Democratic Senate could boost EVs, batter fossil fuels

Source: By Corbin Hiar, E&E News reporter • Posted: Thursday, January 7, 2021

Corporate advisers are preparing their clients for a strong clean energy push by the incoming Biden administration after Democrats won two runoff elections in Georgia to reclaim the Senate.

When President-elect Joe Biden and the new Congress are sworn in, Democrats will have 50 seats in the Senate and a tiebreaking vote in the White House, along with Speaker Nancy Pelosi (D-Calif.) running the House. Policy analysts and corporate lobbyists say Biden could use that unified power to boost federal spending on clean energy, slash tax breaks that support fossil fuels and strike down eleventh-hour environmental rollbacks by the Trump White House.

The advisers said Biden could go so far as to bypass Congress in an effort to implement some form of a price on carbon emissions.

Yet much of this will hinge on process, including both limits on how Congress can act in response to Trump’s final actions and the rules around executive power.

The Congressional Review Act (CRA), for example, allows Congress to kill rules issued within 60 “legislative days” of the end of an administration — a timeline that stretches back to around the middle of last May.

Scott Segal, a partner at the law and lobbying firm Bracewell LLP, said in a note to Washington reporters that Democratic control of the Senate could make the CRA an attractive way to address late Trump rules that cut against Biden’s views on climate policy and energy. Segal is registered to lobby for a more than a dozen fossil fuel-reliant companies.

But using the CRA comes with risks for Democrats, political and policy analysts emphasized. The law “prohibits agencies from reissuing rules that Congress has rescinded, and it also bars agencies from [issuing] rules that are ‘substantially the same,'” ClearView Energy Partners said in a Jan. 5 note to clients.

How courts would interpret those terms is an open question if the Senate strikes down a Trump regulation and the Biden administration turns around and proposes a stronger regulation.

As a result, ClearView analysts said the CRA remains a “viable tactic” for Democrats even if that uncertainty “does not make its use likely or widespread.”

In terms of federal spending, Bracewell’s Segal wrote there might be room for bipartisan deal-making around energy projects and research spending — “if the year-end omnibus is any guide.” That $2.3 trillion year-end spending and COVID-19 relief deal included a bipartisan energy innovation package, a regulatory crackdown on superpolluting hydrofluorocarbons, extensions of key clean energy tax breaks and water project authorizations (Greenwire, Dec. 28, 2020).

Analysts with Wedbush Securities expect electric vehicle companies to be major beneficiaries of the Democratic takeover of the Senate.

“A more green-driven agenda [is] now certainly in the cards for the next few years,” said the financial services company in a note to clients. “We believe a doubling down on EV tax credits and further consumer incentives and government initiatives around the EV sector will be on the horizon, which is a major positive for Tesla, GM, Fisker, and other auto players.”

ClearView singled out the Clean Cars for America proposal from Sen. Chuck Schumer (D-N.Y.), who is expected to become the Senate majority leader. His plan to create a “cash for clunkers” type of program to speed the transition to EVs now has brighter prospects.

ClearView was also bullish on bipartisan energy legislation to support carbon capture, utilization and sequestration and incentives to support existing nuclear energy.

With Schumer running the Senate, analysts said Democrats could also wield the tax code to combat climate change. That’s a change from late last year, when Republicans opposed to taking significant climate action appeared likely to maintain control the upper chamber (Climatewire, Nov. 9, 2020).

“Democratic control in an evenly split U.S. Senate does re-open the potential to use the budget reconciliation process as a way to advance a pricing mechanism for carbon,” Segal wrote.

Budget reconciliation is a maneuver that allows tax-related legislation to bypass the filibuster and pass by a simple majority.

“Carbon taxes or fees fits more neatly within the constraints of reconciliation as do changes to the tax treatment of fossil fuels,” Segal wrote.

ClearView also saw reconciliation as a way to roll back the Trump tax cuts for corporations and remove some of the tax write-offs for coal, oil and gas producers.

But in a separate note early in the day yesterday, ClearView analysts suggested the chaos that had already ensued around the 2020 elections, and expectations that Republicans in Congress would contest Biden’s election, could force the new president to take more extreme measures to enact policy changes.

There are options for executive action under Biden. ClearView noted Biden could look for ways to cut oil exports and limit offshore drilling. “Biden could also pursue commercial interventions into energy production and manufacturing using the Korean War-era Defense Production Act.”

“What if today’s events mark the start of a deep and enduring partisan rift that extinguishes Biden’s hope of brokering bipartisan compromise on even the relatively narrow objective of a recovery-focused stimulus package?” the analysts said.

“In that eventuality, we would not rule out Biden’s use of one or several emergency powers to advance his climate agenda,” they said.

Later, Trump supporters stormed the Capitol. Windows were broken. Rioters overwhelmed police. A woman was killed inside the building.

Senators and members of the House were evacuated before completing the process of certifying votes cast by state electors for Biden to become president on Jan. 20.