6 things to watch as panel votes on historic environment bill

By Nick Sobczyk, Jeremy Dillon, Hannah Northey | 09/13/2021 05:59 AM EST

House Energy and Commerce Chair Frank Pallone (D-N.J.) addressing climate change on Capitol Hill last year. Francis Chung/E&E News

The Energy and Commerce Committee will begin voting today on a historic suite of climate and energy programs, as the panel prepares its section of the $3.5 trillion reconciliation bill.

The markup will be closely watched by environmental advocates and industry interests alike, offering the first formal glimpse of the kind of policies Democrats want to use to fulfill President Biden’s promises on climate and drinking water.

At the center of E&C’s $456 billion portion is the $150 billion Clean Electricity Performance Program (CEPP). It’s a policy intended to fit the narrow rules of reconciliation that has evolved over the last eight months from a clean electricity standard to a clean electricity payment program to its current legislative nomenclature.

Administered through the Department of Energy, it proposes to dole out grants to electricity suppliers that increase clean electricity at least 4 percent over the previous year. The grants would be calculated at $150 for each megawatt-hour above 1.5 percent of the previous year’s clean generation. Suppliers that don’t meet the target would be hit with a fee at $40 per MWh based on their clean energy shortfall.

Senate Energy and Natural Resources Chair Joe Manchin (D-W.Va.), however, threw a wrench into the process over the weekend, spelling out his opposition to the program in an interview on CNN (see related story).

"The transition is happening. Now they’re wanting to pay companies to do what they’re already doing," Manchin, a key Senate swing vote, told CNN. "Makes no sense to me at all for us to take billions of dollars and pay utilities for what they’re going to do as the market transitions."

The E&C legislation also includes tens of billions for other priorities, including money to replace lead service lines, a new “greenhouse gas reduction fund” and funding for a variety of EPA accounts to reduce air pollution, according to a summary memo from the committee (E&E Daily, Sept. 10).

Here are six items to watch as the panel marks up its air pollution, hazardous materials, drinking water and energy proposals:

1. CEPP debate

The CEPP was the most anticipated item to come out of E&C’s proposal, given that advocates had talked it up for months without legislative text, but it faces some major hurdles before final passage that could bubble up today.

For one thing, the CEPP as written by the House panel would define clean energy as generation with a carbon intensity of less than 0.1 metric ton of carbon dioxide equivalent per MWh.

“That means there’s no unabated natural gas,” said Lindsey Walter, deputy director for Third Way’s Climate and Energy Program. “This does leave room for clean technologies like carbon capture and storage to play a role.”

It’s a potential point of controversy for moderates and in the Senate, particularly given Manchin’s comments over the weekend and his repeated warnings against eliminating fossil fuels.

"Any Senate clean electricity bill that wants to gain the support of all 50 Democrats will have to contain a bigger role for carbon capture from natural gas and coal generation, and probably include somewhat longer timelines for the overall clean electricity transition,” Paul Bledsoe, a former Senate Finance Committee staff member, now with the Progressive Policy Institute, said in an email.

Beyond Manchin, the biggest challenge for the CEPP moving forward might be the Senate parliamentarian. The “Byrd” rule that governs reconciliation allows only certain tax and spending-related provisions to bypass the filibuster under a set of six criteria.

Although the “terms and conditions” of the CEPP are tied to spending, it’s possible that some sections could be ruled extraneous under the Byrd rule once the legislation is scored because they do not have associated costs or revenues, said G. William Hoagland, senior vice president of the Bipartisan Policy Center and a budget expert.

“All I can say is this is going to drive the Senate Parliamentarian crazy,” Hoagland said in an email.

“The spending will pass Byrd, but I honestly do not know if when CBO or JCT costs out the legislation if it will show the specific sections or subsections have a cost associated with them,” Hoagland added, referring to the Congressional Budget Office and Joint Committee on Taxation.

2. Methane fee

The bill text, released late last week, also provides a first look at Democrats’ proposed fee on methane emissions from the oil and gas sector.

Observers had anticipated that the fee could draw on legislation introduced earlier this year by Sen. Sheldon Whitehouse (D-R.I.) and other Senate Democrats (E&E Daily, March 10). But E&C’s version is different.

It would require EPA to impose a fee on oil and natural gas facilities that report methane emissions under the Greenhouse Gas Reporting Program, including storage, production and processing facilities, calculated via a complicated formula.

Producers would be assessed a fee on methane emissions, expressed as carbon dioxide equivalent, that exceed 0.2 percent of the natural gas sold by the facility. Revenues would be used to assist facilities in reducing methane emissions and cleaning up legacy pollution.

3. ZEV cash

For the transportation sector, Democrats are looking to boost Biden’s pledge to get more electric vehicles on the road. That’s despite the president’s reported promise that they would not “double dip” on policy areas that were already included in the Senate’s bipartisan infrastructure bill.

E&C is proposing to fund a variety of electric vehicle and zero-emissions vehicle programs at DOE. That includes $2 billion for rebates on EV supply equipment, $1 billion for EV-related grants in low-income communities, $4 billion for the plug-in electric drive vehicle program and $6 billion for the Near-term Transportation Sector Electrification program, according to the committee’s summary language.

The bill would also dole out $5 billion for grants and rebates to replace conventional heavy-duty vehicles with ZEVs.

4. Transmission

E&C Democrats included $9 billion for transmission improvements in an effort to update an aging grid system and better unleash more clean energy onto the grid.

Most of that total, $8 billion, would go to DOE for grants and loans related to “constructing new long-distance transmission lines and for upgrading interties between the various interconnections,” according to the committee summary.

The focus on more and faster transmission has attracted interest in both parties as experts warn that impending bottlenecks and rickety grid systems could hamper the clean energy transition.

Calls for reform have only grown more pressing following grid woes in Texas and California, which have left millions of people without power for days at a time.

The committee noted funding would go for “constructing and modernizing grid infrastructure across the seams between the Eastern and Western Interconnections, the domestic interties with the Electric Reliability Council of Texas, and for offshore wind projects.”

Wider connections between the East and West grids have the potential to unleash as much as $2 billion annually in operation savings for ratepayers due to power sharing, according to a 2018 DOE study.

“These measures will reduce consumer costs, maintain reliable delivery of electricity during extreme weather events, and are essential to addressing the climate crisis,” the committee summary said.

The bill also includes $200 million for DOE and $100 million for the Federal Energy Regulatory Commission to make National Environmental Policy Act reviews more efficient, potentially helping to speed deployment of new transmission infrastructure.

5. DOE loan program

The bill would look to infuse additional authority at DOE to issue loan guarantees to spur more clean energy and transmission deployment.

The measure would extend DOE’s loan authority out to $30 billion for total principal amount. The bill would also appropriate $700 million for the costs of guarantees “for renewable and/or energy efficient systems and manufacturing, and distributed energy generation, transmission, and distribution,” per the committee summary.

Used as a major clean energy and economic driver under the Obama administration’s recovery response to the 2008 financial crisis, the loan program has languished over the past four years because of the Trump administration’s hesitance to use it.

In one of her first speeches, Energy Secretary Jennifer Granholm heralded the loan program as critical to the Biden administration’s efforts to leverage the clean energy transition into an economic and employment driver (Greenwire, March 3).

Additionally, the bill would appropriate $3 billion for DOE to use as direct loans under the Advanced Technology Vehicles Manufacturing program. It also would remove the cap for total loans the department can make under the program. That funding could help spur a burgeoning electric vehicle industry, seen as another critical step in decreasing emissions from the transportation sector.

6. Water

The House bill includes $30 billion to remove lead service lines across the nation. The money is seen as a significant boost to fulfill Biden’s initial call for $45 billion to get the job done, an amount that was winnowed away during heated infrastructure talks earlier this year (E&E Daily, Aug. 4).

The bill attempts to head off controversy by specifying the funds cannot be diverted to any other uses and that entire lead service lines must be replaced, not partial replacement. The bill also calls for $700 million in grants to reduce lead contamination in schools and $100 million for drinking water infrastructure on tribal lands.

The House measure also includes $500 million to assist low-income households with water bills, a move that numerous utilities and consumer advocates have cast as critical during the ongoing pandemic.

Schedule: The markup is Monday, Sept. 13, at 11 a.m. in 2123 Rayburn and via webcast.

This story also appears in Climatewire and Energywire.