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US utilities await new push on clean energy credits despite mounting challenges


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US utilities await new push on clean energy credits despite mounting challenges

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U.S. President Joe Biden delivers his first State of the Union address March 1. The president urged support for some of the climate provisions in the stalled Build Back Better bill.
Source: Pool/Getty Images News via Getty Images North America

Utilities and clean energy advocates hope Democratic lawmakers will make a new push for climate legislation in the coming months despite major headwinds for U.S. President Joe Biden's domestic agenda.

The window for action will be small, sources say, with Russia's invasion of Ukraine and a range of policy issues demanding Congress' attention. Democrats also face a midterm election in which they could lose control of one or both chambers in Congress, making swift action on an ambitious climate or clean energy bill imperative.

During his March 1 State of the Union address, Biden touted the potential cost savings for consumers from his proposed climate policies amid growing inflation and surging energy prices due to the invasion by Russia, an oil and gas producer. Biden also called for a doubling of clean energy production and to lower the cost of electric vehicles.

After signing infrastructure legislation into law in late 2021, Biden has urged Congress to approve hundreds of billions of dollars in tax credits for clean energy and manufacturing to carry out his Build Back Better social spending and climate plan. The U.S. House of Representatives passed the Build Back Better bill in November 2021 before the legislation hit resistance in the Senate due to cost concerns from Republicans and Democratic Sen. Joe Manchin of West Virginia.

But efforts to advance the bill's climate provisions separately could be imminent. "We heard that they might start hearings on some pieces at the end of the month," one clean energy lobbyist said on background March 2, adding that a definitive timetable has not emerged.

Spokespeople for the House and Senate tax-writing committees and other relevant committees did not immediately return inquiries about possible hearings. But after the State of the Union address, Senate Finance Committee Chairman Ron Wyden, D-Ore., made a refreshed plea to pass clean energy legislation.

"Russia's invasion of Ukraine has provided a stark reminder of the need to free ourselves from our dependence on oil and gas from countries ruled by despots like Vladimir Putin," Wyden tweeted March 2. "Congress must pass a clean energy package as soon as possible not only to reduce energy costs and carbon emissions, but our reliance on foreign oil and gas as well."

In early February, an executive with the Edison Electric Institute said he expected lawmakers to craft a bill containing clean energy tax credits in the second quarter, with major utilities and clean energy backers rallying around the incentives.

"President Biden's first State of the Union address was emphatic and unmistakably clear about the urgency of rapid clean energy investment," American Clean Power Association CEO Heather Zichal said in a March 1 statement. "We join the President in urging Congress to take action on critical investments and tax credits for the renewable energy industry that have broad bipartisan support."

Time short, but action possible

Congress has a busy schedule ahead that could deprioritize climate legislation.

Lawmakers face a March 11 deadline to pass the additional funding needed to avoid a government shutdown. They may also try to pass supplemental appropriations to deal with the crisis in Ukraine at the same time as Democrats hope to hold hearings on Biden's U.S. Supreme Court nominee, Ketanji Brown Jackson.

Unless those issues are resolved quickly, work on a climate or clean energy tax bill could extend into summer, when Congress typically takes a monthlong August recess. Time for such legislation could be short in the fall as well, in light of appropriations deadlines ahead of the new fiscal year starting in October and the November midterm elections.

Still, chances for climate legislation to pass in 2022 are "very strong," said Charlie Ellsworth, a partner at Pioneer Public Affairs and former lead budget adviser for Senate Majority Leader Chuck Schumer, D-N.Y.

"I think the [Senate Democratic] caucus, all 50 members ... recognize there's a moral imperative to act on climate," Ellsworth said in an interview. "It's been more than a decade since our last opportunity to truly make a transformative impact for climate policy, and we don't know when we'll get another opportunity."

As with the Build Back Better bill, Ellsworth said he expects Democrats to try to advance climate provisions through the budget reconciliation process. That process allows legislation to avoid the 100-seat Senate's requirement for 60 votes to avoid a filibuster, thereby allowing Senate passage of a bill with just a simple majority.

"I think the caucus would want to and be able to pass something far more substantial before we lose the ability to use reconciliation, which is at the end of September," Ellsworth said.

Manchin support still uncertain

Despite that optimism, Senate Democrats may be challenged to get their entire caucus on board, depending on how climate measures are advanced.

After opposing the Build Back Better package in late 2021, Manchin indicated agreement was possible on the bill's climate provisions. Following Biden's March 1 address to Congress, however, Manchin appeared skeptical of the president's hopes to revive key pieces of the Build Back Better legislation in order to fight inflation.

"Nothing's changed," Manchin said with respect to his position on the bill, according to a March 1 story by The Hill. "I've never found out that you can lower costs by spending more."

Utilities are still pushing Congress to act quickly to support their climate goals.

"The clean energy tax provisions laid out in the Build Back Better Act and supported by the president in his State of the Union address offer an affordable way to combat the climate crisis," said Paul Adams, a spokesperson for Constellation Energy Corp., which joined several other large utilities recently to urge passage of the bill's climate components.

"Constellation and many others are ready to unleash significant long-term investments in clean energy, but Congress needs to act soon so that we can get to work building our clean energy future."

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