Ten key climate and energy elements in reconciliation package

Historically large bill includes several broad programs to encourage low-carbon energy sources

Wind turbines spin above corn fields near Carroll, Iowa. (Bill Clark/CQ Roll Call file photo)
Wind turbines spin above corn fields near Carroll, Iowa. (Bill Clark/CQ Roll Call file photo)
Posted November 1, 2021 at 10:30am

For the four years of the Trump administration, American officials would attend United Nations climate talks, engaging at a perfunctory level to adhere to their obligations under the Paris climate agreement.

Fast forward a year and the Biden administration has made a commitment under that deal to cut the country’s greenhouse gas emissions by at least half by the end of the decade, backed up in that pledge by sweeping legislation that Democratic leadership and the White House are pushing to pass in Congress.

That $1.75 trillion legislation, which analysts say would amount to the biggest climate bill in U.S. history, is well short of the $3.5 trillion bill President Joe Biden and many congressional Democrats wanted. It was whittled in half to appease Sen. Joe Manchin III, D-W.Va., a longtime advocate of the coal industry whose support for the bill is critical in a closely divided Senate. More changes to the bill, which Manchin has not committed to support, are expected before it gets a vote.

Still, climate action advocates hope it will be approved before an international climate summit that began Sunday in Glasgow, Scotland, concludes in mid-November.

“This is six times larger than any previous investment we’ve seen in climate change and it has the potential to dramatically cut carbon pollution,” Leah Stokes, a professor at the University of California, Santa Barbara, told reporters on a call the League of Conservation Voters organized.

So what’s in this historic climate bill? At its core is a series of programs to encourage low- and zero-carbon energy sources. Here is a nonexhaustive list of 10 of the energy elements that are in the bill.

Offshore wind

The bill would direct the Interior Department to hold offshore lease sales in federal waters in the eastern region of the Gulf of Mexico as well as in the Atlantic Ocean off the shores of Florida, Georgia, North Carolina and South Carolina. It also would direct Interior to auction leases for wind projects in the waters of the U.S. territories of American Samoa, Guam, the Northern Mariana Islands, Puerto Rico and the U.S. Virgin Islands.

In related offshore matters, the bill would block oil and gas drilling in American waters in the Atlantic and Pacific oceans, as well as in the eastern Gulf of Mexico, while also rescinding the oil and gas leasing program in the Arctic National Wildlife Refuge in Alaska.

Royalty rates

Currently, oil and gas companies pay different royalty rates to the federal government depending if they’re operating on federal land or water. On land, the rate is 12.5 percent. In water, it’s 18.75 percent.

To the frustration of oil and gas executives, the bill would raise onshore rates for all new fossil fuel leases — oil, gas and coal – to 18.75 percent. The petroleum industry is all but sure to oppose these hikes and other measures in the legislation.

“A ban or significant curtailment of federal oil and natural gas leasing would be counterproductive to our shared goal of reducing emissions,” Frank Macchiarola, a senior vice president at the American Petroleum Institute, said to Interior officials in March.

Electric vehicle purchases

The legislation would set aside about $2.57 billion for the U.S. Postal Service to buy electric vehicles and $3.4 billion to buy “support infrastructure” for those new cars, including charging stations. It would also plunk down about $3 billion for the General Services Administration to buy electric vehicles.

These proposals were slimmed down from a markup in September, when Republicans sought to focus on the U.S. military withdrawal from Afghanistan.

“Democrats want to talk about electric cars to forget about Afghanistan,” said Rep. James R. Comer, R-Ky., at the markup by the Energy and Commerce Committee.

Clean energy tax credits

Chief among the energy portions of the bill is a slate of tax credits worth $320 billion that would be in place for 10 years.

While Congress has often extended tax credits for the investment in and production of wind and solar power in a piecemeal fashion, often for a year or two at a time, Trevor Higgins, an energy expert at the left-leaning Center for American Progress, said the certainty of a decade worth of extensions is unusual.

“These tax credits are not just like the things we’ve seen before,” Higgins said by phone.

Democrats assembled the tax credit package as a replacement for what would have been the climate centerpiece of the bill, a $150 billion measure called the Clean Electricity Performance Program, which was nixed after Manchin voiced his opposition to it for months.

One key element Manchin has neither supported nor opposed explicitly is a fee that would be levied against oil and gas companies if they don't clamp down on their emissions of methane, a potent greenhouse gas. While the fee is in the bill, it faces opposition from the gas industry and could be nixed.

Money for rural energy

Included in the bill is a smorgasbord of projects that would run through the Agriculture Department, such as $2.88 billion for loans for rural electrification, $1.97 billion for rural energy projects and $9.7 billion for grants and loans to rural electricity cooperatives to purchase electricity from zero-emission sources or buy their own renewable energy hardware.

Upgrades for family homes

Through the Energy Department, the bill would send $5.9 billion to state-level energy offices to provide rebates for energy efficiency retrofits on single- or multi-family homes. That money could be put toward heating, ventilation, air conditioning and cooling systems, as well as water heaters.

The bill would set aside $2.23 billion for rebates for homeowners’ electrification projects and $3.8 billion for rebates for tribal communities, or low- or moderate-income households.

DOE renewable unit

If the legislation becomes law, the Energy Department would get $1 billion for its energy efficiency and renewable energy unit to pursue demonstration projects and nearly as much — $985 million — for research at DOE’s science division.

Pedal power

The bill would raise the maximum benefits that commuters can receive to $81 per month from $20, and establish a 30 percent refundable tax credit for the purchase of electric bicycles. The bicycles would have to be “placed into service before” Jan. 1, 2027.

Superfund changed

In its present form, the bill would reinstate a fee that goes into the Hazardous Substance Superfund on the importation of crude oil and other petroleum products of 16.4 cents per gallon, indexed to ebb and flow with inflation.

Electric vehicle help

The Energy Department would receive $1 billion for state energy offices to install electric-vehicle, or EV, charging stations. Of that sum, $600 million would go to Level 2 charging stations, often used for daily driving of EVs, and $200 million go to fast-charging stations. The final $200 million would be allocated to hydrogen fueling stations.