The Climate Moment

winding road

By Hampden T. Macbeth
September 9, 2021

August is usually a slow month on Capitol Hill, but that was not the case this summer. Both houses gave up parts of their recess to set up a potentially historic moment for climate action later this fall. 

First up, 69 bipartisan senators passed the infrastructure bill, which provides over $550 billion in new spending authorizations. The bill includes $7.5 billion to construct electric vehicle charging stations and billions in grid funding, as well as:

  • $5 billion in grant funding for grid resilience projects; 
  • $6 billion for a civil nuclear credit program to compensate nuclear generation for avoiding emissions; and
  • $2.5 billion for a Department of Energy (DOE) program designed to support large new transmission lines or upgrades to existing lines. 

The bill strengthens the roles of DOE and the Federal Energy Regulatory Commission (FERC) in transmission buildout. The legislation establishes more specific criteria for DOE to use when it designates National Interest Electric Transmission Corridors. And to relieve one of the potential stumbling blocks to transmission, FERC would have siting authority to approve permits for the construction or modification of interstate transmission facilities in those corridors where state permitting is lagging. 

Following passage of the infrastructure bill, the Senate kicked off the budget reconciliation process by adopting a $3.5 trillion budget resolution the next day. The reconciliation process is not subject to the filibuster in the Senate - it can pass with a simple majority - and it allows for expedited consideration of legislation that brings existing spending and revenue provisions into line with the fiscal priorities included in the annual budget resolution. For its part, the budget resolution includes top-line funding numbers with instructions for House and Senate committees to develop legislative policy provisions within their jurisdiction related to direct spending or revenue.  

The budget reconciliation process may lead Congress to take steps to cut greenhouse gas emissions. The budget resolution includes instructions to the relevant congressional committees to develop several climate policy provisions with spending or revenue impacts for the budget reconciliation package. 

Among these provisions is the creation of a Clean Electricity Payment Program, an alternative to a clean energy standard. Clean energy standard programs have been successful in reducing greenhouse gas emissions when implemented at the state level. The new proposal is not a mandate that each electricity supplier achieve a certain percentage of clean electricity by a particular date. Rather, it is part of a package of financial incentives - including payments to suppliers that increase their clean electricity share year-over-year and fees assessed on suppliers that fail to meet annual targets - that are designed to hit an 80% clean energy national average by 2030. A recent analysis indicated that the Clean Electricity Payment Program could generate over $900 billion in added economic value to the U.S. economy and create 7.7 million jobs by 2031. 

There is also an effort to reform the energy tax code. The Senate Finance Committee has already advanced legislation this year that simplifies the energy tax code in favor of a code that will promote three goals through technology-neutral and performance-based tax credits: clean energy, clean transportation, and energy efficiency.  

Senate leadership asserts that these provisions could account for nearly two-thirds of the emissions reductions needed to reduce greenhouse gas emissions 45% by 2030. Further progress on the 45% target could be made through use of a few other possible tools: a fee on vented, flared, or leaked methane emissions from the oil and gas industry; repeal of fossil fuel subsidies; and agriculture conservation and forest management programs. Leading climate states that have pledged further reductions in excess of the federal-level cuts would provide additional emissions reductions. 

After the action in the Senate, the House returned on August 24 to approve a plan to vote on the infrastructure bill with its climate provisions by the end of September and to clear the path for the use of the budget reconciliation process. Senate and House leaders have told their respective committees to submit their parts of the budget reconciliation package to the Budget committees by September 15 with the hope that the consolidated package can be considered by the full House and Senate in the second half of the month. 

An untypically busy August has given way to a busy early September. The coming weeks on Capitol Hill will determine whether the U.S. embarks on a legislative path to addressing climate emissions.   

Hampden T. Macbeth is an attorney with experience in climate, environmental, and energy law and policy. He is a Staff Attorney at the State Energy & Environmental Impact Center.