With help from Kelsey Tamborrino
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— The House Energy Committee is scheduled to consider critical pillars of the Democrats’ climate plans today, including the Clean Electricity Performance Program that is part of their reconciliation legislation.
— House Ways and Means is taking on a number of renewable energy tax incentives this week, with a possible game-changing direct pay option.
— Greens are concerned about Biden’s pick for the newest FERC commissioner and his record (or lack thereof) of standing up to utilities.
HAPPY MONDAY! I’m your host, Matthew Choi. Bracewell’s Frank Maisano gets the trivia for knowing Appenzell Innerrhoden was the last Swiss canton to grant women full suffrage in 1991. For today: What is the most populous city in Côte d’Ivoire? Send your tips and trivia answers to [email protected]. Find me on Twitter @matthewchoi2018.
Check out the POLITICO Energy podcast — all the energy and environmental politics and policy news you need to start your day, in just five minutes. Listen and subscribe for free at politico.com/energy-podcast. On today’s episode: House Dems aim high on clean energy, climate.
MARK IT UP: The House Energy and Commerce Committee is taking on its portion of the reconciliation package today, including many of Democrats’ key climate priorities. Chief among them: $150 billion for a Clean Electricity Performance Program meant to push utilities into phasing in more clean energy into their portfolios. The legislation also includes provisions for lead pipe removal, methane fees, transmission upgrades and EV charging infrastructure, as the Pro Energy team dove into last week. Several provisions, such as those for lead pipes and EVs, aim to close the gaps between the costs to achieve the administration’s stated goals and the funding levels offered in the bipartisan infrastructure package.
With a number of natural disasters plaguing the country this summer, from storms along the East and Gulf Coasts to wildfire and drought out west, Committee Chair Frank Pallone echoed President Joe Biden’s line that the climate measures were as much about responding to immediate catastrophes as revamping the nation’s infrastructure.
“The American people are facing a public health crisis, a rapidly escalating climate crisis, and long-term economic challenges that demand decisive action by Congress,” Pallone said in a statement. “We have a historic opportunity to take bold action that delivers meaningful change for the American people, and I look forward to coming together to take up this urgently needed legislation.”
The clean electricity payment plan is a key pillar in Democrats’ agenda to cut down emissions. When the office of Senate Majority Leader Chuck Schumer conducted an analysis on the climate provisions in the bipartisan and reconciliation plans, the payment program accounted for the single biggest portion of their anticipated emissions cuts, Pro’s Zack Colman reports. But it still has to pass muster as a budget item with the Senate parliamentarian and earn the blessing of centrist Democrats in the Senate, like Energy Chair Joe Manchin.
Environmentalists say there is no room for error, with the entire spate of Democrats’ climate plans needed to meet Biden’s 50 percent emissions cut target. And they have been busy working with legislators to design a clean energy plan that can go through the arcane rules of the reconciliation process, as Zack breaks down for Pros.
MANCHIN’S MAX: Manchin made clear on CNN Sunday that he has no interest in a reconciliation package that exceeds $1.5 trillion — to the chagrin of Sen. Bernie Sanders who says the current $3.5 trillion figure is already a major concession to moderates. “The numbers they’re wanting to pay for it and the tax changes they want to make, is that competitive? Does it keep us competitive or not? I believe there are some changes made that do not keep us competitive,” Manchin said on “State of the Union.” Kelly Hooper has more for Pros.
THE CORPORATE FIGHT: Green groups are losing their patience with corporate lobbyists who say they support climate action but oppose the $3.5 trillion reconciliation bill. While the U.S. Chamber of Commerce, Business Roundtable and the National Association of Manufacturers all support the bipartisan infrastructure deal and openly talk about combating climate change, they reject the “kitchen sink” approach of Democrats’ budget plan, which they view as a partisan ploy with items far beyond climate. But environmentalists are calling Tartuffe and insisting business groups go all in. Zack and Anthony Adragna have more on the fight for Pros.
TAX TALK: The House Ways and Means Committee is slated to consider a host of tax incentives for wind, solar and other green energy on Tuesday after the panel unveiled the proposed text of its sweeping tax package late Friday. The highly anticipated proposed credits are part of the panel’s portion of the reconciliation package and offer the opening bid from tax writers before the Senate takes up its own plan, as Pro’s Brian Faler reports.
Bonus track: Under the House green incentives, any taxpayer looking to take advantage of the full value of a so-called “bonus rate” would need to meet prevailing wage, apprenticeship and domestic content requirements, Pro’s Kelsey Tamborrino reports. Otherwise, they’d be able to claim a “base” credit that is just 20 percent of the “bonus” credit value.
What’s in it? The proposed package includes several notable wins for clean energy advocates, including an up to $12,500 electric vehicle tax credit that ensures final assembly of the vehicle is at a U.S. facility that operates under a collective bargaining agreement and that uses batteries manufactured in the U.S. The package also would allow solar energy to qualify for the production tax credit, which would be extended to 2031 before phasing down to 80 percent in 2032 and 60 percent in 2033. It would also provide an extended investment tax credit for most projects that begin construction by the end of 2032, and would expand the ITC to include energy storage technology, among other provisions.
Let’s be direct: But perhaps one of the most notable proposed changes would make several of the incentives — including for the ITC, PTC and credits for clean hydrogen, zero-emission nuclear and carbon capture and sequestration — eligible for direct pay. That’s a game-changer that clean energy advocates have clamored for for months, amid a slowdown in the tax equity markets triggered by the Covid-19 pandemic, and which researchers say will boost the long-term future of the industry by preventing any potential financing bottlenecks.
What’s the cost? The Joint Committee on Taxation is out with its estimate on the draft tax package, which it said in total would cost $1.2 trillion. Altogether, the green energy tax breaks would cost $235 billion, JCT said.
Not so fast: But biofuel and agriculture advocates are sounding the alarm over the language of a proposed $1.25-$1.75 sustainable aviation fuel tax credit, which they argue would make the administration’s new SAF targets extremely difficult to achieve. Under the bill, sustainable aviation fuels would need to meet lifecycle emissions reduction requirements adopted by the International Civil Aviation Organization, which biofuels groups and farmers say does not use the most comprehensive modeling approaches, leaving some SAF pathways “inaccurate and inappropriately penalized.” They call for use of the Energy Department’s GREET model instead.
Several groups, including the Renewable Fuels Association and American Farm Bureau Federation, sent a letter over the weekend to House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer urging them to change the language in the Ways and Means package, as well as language on SAF out of the Transportation Committee and on a SAF pilot program in the FY22 National Defense Authorization Act. The provisions “exclude SAF derived from agricultural feedstocks from incentive programs and ensure that the Administration’s vision for reducing aviation emissions and the cited opportunities for American agriculture are not realized,” they wrote. “Instead, SAF blend stock from Brazil, Singapore and elsewhere will be subsidized by U.S. taxpayers, while U.S. producers and farmers are shut out.”
WATER WORKS: The House Transportation Committee is also scheduled to meet Tuesday to discuss directing $3.7 billion toward upgrading wastewater infrastructure as part of the committee’s $60 billion portion of the budget plan. The money is meant to top off the $11.7 billion for the Clean Water State Revolving fund included in the bipartisan infrastructure bill, Pro’s Annie Snider reports.
FERC FRETS: The nomination of Willie Phillips to become the newest FERC commissioner is raising some eyebrows among environmental circles who fear the D.C. utility regulator won’t be as aggressive on climate as they’d hoped, Pro’s Catherine Morehouse reports. His critics expressed discontent with his record on the D.C. Public Service Commission in pushing utilities to match the city’s clean energy targets and in fighting for vulnerable frontline communities.
“There’s no smoking gun that you can point to and say, ‘Commissioner Phillips doesn’t get it,’ or … ‘He’s in the pocket of Washington Gas,” Larry Martin, a former EPA official who is now a convener for local clean energy working group Grid 2.0, and has been appearing before the D.C. commission since 2012, told Catherine. “But, you know, there’s just no evidence that the decisions that are being made are actually challenging the old business as usual.”
Phillips has won the support of key players in the renewable energy industry, with the Solar Energy Industries Association backing him as early as July and Greg Wetstone, head of the American Council on Renewable Energy, praising his “deep legal understanding of the issues at stake.” He’s also considered a safe bet for a Senate confirmation, multiple people told Catherine, and his backers say that his experience on a public service commission will help him avoid a lengthy confirmation process. Catherine has more for Pros.
ENERGY IN THE LAND OF LINCOLN: The Illinois Senate is planning to meet today to take up the state’s ambitious energy bill that has been years in the making. The state House passed the measure late Thursday night after hours of debate on how to achieve its goal of eliminating carbon emissions by 2050. Gov. J.B. Pritzker said he plans to sign the House’s agreement into law if the Senate approves it. The bill would allow two coal power plants to remain operational until 2045 but they would have to nearly halve their emissions over the next 14 years. It also offers financial assistance to keep open the state’s financially ailing nuclear fleet, just as Exelon planned to shutter two of its plants unless it received state help. WBEZ and the Associated Press have more.
AD BUY: American Clean Power Association is out with a new batch of 30-second ads today as part of its Powering American Jobs campaign, urging lawmakers to pass infrastructure legislation that “levels the playing field” for clean power. The ads will run in Arizona, Iowa, Kansas, Nevada, New Hampshire, Virginia, West Virginia and D.C. — important clean energy states represented by big players in clean energy in Congress. “The adoption of stable policies will drive investment so our industry can accelerate the delivery of projects, create more good-paying jobs and help the U.S. meet emissions reduction targets,” said ACP CEO Heather Zichal in a statement.
The American Petroleum Institute, meanwhile, is releasing its own batch of ads as part of a seven-figure campaign opposing measures in the reconciliation package such as methane fees that it says punishes American energy. The ads are airing in over 140 congressional districts and key swing states including Arizona, Pennsylvania, West Virginia, Virginia, Minnesota, Georgia and Nevada.
NORD STREAM 2 READY FOR BUSINESS: Russian pipeline operator Gazprom said Friday that the contentious Nord Stream 2 pipeline is now complete, allowing Russian natural gas to flow to Germany via the Baltic Sea to the consternation of Ukraine. Amos Hochstein, the administration’s point person on the project, told Reuters there was “breathing room” until 2024 for Ukraine, which profits handsomely in transit fees from Russian gas sent to Western Europe and fears the pipeline will become Moscow’s coercive geopolitical tool. Still, Hochstein said it would be in Ukraine’s interest to transition to alternative energy sources. Reuters has more.
— Today is Adam Cloch’s first day as communications director for Rep. John Curtis (R-Utah). He joins Curtis’ staff from the American Gas Association, where he was communications manager.
— Katie Pastor is heading to National League of Cities, where she’ll work on the communications team within its Center for City Solutions. Pastor joins from World Resources Institute where she was a communications specialist in the Energy Program.
— “Iran Pledges to Cooperate With U.N. Atomic Agency, Easing Nuclear Talks Threat,” via The Wall Street Journal.
— “U.S. Gulf Coast oil refiners recovering faster than producers,” via Reuters.
THAT’S ALL FOR ME!