Backers Defend Budget Plan’s Climate Provisions Amid Talk Of Big Cuts

Source: By Doug Obey, InsideEPA • Posted: Sunday, October 3, 2021

Supporters of various climate provisions in Democrats’ pending budget “reconciliation” package are ramping up appeals to retain or even strengthen them as lawmakers pursue agreement on the details of a plan expected to be far smaller than an oft-cited spending target of $3.5 trillion, setting up competition between various proposals.

The pitches come amid continued negotiations among Hill Democrats, including an Oct. 1 appearance by President Joe Biden before the House Democratic caucus to try to break a logjam on the reconciliation measure and a politically linked bipartisan infrastructure package.

However, Biden suggested that such talks might continue to drag on for weeks. “It doesn’t matter whether it’s in six minutes, six days or six weeks, we’re going to get it done,” the president told reporters following the meeting.

The lobbying on the specific contours of the reconciliation bill includes a pitch by multiple House Democrats to preserve a committee-approved incentive for building electric vehicles (EV) with union labor in the United States, as well as additional asks from carbon capture and storage (CCS) backers to make it easier for such projects to qualify for federal funding.

“We urge you to ensure that the [EV] tax credit language that was passed by the Ways and Means Committee remains as-is when the Build Back Better Act is considered on the House floor,” write six co-chairs of the House Labor Caucus in a Sept. 30 letter to House Speaker Nancy Pelosi (D-CA).

That means retaining a $4,500 incentive for domestic EVs built with union labor, which under the House plan would supplement a $7,500 consumer tax credit that applies to all EVs, including imports or those built in non-union shops.

The six Democrats — Reps. Thomas Suozzi (NY), Mark Pocan (WI), Donald Norcross (NJ), Debbie Dingell (MI), Steven Horsford (NV) and Linda Sanchez (CA) — argue the $4,500 incentive is needed to level the playing field between non-union and unionized workforces.

The pitch comes amid pushback to the scope of the proposed EV incentive and its labor focus — including from automakers Toyota, Honda and the EV-only Tesla that have eschewed union labor — and well as reports that Sen. Joe Manchin (D-WV) has pushed for means-testing for EV credits.

More broadly, Democratic leaders and the White House are still grappling with the overall scope of the reconciliation plan, with lawmakers trying to agree on a “framework” for the bill that would enable a vote on the bipartisan infrastructure plan progressives are opposing without a deal on the more ambitious measure.

A vote on the infrastructure bill was originally scheduled for Sept. 30, and it appeared likely to be delayed again despite continued talks Oct. 1 — with Biden’s latest remarks suggesting talks could continue for some time.

The delay in approving the infrastructure deal has created at least a short-term lapse in funding for federal transportation programs starting Oct. 1, amid reports Democrats were considering a 30-day extension of such funding to buy time to act on the infrastructure and reconciliation plans.

Climate Initiatives

Both Manchin and Sen. Kyrsten Sinema (D-AZ) have pushed to shrink the size of the reconciliation bill, which also includes several social and health policy matters.

Manchin has repeatedly cited $1.5 trillion as an acceptable size for the package, and rumors circulated prior to Biden’s meeting of efforts to agree on a framework for a bill with roughly $2 trillion in spending, before consideration of offsetting revenue sources that would lower the net cost to the federal government.

Such a cut in spending below the prior $3.5 trillion target raises numerous questions about what climate initiatives might be scaled back, including whether lawmakers would apply a “haircut” to programs across the board or whether a zero-sum game would emerge between programs such as clean energy tax credits and a Clean Electricity Performance Program (CEPP) to prod annual power sector greenhouse gas cuts.

Some sources in recent days, however, have suggested climate spending may remain a priority, in part because of pressure on the White House and Congress to show significant progress on GHG policy prior to Nov. 1-12 international climate talks in Glasgow, Scotland.

Manchin in Sept. 30 remarks to reporters appeared to call for a redesign of the CEPP that would convert it into a loan program, a move sparking pushback among CEPP proponents. Such a move likely would shrink the calculated cost of the program to the government, perhaps significantly. The House plan would fund the program at roughly $150 billion.

Yet, the prospect of major cuts to the reconciliation plan is not stopping calls to add to it — and there are reports that top Democrats have agreed to requests along the lines of a Sept. 30 letter from a coalition of 18 industrial companies seeking bolstered CCS incentives.

Specifically, the letter to Senate Majority Leader Chuck Schumer (D-NY) and Pelosi urges strengthening of proposed CCS incentives beyond current reconciliation bill drafts or language in the pending bipartisan infrastructure plan.

Their asks include an increase in the incentive for all industrial sectors and the power sector, to at least $85 per metric ton for saline storage and carbon utilization, and $50 per ton for geologic storage in oil and gas fields.

The letter also seeks elimination of annual facility-level capture requirements for covered projects that the companies claim would “stymie broader decarbonization of steel, chemicals, cement, refining, ethanol, fertilizer and other industrial facilities.”

Further, the companies urge Pelosi and Schumer to block proposed Senate language that would reduce the amount of the CCS tax incentives for projects that receive “federal state, or local grants, financing tax breaks and other benefits.” This limitation “directly undermines the intent of the bipartisan infrastructure bill and contradicts past precedent of Congress successfully pairing federal financial assistance with tax credits to deploy emerging technologies, such as with utility scale solar projects,” the letter argues.

One Oct. 1 report from Reuters says the White House and top Democrats have agreed to “expand” the CCS credits along the lines of the companies’ request. — Doug Obey (