The energy-related proposals set forth in President Joe Biden’s American Jobs Plan ("Plan"), if enacted by Congress, are set to fuel an already dynamic, evolving energy sector. One needs to look no further than the amounts President Biden hopes to allocate to these proposals—hundreds of billions of dollars—to understand that the passage of a bill resembling Biden’s Plan will have immediate and long-lasting effects on America’s energy future.

The Biden Administration’s “Fact Sheet” provides the President’s sweeping energy wish list, the price tag for which tops $300 billion.  This list includes:

• Investment in electric vehicle ("EV") technology. The Biden Administration has proposed a $174 billion investment in EV and batteries, rebates and tax incentives to buy electric vehicles, and grants and incentives for local and state governments to build 500,000 EV chargers by 2030. The Plan also calls for electrifying the federal fleet of vehicles, including, for example, vehicles used by the United States Postal Service.
• Investment in electric power infrastructure. In an effort to modernize the grid and ensure its resiliency, the Biden Administration proposes using investment tax credits to incentivize the construction of 20 gigawatts of transmission power lines. The Plan also calls for the creation of a “Grid Development Authority” to leverage the use of existing rights-of-way, such as along railroad tracks, to facilitate construction. Further, the Plan provides funding for direct-pay investment and production tax credits for clean energy generation and storage. These are tax credits that do not rely on a taxpayer’s ability to use the credit to offset a tax liability and are treated, ostensibly, like a payment on the taxpayer’s tax return (such that the taxpayer would receive a refund if the credit caused an overpayment of taxes). The Plan also includes an investment in clean power for use in federal buildings. 
• Environmental remediation.  The plan allocates $16 billion to plug orphan oil and gas wells. In the United States, there are a significant number of abandoned oil and gas wells and mines for which no owner can be found. Biden’s Plan allocates money to plug these wells and reclaim the mines, which pose environmental hazards, such as methane leaks. The Plan also allocates $5 billion to the remediation and redevelopment of Brownfield and Superfund sites and expands and enhances the Section Q45 tax credit, which provides tax credits for carbon capture and sequestration.
• Investment in R&D for climate science and clean technology. The plan calls for the launch of ARPA-C, the Advanced Research Projects Agency for Climate, and investment in research projects for utility-scale energy storage, carbon capture and storage, hydrogen, advanced nuclear, and floating off-shore wind technologies.
• Broadband. The Plan calls for a significant expansion of the broadband infrastructure, allowing rural areas to receive affordable, high-speed internet. Although broadband does not directly implicate energy, such expansion would allow for further development of a smart grid, with improved demand response capabilities, i.e., the ability for a consumer to shift or reduce energy usage during peak energy-use periods, and enhanced use of distributed energy resources (DER).

The Plan is not yet law, and these energy-related programs have a long way to go to be enacted. The Plan will have to be turned into a bill, Congress will have to pass that bill, and the President must sign it into law. For their part, Republicans have taken issue with Biden’s purportedly broad definition of the word “infrastructure” and have submitted a far narrower $568 billion counter-proposal which omits the energy-related programs in Biden’s Plan. Certain Republicans have indicated that this counter-proposal, however, is a starting point, and that EV, grid, pipeline, and climate-related spending is up for negotiation and that Republicans might be willing to spend upwards of $800 billion. On the funding side, in meetings on Wednesday, May 12, 2021, between Congressional leaders and the President, Republicans took a hard stance on the President’s proposal to increase the corporate tax rate to 28 percent.

On the Democratic side, some lawmakers think the Plan does not go far enough, while others, such as Senator Joe Manchin from West Virginia, question certain aspects of the Plan, such as increasing the corporate tax rate. Given the Democrat’s narrow majority in the Senate, the final bill will ultimately need to placate these interests even if Democrats try to use the reconciliation process, which, although an oversimplification, can be used to pass legislation with a simple majority when the legislation implicates taxes and spending.

Check back for updates on the progress of these proposals and the future of the energy sector.