President Biden introduces ambitious clean energy and climate-change focused infrastructure bill

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On March 31, President Biden unveiled his US$2 trillion infrastructure proposal - the American Jobs Plan - in a speech in Pittsburgh. The American Jobs Plan includes funding for traditional infrastructure areas but also provides substantial funding aimed at achieving some of President Biden’s climate and clean energy objectives. In particular, the American Rescue Plan would require that utilities garner 100 percent of their electricity needs from clean sources, provide long-term extensions and expansions of clean energy tax credits and make large investments in electric vehicle infrastructure. The American Rescue Plan aims to at least partially pay for the infrastructure investments through increased corporate tax rates and repeals various tax incentives for the fossil fuel industry, among other provisions. 

The path forward will be complicated for the American Jobs Plan. Infrastructure is an area that has traditionally enjoyed bipartisan support. Several key Congressional Democrats, including Senate Energy and Natural Resources Committee Joe Manchin (D-WV), have called for bipartisan support for any infrastructure bill. Senate Minority Leader Mitch McConnell (R-KY), though, criticized the American Rescue Plan, calling it a “Trojan Horse” for liberal priorities. Progressive Democrats, on the other hand, are urging that President Biden and Congress push for more spending for climate and clean energy priorities. 

Compounding the uncertain timeline and process is the fact that President Biden, in the coming weeks, is also scheduled to introduce another large stimulus bill - the American Family Plan -- which is expected to focus on economic security issues like health care, child care and education.

While the exact scope and timing are unclear, Congressional Democrats are likely to use budget reconciliation, thereby allowing legislation to pass in the Senate on a simple majority vote, for at least part of President Biden’s infrastructure plan.

Below is a summary of the some of the key energy and environmental related provisions in the American Jobs Plan.

Electricity Standard

  • Establishes an Energy Efficient and Clean Electricity Standard (EECES) to achieve 100 percent clean power by 2035. The plan underscores that nuclear and hydropower are recognized as “clean” under the EECES. House Energy and Commerce Committee Democrats recently introduced the CLEAN Future Act, which would establish a clean energy standard and could serve as a template for how such a standard might be implemented. 

Transmission

  • Establishes a targeted investment tax credit to incentivize the buildout of at least 20 GW of high-voltage capacity power lines
  • Creates a new DOE Grid Development Authority to allow new transmission lines to better leverage existing rights-of-way and explore “creative” financing tools to support such projects 

Electric Vehicles

  • Provides US$174 million to incentivize domestic supply chains and the retooling of factories to support the EV industry
  • Provides consumers rebates and incentives to purchase US-made EVs
  • Establishes grant and incentive programs for state and local governments, along with the private sector, to support the development of a national network of 500,000 EV chargers by 2030. 
  • Creates a Clean Buses for Kids Program to electrify at least 20 percent of school buses 
  • Leverages the purchasing power of the federal government, including through the US Postal Service, to spur EV deployment 

Orphan Wells

  • Invests US$16 billion in plugging oil and gas wells and restoring and reclaiming coal, hardrock and uranium mines 

Clean Energy Research, Development and Demonstration

  • Sets goal of establishing 10 retrofits of large steel, cement and chemical production facilities with carbon capture technology
  • Invests US$50 billion in National Science Foundation funding to support critical technologies, such as advanced reactors and semiconductors, among other areas
  • Establishes ARPA-C to support new technologies to reduce emissions and bolster climate resilience 
  • Provides US$15 billion in demonstration projects for utility-scale energy storage, carbon capture and storage, hydrogen, advanced nuclear, rare earth, floating offshore wind, biofuels, quantum computing and EVs

Water Infrastructure

  • Provides over US$45 billion to replace 100 percent of the US’s lead pipes and service lines. This money would flow through EPA’s Drinking Water State Revolving Fund and in Water Infrastructure Improvements for the Nation Act grants. 
  • Provides US$56 billion in grants and loans to states, tribes, local governments and disadvantaged communities to address new contaminants (PFAS) and support clean water infrastructure 

Climate Resiliency

  • Provides US$50 billion in dedicated investments to improve infrastructure resilience
  • Increases resilience in the most essential services, including the electric grid; food systems; urban infrastructure; community health and hospitals; and our roads, rail, and other transportation assets.
  • Invests in vulnerable communities small businesses for disaster resilience
  • Empower local leaders to inform the use of restoration and resilience project funds from the Outdoor Restoration Force Act and invest in coastal resilience to sea-level rise and hurricanes
  • Invests US$10 billion in the modernization, sustainability, and resilience of federal buildings, which will include a Federal Capital Revolving Fund to purchase, construction or renovation of Federal facilities

Environmental Justice

  • Invests US$10 billion in a new Civilian Climate Corps create union jobs and promote diversity in public lands and waters conservation work
  • Supports state, local, and tribal governments choosing to accelerate modernization of the power sector through complementary policies, such as clean energy block grants to support clean energy, worker empowerment, and environmental justice
  • Provides US$20 billion for a new program that will fund new projects in isolated neighborhoods to increase opportunity, advance racial equity and environmental justice, and promote affordable access to infrastructure
  • Provides US$5 billion in investment for the remediation and redevelopment of Brownfield and Superfund sites for economic development in distressed and disadvantaged communities
  • Dedicates funding for community-driven environmental justice efforts to address legacy pollution and the cumulative impacts experienced by frontline and fenceline communities

Other Tax Changes

  • Extends the Production Tax Credit and Investment Tax Credit for renewables. The plan also establishes a new tax credit for storage. To qualify for these credits, companies must demonstrate strong labor standards.
  • Establishes a new Production Tax Credit for hydrogen to support 15 decarbonized hydrogen demonstration projects
  • Expands Section 45Q tax credit for carbon capture with the goal of making the credit easier to utilize for industrial applications, direct air capture and retrofits of existing plants
  • Expanding advanced manufacturing tax credit
  • Repeals tax incentives for fossil fuels.  In addition, the plan restores payments from “polluters” into the Superfund Trust Fund
  • Increases corporate tax rate to 28 percent 

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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