|Senate Majority Leader Chuck Schumer, D-N.Y., and congressional Democrats hope to add ambitious climate and clean energy measures to an eventual infrastructure bill.
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U.S. energy producers are aiming to have key industry priorities addressed as President Joe Biden and congressional lawmakers work to draft massive legislation to upgrade the country's aging infrastructure.
Energy and mining trade groups hope the plan will tackle a whole host of issues, ranging from the need to ease power transmission permitting to providing support for greater domestic minerals production to feed the clean energy transition.
Tax policy could also be a significant component of the bill. Some trade groups want Congress to amend the tax code to better promote clean energy technologies or allow their members to capitalize on existing policies.
"Historically, changes to the tax code have always been a part of an infrastructure discussion, and without question, we anticipate that changes to tax policy are going to be an important piece of the discussion both on transportation infrastructure and energy infrastructure," said Louis Finkel, senior vice president of government relations for the National Rural Electric Cooperative Association. "We believe it's an appropriate conversation to be had."
White House officials are preparing to present Biden a roughly $3 trillion infrastructure and jobs package, The Washington Post reported March 22. The infrastructure piece is expected to include $400 billion to combat climate change, spending that could underpin Biden's goal to decarbonize the power sector by 2035 and achieve net-zero emissions economywide by 2050.
Democrats in Congress have also floated infrastructure proposals that include major climate provisions. On March 11, Democrats on the House Energy and Commerce Committee proposed a $312 billion infrastructure bill that would devote nearly $70 billion to clean energy and energy efficiency and $48.1 billion to electric vehicle deployment, clean ports and smart cities. The legislation followed the committee's introduction of a broad climate bill that aligns with Biden's decarbonization targets.
But the climate and energy provisions that actually make it into the infrastructure package will hinge partly on what process Democrats use to advance the legislation.
Senate Majority Leader Chuck Schumer, D-N.Y., has said he is willing to move infrastructure legislation through budget reconciliation, an expedited process that allows bills to pass the Senate with a simple majority rather than the 60 votes needed to avoid a filibuster. But doing so will limit the infrastructure bill to provisions that change federal spending, revenues or deficits, which could exclude measures such as permitting reforms if they do not have budgetary effects.
Using reconciliation "may limit some of what we would like to see in the bill," said Desmarie Waterhouse, vice president of government relations and counsel for the American Public Power Association, or APPA. "I'm hearing conflicting things about whether it will be under reconciliation, or they'll make an attempt to do it through regular order and then if that doesn't pan out do budget reconciliation."
One of APPA's biggest priorities, according to Waterhouse, would be to boost funding for the research and deployment of new technologies to decarbonize the power sector, including long-duration energy storage and carbon capture, utilization and storage systems. But Waterhouse said increased authorizations "might be a problem" if Democrats rely on reconciliation unless that funding is made through direct appropriation or the tax code.
Yet, inserting aggressive climate and clean energy provisions in an infrastructure bill could be tough if Democrats advance legislation through regular order, given the 50-50 split in the upper chamber.
Clean power standard, tax incentives
Maria Korsnick, president and CEO of the Nuclear Energy Institute, called on Congress during a March 23 industry event to "make nuclear energy a part of any broader infrastructure bill," noting that this Congress could possibly advance a clean energy standard.
"Legislation designed to boost investment in carbon-free technologies or boost the market for carbon-free energy has to include nuclear," the CEO said.
Another major focus for power and clean energy groups is tax incentives. Renewable energy groups hope a potential infrastructure bill will provide longer-term certainty for federal tax incentives for wind, solar and other renewable resources, which have been subject to repeated short-term extensions in recent years.
House Democrats reintroduced legislation in 2021 to further extend key renewable energy credits, pieces of which could make their way into an infrastructure package. But some renewable advocates want more.
"A longer window is probably better," said Gregory Wetstone, president and CEO of the American Council on Renewable Energy. "If we're serious about achieving our climate goals, and that's really going to be the barometer against which we're measured, then our effort can't end in five years. We will need to continue to grow, we will need to continue that investment."
Municipal utilities and electric cooperatives want Congress to make federal renewable energy incentives available to them and other utilities that do not pay taxes. Doing so through direct cash payments will be crucial to realizing the country's climate goals, with roughly 30% of the U.S. utility sector exempt from taxes, said John Godfrey, APPA's senior director of government relations.
"If you want to incentivize production of power from wind or investments in solar, you're missing a third of the market," Godfrey said. "I think [lawmakers] are increasingly realizing that you just can't get to 100% [carbon-free power] with only 70% of the market."
Given their budgetary impacts, Godfrey said tax measures would be "better suited for reconciliation" than other types of policy measures.
Rural power cooperatives are also pushing for the ability to reprice their loans through the U.S. Agriculture Department's Rural Utilities Service, or RUS. Cooperatives with RUS debt have to pay a significant prepayment penalty to get out of their existing debt regardless of interest rates, Finkel noted.
"Interest rates are at a historic low," Finkel said. "This is a relief and recovery need for our members that have suffered the economic consequence of the pandemic … and this is a way for them to lower their debt burden and lower their cost of servicing their debt and reinvest in their communities and their co-ops."
With Democrats banking big on renewables to cut emissions, power groups say a comprehensive infrastructure package needs to provide support for electric transmission facilities.
House Energy and Commerce Committee Democrats included transmission development measures in their recently reintroduced climate bill, the Climate Leadership and Environmental Action for our Nation's Future Act, or CLEAN Future Act.
Among other things, the measure would direct the Federal Energy Regulatory Commission to help coordinate siting and permitting of new interstate transmission projects and provide $75 million annually over the next decade to assist state, local and tribal governments on transmission permitting and siting.
The bill, pieces of which could be attached to infrastructure legislation, would also give FERC "backstop" authority to site interstate transmission facilities if a state commission has previously denied needed permits. And another notable provision of the CLEAN Future Act would mandate public utility participation in regional grid operators.
Such provisions will help accommodate more renewables on the grid, said Larry Gasteiger, executive director of WIRES, a trade association working to advance high-voltage transmission investment.
"There is a real sense of urgency here because if we're looking at getting infrastructure in place to meet goals that are coming up in the 10- to 15-year timeline, we've got to get moving now," Gasteiger said.
But Gasteiger said WIRES is more focused on using tools that Congress has already provided for transmission development. The group wants FERC to finish proceedings already underway regarding return on equity and incentives for transmission projects, with WIRES supporting increased incentives for new lines.
A major energy infrastructure buildout could send demand for mined materials through the roof, especially with an increased focus on electrifying the transportation sector through electric vehicles, noted Rich Nolan, president and CEO of the National Mining Association. The mining trade group is also looking for opportunities to improve capital flows to U.S. mining projects.
"Primarily everything in infrastructure, at one point or another, begins with mining and mined products and metals," Nolan said. "So, we're going to be working in a bipartisan way with both the House and the Senate to look at provisions to continue to reshore the mining sector and firm up those supply chains."