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Easing path for Biden energy agenda, Democrats gain control of US Senate

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Easing path for Biden energy agenda, Democrats gain control of US Senate

Highlights

AP calls tight race for Ossoff over Perdue

Easier path for Biden nominees under Democratic leadership

Washington — Brightening the prospects for the climate agenda of incoming President Joe Biden, Democrats have regained control of the US Senate. As the final votes from the Georgia runoff were being counted at midday on Jan. 6, Raphael Warnock was projected to win his race, and fellow Democrat Jon Ossoff was projected by The Associated Press to edge past David Perdue.

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Democratic control could expand the scope of what Biden can achieve as part of his energy transition agenda, with implications for renewable and clean investment and reversing President Donald Trump's deregulatory efforts. Prospects increase for the new president to advance his "climate team" of cabinet picks through the Senate confirmation process, although challenges remain for moving an ambitious climate and energy agenda through a narrowly divided chamber.

Democratic victories in both races leave the Senate split 50-50, with Vice President-elect Kamala Harris able to cast deciding votes, and put Democrats in control of the chamber. Fifty-one votes are needed to advance nominees, while legislation often requires 60 votes to overcome a filibuster.

The Associated Press projected Warnock as beating Kelly Loeffler 50.7% to 49.3%; Ossoff was leading 50.3% to Perdue's 49.7% of the vote. Georgia law allows a candidate to request a recount if the margin is 0.5% or less.

Biden energy and environment nominees include former Michigan Governor Jennifer Granholm, who has championed renewable energy development, former Indiana Mayor Pete Buttigieg, a vocal proponent of decarbonizing the electric and transportation sectors, and Representative Deb Haaland, Democrat-New Mexico, who has been outspoken about controlling extractive industries on federal lands. Haaland's nomination has already shown signs of facing friction from Republican senators.

IMPLICATIONS FOR FERC

Democratic control of the Senate also stands to improve odds Biden can advance another Democrat to join the Federal Energy Regulatory Commission, potentially tipping the balance to a Democratic majority once Commissioner Neil Chatterjee's term concludes at the end of June. With Republican Commissioner Mark Christie having been sworn in Jan. 4, FERC currently has a 3-2 Republican majority, although Biden is expected to designate a Democrat to be chairman, thus controlling the agenda, after the presidential inauguration Jan. 20.

An eventual Democratic majority at FERC would bolster prospects for capacity market reform, facilitating storage and distributed resources and advancing transmission rate reform that encourages renewables growth. It could also raise odds for changes to FERC's pipeline certificate policy to boost consideration of climate and other environmental impacts and to look beyond precedent agreements to establish whether projects are needed.

Under Senate Democratic leadership, Senator Joe Manchin, Democrat-West Virginia, stands to play a pivotal role, leading the Senate Energy and Natural Resources Committee and, as one of the most conservative Senate Democrats, serving as an important swing vote in the chamber.

Manchin has a record of working with former Senate Energy panel chairman Lisa Murkowski of Alaska to advance bipartisan energy proposals such as a recent package of bills that included tax credits for wind and solar energy and carbon capture projects and funding for innovation research. He is likely to back federal investments in clean energy and manufacturing workforce development in areas hard hit by market changes, according to a congressional aide. But he may be more hesitant to champion more sweeping climate targets desired by progressives, given West Virginia's coal industry and challenges gaining enough votes for such actions.

Senator Tom Carper, Democrat-Delaware, is seen as likely to lead the Senate Environment and Public Works Committee.

Moving more ambitious climate legislation through the Senate would likely require 60 votes, although some measures with tax implications could move on a budget reconciliation that requires just a simple majority.

REGULATORY ROLLBACKS

With control of the House and Senate, Democrats could also attempt to stamp out Trump administration deregulatory efforts using the Congressional Review Act, although garnering votes needed to do so likely would vary on a case-by-case basis. In addition to the 50-50 Senate, the House saw Democrats' margins tighten following the November elections.

ClearView Energy Partners in a research note said the thin blue margin in the Senate might not enable Biden's party to enact a sweeping climate law, but Democratic party control "over legislative agendas in both chambers could enable (1) the inclusion of substantial incentives for renewable resources transition technologies and in a recovery-focused stimulus package; (2) an opportunity to rescind some existing fossil fuel tax provisions in tandem with a corporate tax rate hike; and (3) improved prospects for rollbacks of late-breaking, Trump-era rules via the 1996 Congressional Review Act."

In a Democratic stimulus, ClearView also anticipated outlays toward advanced manufacturing, such as EVs and transition technologies and Schumer's Clean Cars for America Act. It counted only 46 votes for rescissions of existing tax treatment for fossil fuels.

Scott Segal of Bracewell's Policy Resolution Group said Democratic control reopens the potential reuse of the budget reconciliation process as a way to advance a pricing mechanism for carbon. "Carbon taxes or fees fits more neatly within the constraints of reconciliation as do changes to the tax treatment of fossil fuels. Actual emissions limits or clean-energy standards are tougher sells through reconciliation," he said in an email Jan. 6.

The change in Senate leadership and climate will put climate change and clean energy legislation "much higher on the agenda," he said. The narrow margins are seen amplifying the importance of Biden administration executive actions on energy and the environment, including steps to roll back Trump regulations affecting energy and infrastructure development, and tighten controls on production on federal lands.

Democrats in both chambers released climate plans this summer that may serve as a blueprint for proposals in the next Congress. In August, Senate Democrats' Special Committee on the Climate Crisis outlined goals pertaining to a clean energy transition that included calls for a federal clean energy standard, carbon price, or other emissions-mitigation market mechanisms. House Democrats also released a plan containing hundreds of specific policy recommendations in June that included a proposal to give FERC a larger role in driving down power sector emissions.