Biden Climate Agenda Now Hinges on Rules Exposed to Rewrite
(Bloomberg) -- President Joe Biden will need to rely far more on regulation to meet his promise to cut greenhouse gas emissions in half by 2030, after his roughly $2 trillion economic plan and its crucial climate provisions suffered a potentially fatal setback in Congress.
The tax-and-spending bill rejected Sunday by West Virginia Democratic Senator Joe Manchin included a record $550 billion for climate measures, including a slew of tax credits for clean energy generators, the nuclear power industry and the makers of electric vehicles. As passed by the House, the Build Back Better bill included a first-time fee on the emission of methane from oil and gas operators.
“It’s a big setback,” Kevin Book, managing director of research firm ClearView Energy Partners, said of the bill’s likely failure in an interview.
It may still be possible for Biden to fulfill the U.S. pledge to pare greenhouse gas emissions 50% to 52% by the end of the decade without the legislation -- but it won’t be easy and it will require a rapid, aggressive ramp up in federal regulation targeting greenhouse gas emissions from every sector of the economy. And even then, regulations can be challenged in court or rolled back by succeeding administrations.
Book’s group, in a research note Sunday, said it would “not yet bet against” legislation being passed to provide long-term green power tax credit extensions though they may be reduced in duration and scope.
Still, the Washington-based group said the White House was likely to respond by utilizing other means to accelerate a green transition including regulations and “federal government ‘superpowers’” that include closing federal lands to drilling, export finance and government procurement of clean energy as well as financial requirements for disclosure and insurance.
The Biden administration is already moving to impose more stringent limits on car and truck emissions, cap methane leaks from oil wells and clamp down on greenhouse gases from power plants. It is also developing a slew of new efficiency standards that would limit energy usage for common household appliances.
Read more: Green Stocks Drop on Rejection of U.S. Bill With Record Funding
The world’s biggest solar module maker, Longi Green Energy Technology Co., fell as much as 2.3% Monday in Shanghai, while Trina Solar Co. tumbled 6.1%. Japanese solar cell equipment producer NPC Inc., which gets about 23% revenue from the U.S., slipped as much as 3.7%, and Korean solar manufacturer Hanwha Solutions Corp. dropped 1.9%.
A bipartisan infrastructure bill signed into law earlier this year included billions for climate. But not nearly on the scale in the Build Back Better act that Democrats were hoping to pass through a procedure that avoids a filibuster but requires the support of the entire caucus.
As passed by the House in November, the Build Back Better bill would have barred oil drilling in most U.S. waters and Alaska’s Arctic National Wildlife Refuge, but analysts said the most impactful climate measure was some roughly $300 billion to expand tax credits for renewable power, biofuels, energy efficiency and electric vehicles. The bill also included an increase in tax credits for power plants and other facilities that employ carbon capture technologies, and new tax credits for energy storage, transmission projects and hydrogen production.
Other highlights: an expansion of a $7,500 tax credit for consumers who purchase electric vehicles, along with a $4,500 bonus for cars made from unionized domestic plants that was seen benefiting Ford Motor Co. and General Motors Co., and nearly $6 billion for the U.S. Postal Service purchase of electric mail trucks and charging infrastructure, a move traders have seen as positive for Loveland, Ohio-based electric vehicle manufacturer Workhorse Group Inc.
Representative Sean Casten, a Democrat from Illinois, lamented on Sunday opposition to the bill in the evenly divided Senate by all the Republicans and Manchin. He called them “51 senators who don’t give a damn about climate, even as climate-fueled disasters are costing the U.S. ~$2 billion in damages every single week we delay action.”
Vows to Fight
Supporters vowed to continue the fight. Senate Finance Chairman Ron Wyden in a statement floated the idea of a package focused on child tax credits and renewable energy incentives along with provisions to lower healthcare and prescription drug costs.
“Failure is not an option here,” Wyden said. “This is our last chance to prevent the most catastrophic effects of the climate crisis.”
Renewable energy companies that had been counting on long-term extensions of the tax credits also pledged to keep pressing.
“This is not over,” Gregory Wetstone, president of the American Council on Renewable Energy, said in a statement Sunday. “We will be working with Congress to find a way forward and deliver the clean energy future Americans want and deserve. Failure is not an option.”
Likewise, Erin Duncan, vice president of congressional affairs at the Solar Energy Industries Association, said “this is not the end of the road.”
“There have been many twists and turns in this legislation,” Duncan said in a statement. “We will continue to advocate aggressively for policies that deliver jobs and clean energy to every state across America.”
©2021 Bloomberg L.P.