With help from Ben Lefebvre, Kelsey Tamborrino and Annie Snider
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— Reconciliation is set to include at least $500 billion in climate spending, the White House told lawmakers, making it one of the biggest priorities in the package. But how that money will be spent is still being debated.
— EPA is gearing up to release its proposed methane rule Thursday, just as key senators continue to fight to include a methane fee in reconciliation.
— FERC and the Biden administration are hoping to build out long-distance transmission to help green the grid, but they’re facing roadblocks from utilities that don’t want to give up control.
HAPPY WEDNESDAY! I’m your host, Matthew Choi. Bryan Boyce of Energy Solutions gets the trivia for finishing the lyrics: “I am agog! I am aghast! Is Marius in love at last?” For today: What was the name of Andrea Sach’s boyfriend in “The Devil Wears Prada”? 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: The transmission obstacle to Biden’s clean energy goals.
BIG BUCKS FOR CLIMATE: Though Democrats continue looking for areas to trim back the reconciliation bill, climate is largely getting spared the shears. The White House told lawmakers Tuesday that total climate spending would be between $500 billion and $555 billion, Zack Colman and Laura Barrón-López report for Pros. It’s a cut from the $600 billion under the original House reconciliation text, but that was with a top line for $3.5 trillion. With top lines now figuring between $1.5 trillion and $2 trillion, climate could be one of the biggest policy areas in the package — while other areas focusing on social services remain in flux. And regardless of the figure’s value relative to other priorities, it’ll be the single largest investment in climate in American history.
Exactly how those hundreds of billions in climate funding are used is another question. Senate Energy Chair Joe Manchin’s opposition to the Clean Electricity Performance Program leaves a $150 billion gap, which could be covered with grants, loans and tax credits focusing on decarbonizing industrial sectors, Zack and Laura report.
Senate Environment and Public Works Chair Tom Carper also said Tuesday that a methane fee was still “very much on the table,” Pro’s Ben Lefebvre and Kelsey Tamborrino report, despite Manchin’s opposition to the idea. Carper’s team is massaging the bill to aid companies in the days immediately following the fee’s roll out, Ben and Kelsey report, and they are taking into account a proposed methane rule EPA is expected to release soon (more on that later). The rewrite would offer what a Democratic Senate aide described as “hundreds of millions of dollars” in grants and rebates to help companies afford the equipment needed to reduce emissions.
Perhaps the most important climate item now will be tax credits. With the CEPP fallen by the wayside, tax credits are now “almost the only horse in town,” Rep. Earl Blumenauer, a member of the Ways and Means Committee, told Kelsey. But Congress’ top tax writers remain at odds over their approaches. The House Ways and Means Committee is focusing largely on extending existing tax credits, whereas Senate Finance Chair Ron Wyden’s approach would lump tax breaks into three buckets for clean energy, transportation and energy efficiency.
“We threw the tax code in the trash can. The energy provisions went in the garbage and then we said we’re going to a tech-neutral system,” Wyden said Tuesday.
The exact details of how those get reconciled are still up in the air, with Ways and Means Chair Richard Neal saying last week he was optimistic there could be a compromise where his committee’s version would be implemented for the first five years to not shock the system. But he reiterated this week that his committee members don’t want to back down from at least five years.
“Candidly, the notion that you’re going to skinny this down for two or three years, I just don’t think the Treasury Department can do this,” Blumenauer added. More on the tax debate from Kelsey.
A PLACE FOR HYDRO? Wyden also told ME Tuesday that he’s working on getting an investment tax credit for hydropower included in the reconciliation bill — a measure pushed by Sens. Maria Cantwell and Lisa Murkowski. The 30-percent investment tax credit would go toward updating hydropower facilities to improve resiliency, efficiency and environmental safeguards, and has the backing of both the hydro industry and river protection groups, who often clashed on dam construction in the past.
Cantwell and Murkowski’s bill would also cover removing defunct dams to protect river ecosystems. Cantwell’s office is working with the Senate Finance Committee to get the measure (S. 2306 (117)) included.
But it could still face hurdles in the House, whose tax approach has been focused on prolonging current programs rather than fiddling with new ones. Malcolm Woolf, president and CEO of the National Hydropower Association, told ME he feared the industry was being overlooked for higher profile renewables, like wind and solar, even though hydropower would provide a baseload independent of weather conditions (though recent droughts out West have put some hydro facilities at risk). Hydropower is the third largest zero-carbon source of generation at 7.3 percent in the country behind nuclear and wind.
“I fear the administration is going one step forward and two steps backward on its climate goal, that as it’s racing to put together a package for Glasgow and COP26, it’s perhaps inadvertently leaving behind some of the essential pieces necessary to make a clean energy grid work, in particular flexible hydropower,” Woolf said.
For more on the tax front: “Ron Wyden takes a buzzer-beating shot at billionaires,” from Burgess Everett and Heather Caygle, and “Sinema steers Dems into uncharted territory on taxes,” from Brian Faler.
METHANE THURSDAY: EPA is expected to release its much-awaited proposal aimed at reining in methane emissions Thursday, sources tell ME. Administration officials will meet with the Office of Management and Budget in the morning, with the proposals to be made public later. As of Tuesday afternoon, questions remained “over monitoring technology and frequency,” one of the people familiar with the negotiations said.
Democrats bracing to go into next week’s U.N. climate conference without major climate legislation are pointing to the methane proposal as something tangible to show that the United States is committed to reducing its greenhouse gas emissions.
The new proposals would be the latest in a back-and-forth on federal regulation of the greenhouse gas that has now yo-yo’d through three administrations. But this time it has at least the tacit backing of some large players in the oil and gas industry who view methane emissions as an increasing source of bad publicity. That’s in contrast to the industry’s far frostier view of the methane fee currently being discussed as part of reconciliation.
“This is nothing more than a tax on natural gas at a time when policymakers should be focused on solutions that support affordable, reliable energy while reducing emissions,” Frank Macchiarola, American Petroleum Institute senior vice president of policy, economics and regulatory affairs, said in a statement of Congress’ methane fee. “The direct regulation of methane by the EPA is the most impactful way to build on the downward trend of methane emission rates in key producing regions rather than a duplicative and punitive natural gas tax that would only hurt American consumers and undermine the economic recovery.”
TRANSMISSION CONTROL: FERC and the Biden administration are both pushing for expanding long distance transmission to better integrate clean energy into the grid. But it’s a heavy lift, with utilities disinclined to give up power over the lines, grid experts say. This conflict exists in the Midcontinent Independent System Operator, where member utility Entergy has been blamed for stalling efforts to bring long-range transmission planning to the region to avoid competition. Entergy retorts that delays are par for the course in the notoriously difficult realm of long-distance transmission.
“The stranglehold that incumbents generally have on the transmission planning and development is one that will continue to be a major barrier to the Biden administration reaching its goal of decarbonizing the grid by 2035,” former FERC Chair Jon Wellinghoff told Pro’s Catherine Morehouse. “It’s going to be virtually impossible to do that as long as those incumbents continue to have the strength of their incumbency.” Catherine has more for Pros.
PFAS GETS THE LIST: EPA is moving to list four PFAS as hazardous substances under the Resource Conservation and Recovery Act — the first step toward regulating PFAS as a hazardous waste under the law. It would mean EPA will be able to regulate the toxic substances throughout its lifetime.
But Administrator Michael Regan opted not to act on PFAS as a class, despite requests to do so from advocates and New Mexico Gov. Michelle Lujan Grisham, whose state has experienced several major PFAS contaminations. Read more from Pro’s Annie Snider.
WOTUS COASTER’S LATEST TWIST: Industry groups are appealing an Arizona district court’s August decision that threw out the Trump administration’s Navigable Waters Protection Rule. The appeal to the U.S. Court of Appeals for the 9th Circuit was filed by the Arizona chapters of groups including the National Association of Home Builders and the American Farm Bureau Federation, and argues that the court should not have thrown out the Trump-era rule without first ruling on the merits of challenges to the rule, and that the move puts industry back on a disruptive “regulatory roller coaster.”
RFS BACKERS CRY FOUL OVER ENERGY PRICE CLAIMS: Nine Republican lawmakers are pressing the White House for a meeting on biofuels policy as the industry awaits the release of the administration’s RVO proposal. South Dakota Sen. John Thune led a letter with fellow midwestern Republicans on Tuesday reiterating a request for a meeting with Biden and others in his Cabinet to discuss the Renewable Fuel Standard. Thune had previously requested a White House meeting on the RFS to no avail.
The senators note they’ve seen reports that the administration has consulted the oil and gas industry on energy concerns, and they cautioned “against attacks that misconstrue” the RFS as the source of rising energy prices. “In reality, the oil industry seeks to protect its market share at the pump, highlighting how expanding consumer choice for higher blends of ethanol will lessen the volume of conventional fuel needed for each vehicle and thus ease the ongoing supply constraint,” they write.
NOT DOING SO HOT: Current national climate pledges will cause global temperatures to rise 2.7 degrees Celsius — far above the Paris Climate Agreement target of 2 degrees and the aspiration target of 1.5 degrees, according to the U.N. Environment Programme emissions gap report. It’s a damning assessment of current global climate policy ahead of COP26, especially with the U.S. and Europe aiming for the more ambitious 1.5 degree cap. But the report says greenhouse gas emissions must fall 55 percent to hit that goal. Zack has more for Pros.
BUT RENEWABLES ARE ON TRACK IN EUROPE: Renewables beat out fossil fuels as the top energy source in Europe for the first time last year, according to the European Commission’s State of the Energy Union report. Renewables were responsible for 38 percent of electricity generation in the EU, while fossil fuels accounted for 37 percent in 2020 and nuclear accounted for 25 percent. POLITICO Europe’s Aitor Hernández-Morales has more. If you’re wondering how that squares up with the U.S. in 2020, fossil fuels were responsible for 60.3 percent, renewables 19.8 percent and nuclear 19.7 percent.
—Tara Hupman will serve as chief counsel for House Natural Resources Republicans. She was previously senior counsel for Republicans in the House Transportation and Infrastructure Committee.
— Former Energy Secretary Ernest Moniz will serve as adviser to the board of Clean Carbon Solutions.
— Jennie Romer is EPA‘s new deputy assistant administrator for pollution prevention, the agency tweeted. She was previously a legal associate for the Surfrider Foundation’s Plastic Pollution Initiative, according to her LinkedIn profile.
— “‘A slow turning of a huge ship’: California agency changes course on climate change,” via POLITICO.
— “Duke Energy partners with Honeywell to test emerging battery technology,” via Charlotte Business Journal.
— ”Biden administration plans roll backs of Trump-era Endangered Species Act rules,” via POLITICO.
— “EU countries split over joint response to energy price spike,” via Reuters.
— “China’s Energy Crisis Complicates Its Plans for Climate Announcements Ahead of COP26,” via The Wall Street Journal.
THAT’S ALL FOR ME!
