean energy tax credits, ease infrastructure permitting and support carbon capture, utilization and storage.

But legislation proposing a carbon tax looks less hopeful, with Biden not promoting the concept in his infrastructure plan and moderate Democratic U.S. Sen. Joe Manchin, D-W.Va., opposed to a price on carbon.

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Partisan divides

Biden and Democratic leaders in Congress want to move quickly on infrastructure given the small window for action ahead of the 2022 midterm elections. White House press secretary Jen Psaki said the president would like to see an infrastructure package passed by this summer.

But Republicans differ on their infrastructure priorities, the overall price tag for the package and how to pay for it, issues that could slow progress on the bill.

In April, Senate Republicans outlined a slimmer $568 billion, five-year infrastructure proposal that focused on traditional projects including roads, bridges and ports and excluded Democrats' clean energy focus. In addition, the GOP proposal would be funded through a combination of user fees and repurposed COVID-19 money rather than the higher corporate tax rate Biden has put forth for infrastructure spending.

But U.S. Sen. Shelley Capito, R-W.Va., the top Republican on the Senate Environment and Public Works Committee, called the GOP outline a "beginning document" and said she expected EVs, the electric grid, pipelines and climate considerations to be a part of negotiations.

With Democrats holding narrow majorities in Congress, party leaders could pursue a more bipartisan initial infrastructure package through regular order.

Along with provisions to support carbon capture and permitting reforms for infrastructure projects, extensions to clean energy credits have become "increasingly, over time, bipartisan," Mackler said. If lawmakers combined tax credit extensions or enhancements for renewable resources with those for nuclear energy, carbon capture and energy storage, such a package "could win bipartisan approval," he speculated.

But a national CES, particularly one that targets 100% clean energy by 2035, could dissuade Republicans fearful of the standard's technological feasibility and impacts on power prices and fossil fuel demand.

Democrats could pursue a CES and other more aggressive climate and clean energy measures through budget reconciliation, a process that allows legislation to pass the Senate with a simple majority. But legislation can only advance through reconciliation if it affects government revenue and debt levels. Crafting a CES in such a way is possible but tricky, policy experts say.

"The ability to shape the kind of program that I think will be needed in a power sector CES design context is really restricted by the rules of budget reconciliation," Mackler said. "You might be able to do something that drives some technological change in power sector, but I don't think it looks like a CES."

Biden's call to fund additional incentives for clean energy by rolling back tax breaks for fossil fuels could also be politically tough, with Manchin likely to reject such measures.

In particular, percentage depletion and intangible drilling cost expensing are "really high priorities for producers operating in a lot of fossil energy states, and so it's not obvious to me that the payout will be big enough" for Manchin to support ending such benefits, noted Kevin Book, managing director of the independent research firm ClearView Energy Partners LLC.

However, Book said tax provisions that benefit international supermajors are the ones that have historically been "in the crosshairs" and are more likely at risk. "It looks like there could still be some tax policy changes that do adversely affect oil and gas, but probably international companies mostly," he said.

But Manchin has expressed a willingness to spend trillions of dollars on infrastructure. While the coal-state lawmaker has repeatedly emphasized the importance of an all-inclusive energy strategy that leaves room for fossil fuels, he has voiced optimism on Congress' ability to compromise.

"I do think that infrastructure is a big thing that we can do," Manchin said during an April 21 event hosted by Axios.

What industry wants

Power industry groups hope that Congress can reach a consensus on infrastructure, particularly if that package includes Biden's proposed grid enhancements.

"For the first time I can ever recall, the president, in particular, and his administration seem keenly focused on the need for transmission investment and making it a key part of his climate agenda," Larry Gasteiger, executive director of transmission planning advocacy group WIRES, said in an interview.

But industry members acknowledged the uphill battle inherent in reconciling the administration's $2 trillion proposal with the GOP's smaller infrastructure plan.

"I think taking the grid out of the equation is really a mistake, given what we've seen just in the past six to nine months in California and then in Texas," said Leah Rubin Shen, who coordinates federal policy efforts for the business group Advanced Energy Economy. To drum up conservative support, AEE stressed that investment in advanced energy technologies generally produces at least four-to-one returns on that investment and has tremendous effects on job creation and economic development.

How helpful legislation ultimately can be to getting long-distance transmission lines built remains a question. "The key obstacle posed to the large transmission projects in development in the U.S. over the last decade has been local and state permitting, which resides outside the jurisdiction of the federal government," Kieran Kemmerer, power sector analyst at S&P Global Platts Analytics, asserted.

"Project owners have attempted to overcome obstacles in permitting by providing direct benefits to affected communities, or tried to circumvent issues altogether by burying lines, with little success," he said.

Gasteiger said he was concerned about the unpredictability surrounding what Congress may do and was hopeful but not optimistic that lawmakers could find ways to ease the development of new projects.

"Any actions they take that can help streamline the permitting and the siting process would be helpful," he said. "Those are extremely difficult issues. They are political in nature, and those are going to be amongst the hardest to try and get through."

S&P Global Platts and S&P Global Market Intelligence are both owned by S&P Global Inc.