CONGRESS

13 ways the massive omnibus hits energy

The Department of Energy, EPA and the Interior Department would see modest funding increases — and a raft of new programs — in an enormous spending, pandemic and energy package that Congress has sent to President Trump for his signature.

The legislation includes significant energy research and climate provisions and arrives as the incoming Biden administration has pledged a major focus on clean and renewable energy, environmental justice and combating climate change.

It includes mandates to boost offshore wind farms, open the Federal Energy Regulatory Commission up to the public and research new ways to use coal.

Trump, who had shown little interest in the negotiations, interjected last-minute uncertainty late last night, calling the massive bill a "disgrace" in a video posted to Twitter.

He hinted that he might not sign the legislation and called for more direct aid to Americans for COVID-19 relief. Lawmakers are back in Washington next week to override an expected defense bill veto, but it is unclear whether they will be able to amend the measure.

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Here are 13 energy takeaways from a package that took Congress months to assemble and weighed in at more than 5,000 pages:

Renewable energy

The legislation extends tax credits for solar, energy efficiency, and both onshore and offshore wind, delighting advocates.

Heather Zichal, CEO of the American Clean Power Association, called the extensions "a major win for American energy consumers" and singled out the recognition of offshore wind as "a brand-new provider of jobs" and clean electricity.

The wind and solar industries also secured investments in their future, in the form of research and development.

Myriad new and expanded programs housed at DOE's national labs would seek to improve wind and solar efficiency, grid integration, and competitiveness, while training workers, supporting domestic manufacturers and nudging along next-generation versions of the technologies.

The wind industry's subsidies were contested by North Dakota's two Republican senators, John Hoeven and Kevin Cramer, who called renewable production and investment tax credits "market-distorting" and "ineffective policy." The senators tried unsuccessfully to pass an amendment that would have stripped the production tax credit extension from the bill's final version.

Free-market conservative groups were similarly displeased with the bill's renewable policies. The Heritage Foundation, a longtime critic of tax subsidies for renewables, blasted the credit extensions as "corrupt subsidies for special interests."

Heritage also charged that the additional research and development programs "overstep the role of the government in commercialization."

"The private sector should assume the risk (and reap the rewards) of investing [in] new technologies," wrote Matthew Dickerson and David Ditch, who respectively direct and conduct research at Heritage on the federal budget, in an analysis of the spending package yesterday.

Wind, solar and geothermal energy producers may see easier access to federal lands for their projects, as well, under the legislation. By September 2022, DOE must set new national goals for renewable production on public land. And by 2025, it must issue permits for at least 25 gigawatts of clean electricity generation.

The benefits for renewables include a 30% investment tax credit for the offshore wind industry.

Lawmakers extended the sunset on the existing onshore wind production tax credit by one year and gave a two-year extension to the solar investment tax credit. The new offshore wind benefit applies to projects built between 2017 and 2025.

An offshore wind credit to boost the burgeoning industry was previously advanced by Democratic Sens. Ed Markey of Massachusetts and Sheldon Whitehouse of Rhode Island, along with Democratic Rhode Island Rep. Jim Langevin, in the "Offshore Wind Incentives for New Development Act," S. 1957, which they introduced last year.

Whitehouse said the measure would help advance a clean U.S. energy economy. "We are running out of time in the fight against climate change, which is why we need to press forward on every front we can," he said in a statement.

John Bowman, managing director for government affairs at the Natural Resources Defense Council, called the energy focus in the legislation a "mixed bag," praising the tax credits and renewable support but noting that lawmakers also included provisions for fossil fuels.

The Bureau of Ocean Energy Management estimates 2,000 wind turbines could be raised offshore within 10 years, largely on the strength of state climate commitments and declining development costs.

The spending package provides a $5.1 million bump in funding for BOEM's renewables shop to assist with timely and predictable permitting of offshore wind farms.

The Interior agency has 11 construction and operations plans for offshore wind projects on its docket. Each would require an environmental review that can take up to two years. The projected first utility-scale offshore wind farm, Vineyard Wind off the Massachusetts coast, recently retracted its application.

The unexpected move came just weeks before the Trump administration was set to issue a final decision on the project, which has faced multiple setbacks (Climatewire, Dec. 2).

One provision of the spending packages directs the Interior secretary to set goals for renewable energy production on federal land by 2022 and permit at least 25 GW of solar, wind or geothermal electricity projects by 2025.

Two central requests from renewable advocates didn't make the cut: a mechanism that would let project financiers access direct payments from the government instead of tax credits, and a stand-alone tax credit for energy storage, which would help deliver renewable power to the grid when wind and solar resources go offline.

"I think there was a reticence about creating new tax credits as opposed to extending old" ones, said Abigail Ross Hopper, president of the Solar Energy Industries Association (SEIA), referring to the energy storage credits' failure. "It is still absolutely a priority for us."

Hydrogen, an energy source that saw an explosion of investor attention in 2020 and favorable policies outside of the United States, found its way into the legislation via research programs for nuclear energy, carbon capture and natural gas efficiency, and the decarbonization of manufacturing industries.

A new DOE study would look into the usefulness of "blue" hydrogen — produced with natural gas but paired with carbon capture — for cutting the industrial sector's emissions and advancing carbon capture and storage (CCS).

Electric vehicles

One of the bigger disappointments for clean energy advocates may have been the bill's treatment of electric vehicles.

Two programs would launch DOE studies into recycling the cars' batteries and integrating EVs into the grid to improve reliability.

But a key $7,500 tax credit for EV buyers failed to win an extension, meaning buyers of Tesla Inc. and General Motors Co. electric models won't be able to claim the credit.

That's because both of those automakers have sold more than 200,000 EVs in the United States, triggering the end of the credit's availability for those brands.

Electric car advocates have long pushed lawmakers to lift that cap. The idea was struck from a different energy package earlier this year at the behest of the Trump White House, whose budget proposals have called for ending the credit entirely.

"We are disappointed that Congress once again kicked the can down the road on supporting a transition to an electrified transportation sector," said Katherine Stainken, policy director at Plug In America, an EV advocacy group.

The omnibus also slices away $1.9 billion in DOE loan authority for advanced vehicle manufacturing. Approved as emergency spending under the Obama administration, the funds are part of a $17.7 billion pot of grants that could be one of the Biden administration's levers for promoting clean cars without congressional help.

Rob Cowin, director of government affairs for climate and energy at the environmental group Union of Concerned Scientists, criticized the package as lacking in clean vehicle support. "We are going to need a real commitment from Congress on sustained support for clean energy and clean transportation going forward," he said.

Many advocates are looking at President-elect Joe Biden's nominee for Energy secretary, former Michigan Gov. Jennifer Granholm (D), who has championed clean energy as an economic boost.

Energy storage

The package includes the "Energy Act of 2020," considered the most significant energy policy bill Congress has passed in years (E&E News PM, Dec. 14).

In addition to supporting solar and wind energy, CCS, and other technologies, the act would establish new research and development efforts for energy storage, which often includes large-scale batteries.

The act would also create a DOE grant program to assist utilities and electric cooperatives with energy storage and microgrid projects that draw from renewables.

All told, federal investments for energy storage from the act would amount to $1 billion over five years, according to the Energy Storage Association.

Those investments would support reliable, flexible electric grids across the country, ESA said, which could be especially helpful for regions that rely heavily on renewable energy resources that don't run around the clock.

"Congress has recognized the critical role of energy storage in building a clean energy future," ESA CEO Kelly Speakes-Backman said in a press release.

New FERC office

The package would also direct FERC to establish an Office of Public Participation, marking a major win for consumer advocates who have long pushed for a greater say in the commission's oversight of electricity markets and major natural gas infrastructure projects.

"For too long, public interest organizations have lacked the resources to meaningfully participate in important FERC proceedings," Tyson Slocum, energy program director at watchdog group Public Citizen, said in a statement.

"Providing intervenor compensation to consumer groups, environmental justice organizations and other members of the public interest will revolutionize public interest representation and democratize policy making at FERC."

Slocum called the requirement to set up the office the biggest development at FERC in 20 years.

If Trump signs the package into law, FERC will have 180 days to inform Congress about how it will design, fund and operate the office.

The Public Utility Regulatory Policies Act of 1978 authorized FERC to create such an office — and authorized more than $7 million over four years — but it was never created, and Congress never set aside more funding (E&E Daily, May 16, 2019).

Cybersecurity

The omnibus package includes an increase in funding for the Department of Homeland Security's Cybersecurity and Infrastructure Security Agency.

The nation's top civilian cyber office would receive $260 million more than the Trump administration requested for fiscal 2021, with a total budget of just over $2 billion.

The increase comes amid news of a massive ongoing hacking campaign that has hit federal agencies such as DOE and the Treasury Department as well as potentially thousands of private companies worldwide.

The package would also make it easier for state and local governments to use a .gov domain — which is considered more secure — with the inclusion of the "DOTGOV Online Trust in Government Act."

The act would also transfer the program from the General Services Administration to CISA, which can lessen the cost of switching to a .gov domain. The cyber agency would then develop a strategy to better protect the domain from cyberattacks.

While experts say hacking threats to the energy sector have grown over the past year, the budget for the DOE office charged with defending the grid would stay the same.

The agency's Office of Cybersecurity, Energy Security and Emergency Response (CESER) would receive $156 million in the package, the same amount as fiscal 2020 and around $28 million less than requested.

At a Senate hearing earlier this year, then-head of CESER Alexander Gates warned that more money and authority were needed to defend against threats to the grid from nation-state hackers and financially motivated cybercriminals.

Also included is a provision requiring a public hearing on the worldwide threat assessment. The annual briefing has traditionally given the public an unclassified look at what the intelligence community gauges as the greatest security threats to U.S. interests, and in recent years, cyberthreats have topped the list. However, 2020 went without such a public hearing.

The package also includes $4.25 million for the Transportation Security Administration to continue field assessments identifying pipeline cybersecurity gaps. TSA, best known for its role in U.S. airports, also oversees surface transportation security, including for pipelines and railroads.

Energy efficiency

The bill includes provisions to improve the weatherization of low-income homes and reduce industrial emissions but does not include a measure that advocates had sought to help cities and states voluntarily impose stronger building codes.

"We applaud these meaningful steps, but we urgently need efficiency efforts at an even greater scale to address the climate crisis and create the large numbers of jobs that will get us out of this recession," said Steven Nadel, executive director of the American Council for an Energy-Efficient Economy.

He noted that the final legislation would require federal agencies to perform efficiency measures identified in energy audits but omits a House-passed measure that would help with building codes.

The legislation does include modernizing the federal Weatherization Assistance Program to help it address health and safety issues in homes, add solar cells and test new approaches.

It also calls for reducing industrial energy use and greenhouse gas emissions through research and development of efficient technologies, technical assistance and drafting a national smart manufacturing plan.

And it would authorize a smart buildings program, energy- and water-saving pilot programs, an energy-saving information technology plan, coordination of assistance for retrofits in schools, and rebates for efficient motors and transformers.

The energy efficiency council noted that the legislation would maintain funding for DOE's Office of Energy Efficiency and Renewable Energy and give slight increases to the Weatherization Assistance Program and building technologies offices.

The bill also would make permanent a tax deduction for commercial building owners to make energy efficiency upgrades.

The council said the bill would also extend tax incentives to spur household energy efficiency improvements and the construction of efficient new homes, but notes that the incentives would not update efficiency requirements, so their effect "appears to be limited."

Carbon capture

Proponents of carbon capture technology heralded a two-year extension of the 45Q tax credit.

Previously, developers of carbon capture projects had until the end of 2023 to start construction in order to claim the credit. They would now have until the close of 2025.

Extending the window has been one of the highest priorities for carbon capture advocates, who say past delays around guidance for the incentive ate into an already tight time frame to kick off construction.

Cheering the extension, CCS proponents are setting their sights on other industry goals.

"While the Coalition's other top priority of a direct pay option for 45Q did not make it into the final package, the measures included in the omnibus make this year-end legislation the most important accomplishment for carbon capture and removal since passage of the 2018 FUTURE Act that reformed and expanded the 45Q tax credit," said Brad Crabtree, director of the Carbon Capture Coalition, in a statement.

According to groups like the Global CCS Institute, developers are seeking a direct pay option in part because the coronavirus pandemic's market impacts have made it harder to finance projects.

In a report earlier this month, the institute said that "US involvement in 12 of the 17 new facilities in 2020 is largely due to the enhanced 45Q tax credit signed into law in 2018."

LNG and pipeline safety

Pipeline safety language in the bill represents the first time Congress has required companies to use advanced technology to find and fix methane leaks, said Elgie Holstein, a senior director with the Environmental Defense Fund, which has been pushing for such language.

"That's a win for public safety and for the climate," Holstein said.

The methane language is part of a five-year pipeline safety reauthorization. Authorization for the Transportation Department's Pipeline and Hazardous Materials Safety Administration (PHMSA) lapsed more than a year ago, and progress had stalled until recently over differences between Republicans and House Democrats.

The spending package includes language ordering PHMSA to regulate about 100,000 miles of "gathering" pipelines that have remained unregulated for years despite a number of fatal explosions (Energywire, March 4, 2019).

The methane and gathering line provisions stemmed from legislation attached to the reauthorization bill by departing Sen. Tom Udall (D-N.M.).

"Communities in New Mexico — and across America — that are near natural gas pipelines should not be at risk for deadly explosions from preventable leaks," Udall said in a statement.

Separately, the legislation would also establish a National Center of Excellence for Liquefied Natural Gas Safety to "enhance the United States as the leader and foremost expert in LNG operations" through a variety of measures.

Among them, the center would serve as "a repository of information on best practices for the operation of LNG facilities" and to strengthen the federal government's knowledge about the "operations, management, and regulatory practices of LNG facilities."

The center would one day be located in "close proximity to critical LNG transportation infrastructure" that is on or connected to the Gulf of Mexico, according to the legislation.

Republicans have lauded the bipartisan nature of the pipeline legislation, which passed the Senate in August on a unanimous vote. Democrats also praised the package but said they want to see the federal government do more.

"Despite making significant progress over the last 20 years, our nation's pipelines are still far too prone to safety issues, oil spills, and gas leaks," said House Energy and Commerce Chairman Frank Pallone (D-N.J.). "This legislation is a sensible step in the right direction."

Congressional leaders say the pipeline package will also allow PHMSA to increase its roster of pipeline inspectors by nearly 20%, require an update of liquefied natural gas facilities and update regulations for distribution pipeline operators.

New uses for coal

In a win for coal allies, a measure aimed at identifying and supporting new uses of coal was included in the bipartisan accord.

A section of the bill calls for research, development, demonstration and commercialization of a "carbon utilization program" that would review alternative uses of raw and processed coal that don't cause "significant" carbon dioxide emissions.

The language would also direct the Energy secretary to invest in a two-year demonstration program in the country's coal-producing regions to ramp up "coal-carbon products."

Finding new markets for coal — which is seeing declining use in the power sector due to competition from cheaper natural gas, wind and solar energy — has been a Trump administration priority.

Potential ways to use the fossil fuel without burning it for energy include using it to make computer memory devices, anodes for batteries and roofing tiles, insulation, and other building materials, according to DOE's National Energy Technology Laboratory.

Skeptics have questioned whether those and other suggested new uses could significantly revive the coal industry (Energywire, June 26).

Nonetheless, Sen. John Barrasso (R-Wyo.) called the inclusion of a coal-to-products measure in the omnibus bill a win for Wyoming, the country's top coal-producing state.

Barrasso, along with Sens. Shelley Moore Capito (R-W.Va.) and Joe Manchin (D-W.Va.), sponsored a bill this year with similar provisions, the "Creating Opportunities and Leveraging Technologies for Coal Carbon (COAL TeCC) Act" (E&E Daily, Jan. 31).

"While coal continues to help keep the lights on across the country, it's more than just a power source," Barrasso said in a press release. "Carbon from coal can be used in products as diverse as water filters, automobile bodies, bikes and building products."

Other coal-related initiatives included in the bill are a one-year extension of production tax credits for coal facilities on tribal lands and the creation of a research program on the extraction and recovery of "rare earth elements and other critical materials" from coal.

The measures have the backing of the United Mine Workers of America, which represents coal miners.

"We support any programs that will provide coal miners with opportunities to continue to work," Phil Smith, director of communications and governmental affairs at UMWA, said in an email.

Mixed bag for utilities

The final deal contains pandemic-related provisions sought by consumer advocates that limit termination of utility services for one year, while also injecting $3.75 billion into the Low Income Home Energy Assistance Program — a popular fund that has long enjoyed bipartisan support.

The inclusion of LIHEAP funding helps address the fiscal crunch of nonpayment that has added to utilities' woes during the COVID-19 pandemic.

Also helping water and electricity providers is the inclusion of $25 billion in rental assistance — including for payment of utility bills — in the relief deal.

However, the final deal omitted a key request of the National Rural Electric Cooperative Association: the inclusion of legislation that would allow its nonprofit members to refinance Rural Utilities Service debt at lower interest rates.

"Doing so would have given cooperatives the same opportunity to refinance that other businesses enjoy and produced $10 billion in savings to help rural families and businesses navigate these difficult times," NRECA CEO Jim Matheson said in a statement.

Still, the group applauded other provisions in the deal, including rental assistance and a change that allows utility bills paid with Paycheck Protection Program funding to be forgiven.

Oil and gas

Lawmakers once again avoided attaching the most contentious policy riders into the year-end spending package.

Democrats had hoped to add provisions blocking drilling in the Arctic National Wildlife Refuge and to revive Obama-era climate rules. But those were dropped in leadership talks.

Instead, the policy provisions in the spending package are those that have been included for the past several years.

They include provisions limiting oil and gas development near the Chaco Culture National Historical Park and barring the regulation of lead in ammunition and tackle.

Uranium

Congress might not be able to decide how to dispose of nuclear waste, but it did agree on the need for a new uranium reserve.

Lawmakers provided $75 million, half of the amount sought by DOE, for developing the reserve. Backers argue that it's a national security imperative because the United States now imports about 90% of its uranium.

It's far from certain that the Biden administration will show much interest in the effort, which has not been authorized by Congress.

The Government Accountability Office said in a recent report that DOE has yet to offer a clear rationale for its push to shore up domestic uranium production (E&E News PM, Dec. 10).

Democrats, for their part, focused on more than $800 million in the bill that would go toward decommissioning uranium nuclear weapons.

Absent was any mention of the Yucca Mountain nuclear waste repository in Nevada. While experts have long argued that the nation needs a permanent nuclear disposal site and that the Silver State is a viable option, Congress for the past several years has refused to fund it amid fierce opposition from Nevada lawmakers. The bill would provide about $20 million for interim nuclear waste storage.

Climate action

The package would phase down hydrofluorocarbons (HFCs), the most significant congressional action on climate change in years.

In addition, the omnibus includes an innovation-focused research and development measure cobbled together from provisions from the Senate Energy and Natural Resources Committee and a House-passed clean energy package.

The resulting deal "will foster innovation across the board on a range of technologies that are critical to our energy and national security, our long-term economic competitiveness, and the protection of our environment," Senate Energy and Natural Resources Chairwoman Lisa Murkowski (R-Alaska) said in a statement yesterday.

Some progressive advocacy groups decried the inclusion of provisions to boost nuclear power as well as CCS technology. But the end-of-year bill won praise from other advocacy groups.

The energy package "sets the stage for the Biden administration to hit the ground running in 2021," said Lindsey Walter, a senior policy adviser for the Climate and Energy Program at Third Way.

"The innovation provisions, the demonstration programs, the clean energy research and development programs — all of that is going to set us up to build and innovate the clean energy technologies that we need in order to actually implement the Biden climate plan," Walter said.

"So this is absolutely a huge down payment toward larger climate and clean energy legislation that we'll likely see under a Biden administration."

Senate Minority Leader Chuck Schumer (D-N.Y.) pledged Monday to "deliver bold climate action" with Biden in the White House.

"Let's be clear: are these provisions enough to meet the demands of the science? No," Schumer said in a statement. "But are they a significant step in the right direction? Yes."

Reporters Lesley Clark, Carlos Anchondo, Miranda Willson, Christian Vasquez, David Iaconangelo, Heather Richards, Arianna Skibell, Nick Sobczyk, Geof Koss and George Cahlink contributed.

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