What a Republican House means for energy

Source: By Jason Plautz, E&E News • Posted: Thursday, November 17, 2022

The U.S. Capitol in Washington.

The U.S. Capitol in Washington. Francis Chung/E&E News

Ahead of the midterm elections, many Republicans hoped a red wave would put pressure on the Biden administration’s energy agenda and help reverse it.

But any plan to slow down clean energy spending looks more limited now, even as the GOP claimed a majority in the House yesterday.

Republicans now have at least 218 House seats, ensuring a slim majority with seven races yet to be called. Democrats are already assured of keeping control of the Senate, meaning Republicans will have a harder time getting their way on appropriations and any plans for permitting reform.

Still, Republicans will have power in the House to conduct oversight investigations and hold hearings on how the Biden administration spends billions of dollars in loans and grants passed in this year’s Inflation Reduction Act and last year’s Infrastructure Investment and Jobs Act.

Rep. Cathy McMorris Rodgers (R-Wash.), who is in line to become chair of the House Energy and Commerce Committee, has likened the climate law to “Solyndra on steroids” and vowed strict oversight that could slow down the distribution of grants.

“I think you’ll see efforts to make it very difficult for the Biden administration. There could also be efforts to complicate the Biden administration moving forward through executive action,” said Barry Rabe, professor of public policy at the University of Michigan.

An October letter from committee Republicans to Energy Secretary Jennifer Granholm previewed likely avenues of investigation on energy policy, asking for the portfolio of the Department of Energy’s Loan Programs Office and information about the review process for loan guarantee decisions (Greenwire, Oct. 11).

The climate law was not a centerpiece of GOP fury in the way the Affordable Care Act was in the 2010 midterms, but it did not get a single Republican vote in either chamber.

Last week, House Minority Leader Kevin McCarthy of California, who won the GOP nomination for House speaker yesterday, retweeted a message linking to the GOP “Commitment to America,” which attacks Biden on oil and gas production and notes higher electricity and gasoline prices during his administration.

Not even the Conservative Climate Caucus — a group of more than 70 House Republicans dedicated to working on climate issues — is promising to stay away from the law. A spokesperson for the caucus said that “the final so-called ‘Inflation Reduction Act’ comprehensively was a bad piece of legislation.”

“We stand at the ready to support each relevant Republican committee chair’s efforts to conduct proper oversight of these funds and the impact of the IRA,” they said. The spokesperson added that “it’s effectively impossible to know how individuals feel about each provision” because it did not go through regular order.

Yet the power of House Republicans to go after the Inflation Reduction Act “is really limited,” said Conrad Schneider, advocacy director for the Clean Air Task Force. “They can conduct oversight and ask questions, but they can’t really slow down the Treasury, the IRS and DOE from implementing these programs.”

“The ball is in the Biden administration’s court to get these programs set up and get the money out as quickly as possible,” he said.

However, with Democrats keeping narrow control of the Senate — they currently hold 50 seats and could add another depending on the outcome of a Dec. 6 runoff in Georgia — the ability to use the climate law’s programs as bargaining chips in budget negotiations is reduced.

“Given that there is such bad blood, it’s hard to imagine Republicans walking away and saying. ‘We’re not going to touch anything,’” said Rabe.

The promise of GOP investigations has brought back memories of the DOE’s fateful $535 million loan guarantee to solar manufacturer Solyndra after the 2009 American Recovery and Reinvestment Act, which catalyzed more than $31 billion in clean energy investments from DOE.

The company’s bankruptcy in 2011 brought the loan office under blistering attack from conservatives, who accused the Obama administration of squandering tax dollars on a fanciful clean energy technology. The attacks helped slow the office’s loanmaking in subsequent years, although the Biden administration has championed its work.

Jonathan Silver, who directed the DOE’s Loan Programs Office starting in 2009, just after the Solyndra loan, said the office’s track record remains strong. He said its overall portfolio of loans has turned a profit for the federal government and enjoys some support from more centrist Republicans.

And he downplayed the possibility that the Loan Programs Office might once again go dark. “There’s no special target on its back,” said Silver, now chair of the global climate council at private equity firm Apollo Global Management.

Still, Silver said that he doubted greater Republican control in Congress would change much about the country’s energy transition. While he said it would be “messy for the next couple of years,” he added that “I don’t think it’s going to be any messier than environmental legislation has been at any other time.”

“My overriding perception here is that the war is over. Clean has won,” Silver added.

Where action won’t be stopped

The cornerstone of President Joe Biden’s clean energy program — 10 years of federal tax credits written into the Inflation Reduction Act — is likely set in stone, climate policy advocates said.

“Importantly, most of the investments in [the Inflation Reduction Act] come in the form of tax credits with no dollar or unit caps and are set to remain in place for at least ten years, meaning that the more states, cities, and businesses do to accelerate clean energy deployment now, the more reductions, and societal benefits will be achieved in the long-term,” according to a report released this month funded by Bloomberg Philanthropies.

Of the Inflation Reduction Act’s estimated $369 billion, 10-year cost, two-thirds of the amount come from tax credits for clean energy generation, carbon sequestration, renewable fuels and clean energy manufacturing, according to Moody’s Analytics. The other one-third of the legislation’s clean energy and climate investments represent appropriations for grants for technology and energy efficiency, Moody’s Analytics said.

A research team led by Princeton University estimated that tax incentives in the law could potentially accelerate growth in wind and solar installations dramatically. Annual increases in wind generation could go from 15 gigawatts in 2020 to 39 gigawatts by 2025-2026, and utility-scale solar could climb from 10 gigawatts a year in 2020 to 49 gigawatts a year, also by middecade, the researchers estimated.

League of Conservation Voters President Gene Karpinski said on a call with reporters last week that with the Inflation Reduction Act passed, green groups’ attention could shift to the administration to maximize its deployment, even with Republican gains in the election.

“The progress we need to make implementing the bill, executive action on steroids and progress in the states, will continue even if they’re in charge of the House,” Karpinski said.

A campaign by House Republicans next year to slow the Biden clean energy initiatives would also run into clean energy policies pushed by Democratic state governors, and support for clean energy in some GOP-led states whose governors want the investment and jobs that come with these projects. Democrats gained trifecta control in four states last week and held on to close gubernatorial races elsewhere, opening more opportunities for state-level energy programs (Energywire, Nov. 10).

Most of the large, investor-owned utilities also have clean energy goals.

Lloyd Yates, CEO at NiSource Inc., whose power and gas operations run from Indiana into Pennsylvania, was asked recently about the impact of a GOP House victory on the company’s goal to achieve zero-carbon power by 2040.

He said NiSource is preparing to spend an average of $3 billion a year on capital projects over the next 10 years, including coal plant retirements and solar farms. He said the company assumes the federal incentives will be there, but it will go ahead in any case.

“While the political process is very important to NiSource,” Yates said, “our long-term commitment to clean energy will not waver.”

Possibilities for cooperation

Further complicating the politics around the Inflation Reduction Act is the fact that the benefits will flow to red states and districts where renewable energy is produced, said Colin Hayes, a former staff director for Republicans on the Senate Energy & Natural Resources Committee.

“It will be interesting to see how those red-state members balance an embrace of economic development in the clean energy sector against oversight and investigations work meant to catch the Biden Administration slipping,” said Hayes, now a founding partner at lobbying firm Lot Sixteen.

“The clean energy industry has become, well, industrial; it is a major economic force now,” he added. “So, even though the debate over what to do on climate policy has been fairly polarized, I’d expect to see a continued increase in bipartisan cooperation on clean energy.”

Still, there are some potential areas where energy policy could emerge from Congress. Sen. Joe Manchin (D-W.Va.) is working to pass permitting reform legislation that would make it easier to approve renewable energy and oil and gas projects.

Although that bill stalled amid progressive opposition, Democratic leaders have said it could come back in the lame-duck session or next year. Some backers — including the White House — have suggested tying it to the National Defense Authorization Act, but the authors of the defense bill have thrown cold water on the idea (E&E Daily, Nov. 16).

Republicans, meanwhile, have also urged a more sweeping bill that would pull back environmental reviews for a wide range of energy projects, a longstanding goal. With Democrats eager to get faster approval for the transmission lines and renewable energy projects that will be crucial to harnessing the Inflation Reduction Act’s benefits, a permitting bill could emerge as a rare piece of bipartisan legislation.

In a press appearance at the United Nations climate summit in Egypt last week, members of the House Conservative Climate Caucus said there were opportunities to gather bipartisan support for some smaller-scale programs. Rep. Garret Graves (R-La.) said that there are “bite-size pieces where we are on the same page,” including more energy efficiency funding, redesigning the grid, and funding research into “economically sustainable and environmentally sustainable” climate solutions.

The narrow margins of the House could offer more moderate members inclined to work on climate change an opening to move bipartisan bills or to block more extreme measures. However, the same holds true of the party’s far-right wing, which largely opposes clean energy and climate work.

Paul Bledsoe, a former climate adviser in the Clinton White House, said that with polls showing strong support for the Inflation Reduction Act and clean energy in general, Republicans who pushed too hard against them risked getting “over their skis.”

“The rejection of so many Trump candidates was not just about election denial, but also over the predilection of Trump acolytes to deny facts whenever it suits them politically, which includes climate issues,” said Bledsoe, now with the Progressive Policy Institute. “On the other hand, moderate swing voters in key states like Pennsylvania and Ohio continue to embrace the economic benefits of shale gas, with successful candidates like [Democratic Sen.-elect John] Fetterman supporting climate action through both renewables and natural gas.”

Interior in the spotlight

Along with affecting money flowing through the Department of Energy, the Biden administration’s Interior Department is expected to be caught more firmly in the crosshairs of political fights over climate and energy policy on public lands with a Republican House.

The administration will likely face additional scrutiny from committee bully pulpits when climate policies appear to hamper fossil fuel industries. And GOP lawmakers are expected to use their muscle to question or undercut climate policies where they can, like in the budgeting process, according to observers.

“It’s going to be an incredibly adversarial, hostile, confrontational Congress that is going to try to thwart and stymie pretty much any and every initiative that Interior tries to do,” said Brett Hartl, government affairs director for the Center for Biological Diversity.

But Kathleen Sgamma, president of the Denver-based Western Energy Alliance, which represents oil and gas companies, said the upcoming pushback is exactly what’s needed.

The Republican House will be a “firewall” against anti-energy legislation born in the White House, and the agencies will be held accountable for public land energy decisions via oversight hearings, Sgamma said.

“We just haven’t had any oversight of the agencies over the last two years, so being able to ask them tough questions is important,” she said. “Agencies left to themselves are not healthy.”

The Interior Department plays a key role in the White House’s energy policies, including the goal to deploy 30 gigawatts of offshore wind. The agency will also oversee policies on mining reform, offshore oil and gas leasing, renewable energy development on federal lands, and regulations like methane rules for oil and gas developers on public lands.

While GOP lawmakers won’t have direct control over these initiatives, they can try to affect the amount of resources agencies have for their clean energy and climate policies, said Hartl with the Center for Biological Diversity.

Hartl said what’s unclear is how the Biden administration will counter new congressional pushback and whether it will look for consensus across the aisle — something Hartl associated with former President Barack Obama’s approach. Another option: Follow the Trump administration’s example and aggressively implement an energy agenda.

Hartl said he’s hoping for aggressive action because the Biden administration is running out of time to get regulations on fossil fuels finished before the presidential elections in 2024, he said.

“The Obama administration made catastrophic errors of judgments by sort of playing along and conceding the premise: let rules drag on for three, four or five years because of Republican concerns, reopening comment periods and trying to appease them,” Hartl said. “It didn’t work, and it didn’t help.”

Sgamma said the White House agenda is unlikely to shift or retreat despite new political pressure from the House.

Sgamma said the benefit of more tension on Capitol Hill is that Interior officials will be forced to answer questions publicly. That back-and-forth could be important in courtroom battles when the agency’s energy policies end up in litigation, she said.

Reporters Heather Richards, Peter Behr and David Iaconangelo contributed.

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