latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/us-senate-passes-budget-resolution-that-paves-way-for-aggressive-climate-action-66011801 content esgSubNav
In This List

US Senate passes budget resolution that paves way for aggressive climate action


Insight Weekly: US stock performance; banks' M&A risk; COVID-19 vaccine makers' earnings


S&P Capital IQ Pro | Powered by Expert Insights


Insight Weekly: LNG exports surge; investors unfazed by inflation; neobanks drive VC funding

451 Research Podcast

Next in Tech | Episode 41: IoT's Role in Energy and Utilities

US Senate passes budget resolution that paves way for aggressive climate action

The U.S. Senate narrowly passed a $3.5 trillion budget resolution early Aug. 11 that could pave the way for major climate and clean energy programs.

The resolution, which now heads to the U.S. House of Representatives, is the first step in the budget reconciliation process. If the House also passes the resolution, relevant committees in both chambers will work together to draft legislation to carry out the Senate Budget Committee's reconciliation instructions, which include creating sweeping new programs to curb climate-warming greenhouse gas emissions.

The budget resolution gave a target date of Sept. 15 for Senate committees to submit their reconciliation bills.

"The Democratic budget will bring a generational transformation to how our economy works for average Americans," Senate Majority Leader Chuck Schumer, D-N.Y., said after the Senate voted 50-49 to pass the resolution. "It will cut taxes for American families. It will lower costs for everyone. It will create good-paying jobs while tackling climate change."

The budget committee's reconciliation instructions called for the Senate Energy and Natural Resources Committee to propose a "clean electricity payment program." The program, similar to a clean electricity standard, would provide incentives to utilities to add zero-emission generation and penalize those that do not meet the program's clean energy requirements.

Other policies requested in the reconciliation instructions include tax incentives for clean energy, manufacturing and transportation, investments in clean vehicles, fees on methane emissions and carbon-intensive imports, and consumer rebates for home weatherization and electrification.

The Senate's passage of the budget measure came a day after the upper chamber approved a more than $1 trillion bipartisan infrastructure package.

The infrastructure bill, which also now goes to the House, contains dozens of energy and climate provisions, including proposals aimed at easing transmission development and supporting advanced clean energy technologies. But climate advocates and progressive Democrats have pushed for more aggressive action as part of the reconciliation bill.


Before adopting the budget resolution, the Senate voted on a wave of energy- and climate-focused amendments.

The Senate agreed to an amendment from Sen. Kevin Cramer, R-N.D., that would prohibit the White House Council on Environmental Quality and the U.S. Environmental Protection Agency from promulgating rules or guidance to ban hydraulic fracturing in the U.S.

Amendments were also adopted to address concerns over China's labor practices, including the production of clean energy equipment and materials. The Senate voted 90-9 in favor of an amendment from Sen. Dan Sullivan, R-Alaska, that would prohibit renewable energy projects that receive federal funds and subsidies from purchasing materials, technology and critical minerals produced in China.

If enacted, the proposal could substantially impact the renewable power industry. China is responsible for about 80% of the processing and manufacturing of minerals, rare earth elements and metals used in the U.S. renewable energy and national security sectors, a release from Sullivan said.

"If we are going to build out our domestic renewable energy industry, we need to have an honest conversation about where we are sourcing these materials," Sullivan said. "We cannot continue to be dependent on China for critical minerals — resources that are crucial to our economy and national security, and [of] which we have in abundance in the U.S., particularly in Alaska."

The Senate, however, rejected other energy amendments. An amendment failed from Sen. Cynthia Lummis, R-Wyo., that sought to cancel the Biden administration's pause on new oil and gas leases on federal lands pending a programmatic review. In mid-June, a federal judge struck down the administration's policy, citing federal laws requiring the U.S. Interior Department to issue leases.