latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/house-dems-bill-targets-clean-power-by-2035-with-big-grid-generation-changes-62954531 content esgSubNav
Log in to other products

 /


Looking for more?

Contact Us
In This List

House Dems' bill targets clean power by 2035 with big grid, generation changes

Blog

Essential Energy Insights - March 2021

Blog

what is the impact of the eu sustainable finance disclosure regulation sfdr

PODCAST

Episode 8: What the SolarWinds compromise means for information security

Blog

Infographic Q4 20 US Power Forecast


House Dems' bill targets clean power by 2035 with big grid, generation changes

SNL Image

House Energy and Commerce Committee Chairman Frank Pallone, D-N.J., listens during House Speaker Nancy Pelosi's weekly news conference on Nov. 6, 2020.
Source: Al Drago/Getty Images News via Getty Images

Democrats in the U.S. House of Representatives introduced an updated version of a broad climate action bill that would put the U.S. on a path to 100% clean electricity generation by 2035, mirroring President Joe Biden's timeline for achieving an emissions-free power sector.

The nearly 1,000-page bill also includes provisions that would promote transmission development, require public utilities to place their transmission facilities under the control of a regional grid operator within two years, and compel public companies to disclose information about their exposure to climate-related risks.

The proposals were contained in the new version of the Climate Leadership and Environmental Action for our Nation's Future Act, or CLEAN Future Act, which Democrats on the House Energy and Commerce Committee introduced March 2.

"The bill marks the first introduction of a major comprehensive piece of climate legislation in over a decade, and it's exactly the kind of federal leadership that I think the moment demands," House Energy and Commerce Committee Chairman Frank Pallone, D-N.J., said on a March 2 media call. "This is just the beginning. We are going to use regular order, and we really think that this is a major step forward and a major action plan that will define climate policy."

Pallone said the bill, which would authorize $565 billion in spending over 10 years, does not include an explicit price on carbon, such as a carbon tax, since similar policies have failed in the past. "The votes are just not there for a price on carbon," he explained.

The committee and subcommittees will hold hearings on the legislation and welcome input from other representatives, Pallone said. Noting that the bill contains Republican legislative proposals as well, the chairman said he hopes to move the bill through regular order with Republican participation so Democrats do not have to turn to budget reconciliation to pass it. But, he added, he will not "rule anything out."

Gaining Republican support for the bill may be difficult, however. In a statement, three Republicans on the Commerce Committee, including ranking member Cathy McMorris Rodgers, R-Wash., denounced the Democrats' proposal, calling it a "down payment on the Green New Deal."

“We can pursue practical policies to innovate a cleaner energy future if we work together," they said. "Rather than threaten millions of jobs and hold back America's economic recovery, we urge the majority to join us in a bipartisan way to unleash innovation, strengthen our supply chains, and capture all the advantages of our abundant resources, which include coal, hydropower, nuclear technologies, and clean natural gas."

Clean electricity standard

The CLEAN Future Act commits the U.S. to reducing greenhouse gas emissions from 2005 levels by 50% by 2030 and achieving a 100% clean economy no later than 2050.

As part of that goal, the bill establishes a federal clean electricity standard of 100% clean generation by 2035, with an interim target of 80% clean electricity by 2030. A draft version of the CLEAN Future Act introduced in January 2020 called for a complete shift to clean generation by 2050, but House Democrats have stepped up their ambitions to align with Biden's 2035 target.

The clean electricity standard would require retail electricity suppliers to provide an increasing percentage of electricity from zero-emission sources starting in 2023. Power suppliers will have the option to trade zero-emission electricity credits or make alternative compliance payments to satisfy their requirements under the bill.

To determine issuance of the credits, the bill would establish a carbon intensity baseline of 0.82 metric tons of carbon dioxide per MWh through 2030, with the baseline declining to 0.4 metric tons per MWh in 2035. Nonemitting generators would receive a full credit, while sources with emissions below the carbon intensity threshold can receive a partial credit.

Although the standard is resource-neutral, the 2035 step-down in the carbon intensity threshold "phases out the ability of fossil fuel power plants to earn partial credits," according to a committee fact sheet on the bill.

The U.S. Environmental Protection Agency administrator can extend an individual retail supplier's compliance obligation in the 2030s by one year at a time if the supplier submits alternative compliance payments totaling more than 10% of its compliance obligations for the two prior consecutive years. But the EPA can grant such extensions no more than five times, the fact sheet said. Failure to comply with the clean electricity standard's mandates could result in civil penalties from the EPA administrator.

The legislation, however, would not prevent states from adopting or enforcing their own clean or renewable energy standards or regulations for retail electricity suppliers if states satisfy the federal standard's requirements.

Along with the earlier decarbonization target for the power sector, the new CLEAN Future Act added new labor standards to the clean electricity standard title. To be eligible to receive zero-emission credits, generators must pay prevailing wages for construction of new units and all qualifying generation must remain neutral with respect to workers' rights to organize and bargain.

FERC implications

Recognizing that the earlier draft of the bill fell short on electric transmission buildout, the updated version would go much further by establishing a new Office of Transmission within the Federal Energy Regulatory Commission. The new office would help coordinate the "responsible" permitting and siting of new interstate transmission lines, which often face stiff local opposition from affected landowners.

In addition, the bill would provide $75 million annually over the next decade in assistance to state, local and tribal governments for the permitting and siting of interstate transmission lines.

Pro-transmission groups have estimated the U.S. needs to double or even triple its high-voltage electric transmission capacity to successfully decarbonize its economy by midcentury.

The legislation also aims to resolve legal uncertainty around FERC's ability to exert so-called "backstop" siting authority by clarifying that the agency can issue permits for interstate transmission facilities if a state commission has previously denied needed permits. The change comes after former federal regulators, as well as current FERC Chairman Richard Glick, warned that the U.S. Congress needs to provide further clarity on the issue after a federal appeals court tossed the commission's implementing rules for a 2005 law giving it backstop siting authority for proposed transmission projects that have languished before state regulators.

In addition to requiring regional grid operator participation by all public utilities, the bill would require FERC to promulgate a rule requiring better interregional planning by those grid operators. Other noteworthy provisions include language to allow energy storage resources and non-wires solutions to receive favorable rate treatment under the Public Utility Regulatory Policies Act of 1978.

Methane and flaring provisions

The proposed legislation contains significant methane reduction goals as well. If enacted, the bill would direct the EPA to require existing methane sources in the oil and gas sector to reduce emissions by 65% from 2012 levels by 2025, reaching a 90% reduction by 2030. The agency would also be tasked with curbing pollution from liquified natural gas facilities and offshore oil and gas infrastructure.

Additionally, the proposal would create a $1.25 billion grant program through the U.S. Department of Energy to prevent natural gas system methane leaks and offset utility rate increases for low-income areas.

The legislation also targets routine flaring, prohibiting the practice at new oil and gas facilities and limiting it for existing sources to 80% below 2017 levels by 2025. By 2028, the bill calls for an end to routing flaring entirely.

Other key pieces

On the transportation side, the bill includes several provisions to expand U.S. electric vehicle infrastructure and access, including authorizing $500 million to deploy EV supply equipment and $2.5 billion per year to speed the transition to zero-emission school buses. But unlike the original CLEAN Future Act, the new bill excluded emissions standards for light- and medium-duty vehicles, with Biden's EPA expected to introduce its own tougher automobile standards.

Along with sector-specific provisions, the CLEAN Future Act includes several economywide measures. If enacted, the bill would direct the Securities and Exchange Commission to require public companies to disclose information about their exposure to climate-related risks, including direct and indirect greenhouse gas emissions. Public companies would also need to "identify and mitigate the physical and transition risks posed by climate change," the bill's fact sheet said.

Another provision would require 40% of funds made available under the bill to be used to support activities that directly benefit environmental justice communities. The legislation also establishes an Office of Energy and Economic Transition to coordinate federal activities related to workers and communities on the frontlines of the clean energy transition.

Finally, on the clean energy financing front, the bill would create a "first-of-its-kind accelerator" to fund emissions-cutting technologies. The bill would authorize $100 billion in federal support for the "Clean Energy and Sustainability Accelerator," which is modeled after so-called "green banks" for facilitating private investment in clean energy and climate solutions.