Biden Clean Energy Plan—An Ambitious Climate Agenda Arrives

Pillsbury Winthrop Shaw Pittman LLP

TAKEAWAYS

  • President-elect Joe Biden announced an ambitious clean energy plan designed to counteract the impacts of climate change and reverse policies from the last four years of the Trump Administration.
  • With action promised on Day 1 of the Biden Administration, the plan represents one of the Biden Administration’s most concrete and fleshed out promises for the first year of President Biden’s term in office.

The Biden Plan to Build a Modern, Sustainable Infrastructure and an Equitable Clean Energy Future,” is one of the Biden-Harris Transition Team’s top four policy priorities along with COVID-19, economic recovery and racial equity. It also represents the most ambitious clean energy vision by any U.S. president in history.

The Biden Plan is far-reaching in scope, covering clean infrastructure development, auto industry improvements, power sector reform, sustainable building and housing development. It also calls for federal investment in innovative clean energy technologies, including hydrogen and nuclear power, to drive significant cost reductions.

While some of the more ambitious goals could face headwinds from Congress—particularly if Republicans maintain control of the Senate after the January 5 Georgia runoff elections—President-elect Biden will be able to implement large portions of his climate agenda through executive orders and other federal agency action.

Other portions of the plan are expected to be incorporated as part of any economic recovery legislation Congress will advance. In short, significant changes to U.S. energy and climate policies are coming to Washington in 2021.

History of President-elect Biden’s Plan
Throughout the 2019-2020 Democratic presidential primary, the two leading candidates, former Vice President Joe Biden and Senator Bernie Sanders, clashed over their vision for America’s energy future, including on how to handle climate change and the merits of the “Green New Deal” proposal. In a sign of party cohesion, shortly after Joe Biden clinched the Democratic nomination, the two convened the Biden-Sanders “Unity Task Force,” drafting policy recommendations and incorporating many of Sen. Sanders’ more far-reaching proposals than Vice President Biden originally supported. While serving to shore up Vice President Biden’s support among progressives and younger voters, the agreement also provided a framework for many Biden Administration plans for the critical first 100 days.

This plan offered specific targets, including a target date of 2035 for nationwide zero-carbon energy production and net-zero emissions for all new buildings by 2030. The final Biden plan incorporated many of the suggestions from both sets of policy recommendations. Further, the co-chair of the Unity Task Force, former Secretary of State John Kerry, has been named as the Special Presidential Envoy for Climate in the incoming Biden Administration and will focus on achieving international climate goals.

After the Biden plan was released, certain aspects of the plan were further developed in the Clean Energy for Biden (CE4B) Policy Recommendations, a series of 48 policy papers written by over 100 clean energy sector volunteers for the Biden-Harris Transition Team. Though the policy recommendations were not an official part of the Biden campaign, with over 400 pages in length, the CE4B recommendations provide insight into how certain goals of the Biden’s plan may be achieved.

The proposals include the creation of a National Council on Workforce Development in the White House to specifically oversee the creation of clean energy jobs, a 100% clean transportation commitment, a 100% clean energy economy commitment, a rural clean energy and jobs development plan, and an overall reduction of reliance on fossil fuels to achieve a net-zero emissions standard by 2050 and stopping new fossil fuel infrastructure development.

The Paris Agreement and Day 1 Action
A Day 1 priority for President Joe Biden has long been rejoining the 2016 Paris Agreement on climate change. Signed initially under President Obama, President Trump announced that the United States would withdraw from the Agreement at the earliest possible date, with withdrawal becoming effective on November 4, 2020. In response, President-elect Biden promised to rejoin the Agreement on his first day in the White House and vowed to go far beyond the Paris Agreement minimum requirements to reduce emissions by working to establish a framework for “every major country to ramp up the ambition of their domestic climate targets.”

Biden promised on the first day of his presidency to immediately adopt aggressive methane pollution limits for new and existing oil and gas operations, enact new fuel economy standards to ensure all new sales of light- and medium-duty vehicles are zero-emission, and to halt the Trump Administration plans to sell drilling leases in the Arctic National Wildlife Refuge (ANWR), as well as banning any new oil and gas leasing on public lands or in public waters.

Reduced Carbon, Clean Energy Jobs, New Innovations
Under the final Biden plan, the U.S. would commit $2 trillion to an accelerated clean energy investment development goal. The plan calls for an economy-wide net-zero carbon emissions standard by 2050 and a 2035 target date for a carbon pollution-free American utility sector. To achieve these goals, the Biden Administration will seek to reform and extend certain tax incentives like the production and investment tax credits for wind and solar projects, help develop financing mechanisms to deliver private sector funding to clean energy projects, and establish a technology-neutral Energy Efficiency and Clean Electricity Standard (EECES) for utilities and grid operators. By coupling front-loaded investments with a clean electricity standard, the Biden Administration hopes to increase market competition for clean energy assets.

To achieve these goals, however, the Biden Administration will also need to incentivize further use of existing clean energy assets and drive the development of new energy sources. The plan calls for increased use of nuclear and hydroelectric power options while ensuring that these facilities meet “robust and rigorous standards for worker, public, environmental safety and environmental justice.” In the nuclear space, the Biden plan calls for significant investment in the research, development and eventual commercialization of advanced nuclear reactors that are smaller and safer, and lower cost than existing reactors.

Another area where the Biden plan aims to develop clean energy options is in hydrogen energy innovations for power and storage. The plan calls for the use of renewables to produce carbon-free hydrogen power. This hydrogen production may ultimately be able to produce hydrogen power at a lower cost than from shale gas through use of newly developed electrolyzers and other next-generation technologies which produce hydrogen without the emission of greenhouse gases.

Interestingly, the Biden plan focuses on the use of hydrogen for power plants while not specifically focusing on hydrogen fuel cells for cars, trucks and other automobiles. However, with the Biden plan also committing to building more zero-emission vehicles, using federal procurement to purchase clean American-made vehicles, and committing to creating one million new jobs in auto manufacturing, supply chains and infrastructure, the Biden Administration may ultimately expand the hydrogen development plan to also include hydrogen power for automobiles to achieve these lofty targets.

Conclusion
The Biden clean energy plan is a significant public commitment by the incoming Administration to achieve new energy and climate solutions. While many parts of the plan are aspirational and may be challenging to advance through Congress—particularly if the Republicans retain control of the Senate—major components of the plan, as well as a return to the Paris Agreement, can be accomplished without Congressional approval. The Biden transition team has signaled plans to make a number of changes through Executive Branch action.

Businesses and industry stakeholders have raised concerns that the Biden plan will lead to increases in energy costs that would be passed on to consumers, job losses in affected sectors, and the overall costs of these commitments. However, the Biden team views climate change as a looming economic and humanitarian crisis and sees clean energy development as a way to mitigate its impacts while revitalizing the American economy in the wake of the COVID-19 pandemic.

Whether the Biden Administration can ultimately create 10 million clean energy jobs, as promised, and reach many of the plan’s standards and targets will depend on numerous factors outside of the incoming Administration’s control, including international cooperation and technological advancements. Nonetheless, come January 20, 2021, new leaders in the Biden Administration will be activated to promote a significant and comprehensive agenda for clean energy development, environmental regulation and sustainability.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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