WHITE HOUSE

How Biden's $2T plan would spur EVs, 100% clean power

President Biden pledged to rebuild the "backbone of America" yesterday, pitching a massive $2 trillion plan to accelerate his efforts to tackle climate change, including a national clean energy standard and a carbon-free electric grid.

"It's not a plan that tinkers around the edges," Biden said at a union hall in Pittsburgh. "It's a once-in-a-generation investment in America. Unlike anything we've seen or done since we built the Interstate Highway System and the space race decades ago."

The plan faces significant headwinds from Republicans in Congress, who said they back spending on roads and bridges but oppose Biden's plan to raise the corporate tax rate and invest heavily in green energy.

Biden pledged yesterday that he'd bring Republicans in for "good faith" negotiations, but he added, "We have to get it done."

Biden's Cabinet will meet for the first time today at the White House, and the discussion will include how its members will help sell the plan, deputy press secretary Karine Jean-Pierre told reporters en route to Pennsylvania.

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Energy Secretary Jennifer Granholm began making the pitch for the plan yesterday, telling an audience of small-business owners who have received DOE grants for work on science, energy and climate initiatives that the package calls for a $31 billion program to give small businesses access to credit, venture capital, and research and development dollars.

"It is big, it's bold," Granholm said on the Zoom call, calling the infrastructure plan a "once-in-a-century investment in our nation's ability to compete in and to win the race for 21st-century innovation."

Yet enormous questions remain for a proposal that the White House acknowledged would "take some time" to get through Congress and does not yet include detailed legislative language. Republicans said the plan would raise costs, while other critics said it was vague or did not go far enough to address climate change.

Chip Cannon, head of the energy regulation practice at Akin Gump Strauss Hauer & Feld LLP, called the sweeping proposal a "green unicorn."

"Reducing carbon emissions, greater competition, protecting workers, bringing back jobs, environmental justice and environmental safety — I'm not sure how you do all of that and do it all with a clean electricity standard," he said. "These are very general goals without any real indication of how the administration intends to reach those goals."

One example Cannon cited was Biden's call for an Energy Efficiency and Clean Electricity Standard (EECES), which would be a centerpiece of his goal to achieve carbon-free power by 2035. Yet there were few details about what the standard would look like.

On the state level, clean power standards have tended to place responsibility for sourcing cleaner electricity in the lap of utilities, by requiring them to meet annual or semiannual CO2 reductions. Many have often carved out a percentage of electricity generation, or a number of megawatts, for a particular renewable source, like solar or wind.

Biden's plan indicates that the EECES would preserve a role for nuclear and hydropower as "clean" power resources. But it leaves open the question of how deeply it would favor renewables like wind and solar and how it would regulate fossil fuel facilities, including those that installed carbon capture units.

"If there really is a federal standard, that's huge," said Cannon. "That would be a giant step forward with respect to greening the grid. But there's nothing here that provides any indication [of that]."

A White House official told reporters Tuesday that Biden would work with Congress on the standard. Thirty states and the District of Columbia have instituted clean energy standards, including 10 that will ultimately require 100% of covered electricity sales to come from eligible clean energy sources, according to a Congressional Research Service report.

The precise shape of the EECES also could put the Biden administration at odds with the utility sector.

Many of the largest investor-owned utilities want to take longer to decarbonize than the White House is pushing for, having released plans to reach "net-zero" emissions by 2050.

In a statement yesterday, the Edison Electric Institute, which represents investor-owned utilities, reiterated its stance that 100% clean power would require new technologies to reach the target. And it applauded the administration for supporting R&D of new technology and "for recognizing that, ultimately, technology will drive the timeline to a 100 percent clean energy future."

It's also not clear whether an EECES proposal would survive the Senate.

Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association, was cautiously optimistic, however, saying clean energy and solar had bipartisan support.

"Obviously this is a much bigger piece of legislation than only the clean energy pieces," Hopper said in an interview with E&E News.

Renewable, CCS repercussions

Analysts at investment bank Raymond James wrote in a research note yesterday that they were "skeptical" that moderate Democrats, particularly Sen. Joe Manchin of West Virginia, would back phasing out fossil fuels.

But Biden said yesterday that the plan's push to repeal fossil fuel subsidies would create millions of jobs and pledged they would be well-paying union jobs.

"My 'American Jobs Plan' will put hundreds of thousands of people to work: line workers, electricians and laborers laying thousands of miles of transmission line, building a modern, resilient and fully clean grid," he said.

Many renewable energy advocates, meanwhile, lauded Biden's proposal, but some environmentalists said it didn't go far enough.

Heather Zichal, chief executive of the American Clean Power Association, called it a "steroid shot to rebuild our economy and get serious about climate change." She said the package's energy provisions would provide "certainty and predictability for America's cleanest technologies."

"Simply put, this is a plan to put steel in the ground to build a clean infrastructure system that will be the envy of the world," she said. "We can't afford to miss this moment."

Apart from extending tax credits for wind and solar through the decade and establishing a direct-pay option to make financing projects easier, the plan tries to accelerate the build-out of transmission lines — a task that many clean energy advocates say is key to any 100% carbon-free system.

A new division at the Department of Energy known as the Grid Deployment Authority would facilitate siting and financing of 20 gigawatts of high-voltage power lines along existing rights of way, with the help of a new tax credit for investment.

Gregory Wetstone, president of the American Council on Renewable Energy, praised those features of the plan, along with the pitch for a clean energy standard.

A new standard, he said, would be "vital to ensure we stay on track with the critical emissions reductions needed to make progress addressing climate change."

Hopper and other solar advocates said the investment tax credit extension would provide certainty to the marketplace. Broadly, Biden's plan makes it clear that the energy transition will be wind, solar, storage, transportation electrification and more transmission, which gives opportunities to a wide range of sectors.

"I think this is a clear indication that this administration both believes in climate change and believes in addressing the climate crisis quickly — and that there's lots of investment needed in this sector," she said, later adding, "This is an incredible business opportunity [for everyone]."

The direct-pay option is critical now as tax equity markets are strapped. That has created a glut of projects sitting in a holding pattern even though they've been approved, Hopper said.

"This change could unleash lots of projects now," she said.

Biden's plan also calls for a carbon capture retrofit of 10 steel, cement and chemical production facilities and directly mentions the "Storing CO2 and Lowering Emissions Act," legislation that aims to bolster the country's CO2 transport network (E&E Daily, March 18).

The Carbon Capture Coalition, a collection of over 80 groups that back greater deployment of carbon capture, welcomed support for the technology — particularly a direct-pay option for the federal tax credit known as 45Q. The credit is considered to be more of the most important incentives for carbon capture projects that prevent CO2 from entering the atmosphere.

But Rep. David McKinley (R-W.Va.), who last month reintroduced the bill along with Rep. Marc Veasey (D-Texas), said yesterday that although he was "encouraged" the legislation is included in Biden's plan, he still has concerns about the proposal. It would jeopardize energy jobs and create "unreasonable mandates," he said.

Some environmental groups said Biden should have been bolder and that the plan isn't enough to reach his goal of decarbonizing the electric sector.

"Instead of a Marshall Plan approach that moves our economy to renewable energy, it includes gimmicky subsidies for carbon capture, fantastically wishes the free market will save us, and fails to take crucial and ambitious steps toward phasing out fossil fuels," said Brett Hartl, government affairs director at the Center for Biological Diversity.

In an interview, Hartl questioned how many times the 45Q tax credit needs to be expanded and criticized the plans for carbon capture retrofits.

Lukas Ross, a program manager at Friends of the Earth, similarly said that "throwing infrastructure dollars at carbon capture boondoggles is just a way to keep dirty energy in business at the expense of communities on the front lines of pollution."

Brad Crabtree, director of the Carbon Capture Coalition, rejected the characterization and said carbon capture systems require pollution controls to be in place to operate effectively.

"Unfortunately, it's being presented in this absolutist, sort of false assertion that you're either shutting down these plants and protecting communities, or you're putting in carbon capture and you're continuing to pollute in these communities, and the reality is that if you install carbon capture, you're dealing with the CO2 emissions and some other pollutants and we need to take specific measures to deal with the others," Crabtree said.

'Panoramic' for EVs?

Electric vehicles are another technology that looms large in the White House proposal. The $174 billion investment is the biggest share of transportation spending, outpacing the next big-ticket item, roads and bridges, by $60 billion.

Fears of a rising China are an integral part of the pitch. Biden's statement said the goal is "to win the EV market," noting that China has three times as many EVs on its roads.

Battery, clean energy and electric vehicle interest groups endorsed the framework, with the Electric Drive Transportation Association calling it "panoramic."

Biden did not make clear how the funds would be spent, but the plan would include point-of-sale rebates and tax incentives to motivate buyers.

The plan offered few specifics, but likely routes are through the tax code. One possibility is Section 30C, which provides tax incentives for charging stations. The other is Section 30D, which offers a $7,500 federal tax credit to buy an electric vehicle but now excludes major makers like Tesla Inc. and General Motors Co. that have exceeded the rule's sales cap of 200,000 vehicles.

Last week, a bipartisan bill in the Senate called for changes to 30C, the charging station credit. The proposal would allow each station to claim more credits, raise the maximum credit more than sixfold and extend the provision to 2029.

The charging station credit will expire at the end of this year if Congress doesn't act.

Biden's plan calls for building 500,000 charging stations. Projections in California, which has about half of all the EVs in the country, suggest that many more are needed (Energywire, Jan. 25).

Another part of the proposal involves heavy vehicles. Biden put a spotlight on buses but remained silent on other big vehicles, like delivery trucks and tractor-trailers.

Biden aims to replace 50,000 diesel transit buses with electric versions. Pavel Molchanov, an analyst at Raymond James, said that may mean an expansion of the Federal Transit Administration's Low or No Emission Vehicle Program, which funds the replacement of older, polluting diesel buses with cleaner versions.

Last year, the program got a significant boost by Congress and was funded at nearly $130 million. Nearly all the money went to electric buses and charging stations.

Biden's plan also calls for electrifying 20% of school buses through a new "Clean Buses for Kids" program at EPA.

Together, the transit and school bus "investments will set us on a path to 100 percent clean buses," the plan said.

The language also reiterated that the U.S. government will use its vast purchasing power to buy EVs for its fleets. Importantly, that means "including the United States Postal Service."

In February, USPS dismayed climate advocates when it announced that a long-awaited, nearly $500 million acquisition of new postal trucks would have only a small and gradual role for electric vehicles (Energywire, Feb. 24).

Democratic senators have since introduced legislation to change that plan, but it's unclear whether Congress or the White House can force the semi-independent Postal Service to change course.

The proposal further calls for $46 billion in federal procurement dollars tied to clean manufacturing. That incentive would apply to electric vehicles and charging stations, as well as crafting more energy-efficient buildings with technology like heat pumps.

As with other portions of the plan, Biden was careful to note his emphasis on domestic jobs and businesses. In the portion of his speech yesterday related to EVs, Biden said, "Not a contract will go out that I control that will go to a company that is not an American company."

Other clean energy elements call for retrofitting more than a million housing units to increase energy efficiency, through targeted tax credits, grants and rental assistance.

The plan would establish a $27 billion national climate bank or "Clean Energy and Sustainability Accelerator" that would leverage private investment into retrofits of residential, commercial and municipal buildings.

That too already has congressional backing: Democrats in February introduced similar legislation for a climate bank, and Sen. Chris Van Hollen (D-Md.) last December called for setting up a $35 billion bank over five years to finance electric vehicle deployment, renewable energy, and other decarbonization and climate resilience projects.

A 'Trojan horse'?

Top Democrats in the House and Senate embraced the infrastructure proposal, but it's unclear how many of the provisions can get through a sharply divided Congress. No Republicans voted for Biden's massive COVID-19 relief bill that he signed last month, though spending money to improve roads, bridges and airports has traditionally found support across the aisle.

Republicans have already made it clear they oppose the tax increases in the proposal, and Senate Minority Leader Mitch McConnell (R-Ky.) renewed his criticism yesterday, calling it a "Trojan horse" that he is unlikely to support.

"It's called infrastructure, but inside the Trojan horse it's going to be more borrowed money and massive tax increases on all the productive parts of our economy," McConnell told reporters in Kentucky.

Sen. Kevin Cramer of North Dakota, the top Republican on the Senate Environment and Public Works Subcommittee on Transportation and Infrastructure, accused Biden of using across-the-aisle support for infrastructure "as a tool for much more partisan goals like climate and taxes."

Cramer suggested he'd prefer to ease regulations on developing highways, bridges, transmission lines and pipelines, saying it would "make tax dollars go further and attract much more in private investment."

Biden called McConnell on Tuesday to brief him on the plan, and White House officials said they will continue to seek Republican support, though Jean-Pierre, the deputy press secretary, did not rule out going without Republican votes.

"He knows how to reach to the other side and make good things happen," Jean-Pierre said of Biden. "This is a critical bill for the president."

It's unclear whether Democratic leadership will be able to keep the caucus together to support another massive spending bill and provide Biden with enough votes for passage. Yet many of the proposals are similar or identical to legislation that has already been proposed, giving the plan additional congressional support.

ClearView Energy Partners LLC noted that key components of the plan appear to draw from four recent legislative proposals, including a $500 billion climate and clean energy proposal introduced last month by House Energy and Commerce Committee Democrats and a $450 billion clean car package proposed by Senate Majority Leader Chuck Schumer (D-N.Y.).

Reporters Carlos Anchondo, David Ferris, David Iaconangelo, Arianna Skibell and Kristi E. Swartz contributed.

Twitter: @lesleyclarkEmail: lclark@eenews.net

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