Senate Energy and Natural Resources Committee Advances Energy Infrastructure Legislation as Congress Debates Broader Climate Action

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[co-author: Lindsay Steves]

On July 14, the Senate Energy and Natural Resources Committee advanced the Energy Infrastructure Act, a nearly 500-page bill introduced by Chairman Joe Manchin (D-WV). The Energy Infrastructure Act is a wide-ranging measure that covers grid modernization, cybersecurity, carbon capture, nuclear, hydrogen, hydropower and western water needs, among other issues.

The Committee’s markup of the Energy Infrastructure Act occurs as the Senate works on two different but related measures: a bipartisan infrastructure package and a broader budget reconciliation bill. Manchin indicated that he would like the Energy Infrastructure Act to be incorporated into the bipartisan infrastructure measure.

A bipartisan group of lawmakers, including Manchin, are attempting to finalize a broader infrastructure bill with a potential first vote on the measure this week. Manchin’s Energy Infrastructure Act did receive some bipartisan support in the Committee with three Republicans - Senator Bill Cassidy (LA), Senator Steve Daines (MT) and Senator Lisa Murkowski (AK) - supporting the measure. Yet, the other Committee Republicans, including Ranking Member John Barrasso (R-WY), opposed the bill for a variety of different reasons.

As to the budget reconciliation bill, Senate Democrats released the broad framework of a budget resolution on July 14th that includes significant clean energy and climate change provisions. While details remain to be finalized, Senate Democrats signaled that a budget resolution would establish a modified Clean Energy Standard and extend and expand clean energy tax incentives. Manchin, however, expressed concerns about the budget resolution’s climate provisions, underscoring the challenges that Senate Democrats face in securing unified support for the measure. Senate Majority Leader Chuck Schumer (D-NY) is hoping to pass a budget resolution prior to the August Congressional Recess, a necessary prerequisite to Congress advancing a budget reconciliation measure that can pass through the Upper Chamber with 50 votes instead of the 60 votes necessary to overcome a filibuster.

With that context, below is a summary of the key provisions from the Energy Infrastructure Act.

Title I

Grid Infrastructure and Reliability

The Energy Infrastructure Act invests in grid modernization and bolstering transmission capacity, two issues that are important to de-carbonizing our US electricity system and bolstering the reliability and resiliency of the grid.

The Energy Infrastructure Act directs the Department of Energy (DOE) to establish various programs to bolster the resiliency and reliability of the grid. The bill provides assistance to states to create energy security plans.

With respect to transmission, the bill takes several steps to incentive new transmission, including:

  • Requires DOE to study capacity constraints and congestion with a focus on the integration of renewable energy resources when designating National Interest Electric Transmission Corridors.
  • Provides the Federal Energy Regulatory Commission (FERC) with backstop authority to issue permits for the certain interstate transmission facilities if a state commission withholds or denies an application seeking approval for the siting of such facilities. Permitting on the state and local level has persisted as a major impediment to new transmission lines. Republicans during the markup raised concerns regarding expanding FERC’s authority to overrule state opposition.
  • Directs FERC to initiate a rulemaking to address the effectiveness of interregional transmission planning processes.
  • Creates a DOE revolving loan fund so the department can serve as an “anchor-tenant” for a new green field transmission line or upgrade of an existing line.

The bill increases the Bonneville Power Administration’s borrowing authority so it can better address the needs of its transmission system.

The Energy Infrastructure Act also includes provisions to address the distribution segment of the electricity sector. In particular, the bill provides over $19 billion in support for grid modernization, including $3 billion in funding for the Smart Grid Investment Matching Grant Program, which will facilitate the deployment of technologies to enhance grid flexibility. The bill directs utilities to promote the use of demand-response and for state regulators to establish rate mechanisms to recover the costs of promoting demand-response practices.

Cybersecurity

With the electricity sector facing growing cybersecurity threats, the Energy Infrastructure Act takes various actions to help the security prepare for, prevent and respond to cyber risks. This section is particularly focused on advancing technologies to help mitigate cyber security risks, such as:

  • Testing of products and technologies for use in the bulk-power system.
  • Directing FERC to initiate a rulemaking that would incentivize investments in cybersecurity.
  • Establishes a DOE public-private partnership to advance the cyber-security of electric utilities.
  • Establishes a DOE program to provide grants and technical assistance for utilities to address cybersecurity threats.

Title II - Supply Chains for Clean Energy Technologies

Supply chains for the energy sector continue to be an important priority for Senator Manchin. As such, the Energy Infrastructure Act attempts to accelerate the US Geological Services’ (USGS) mapping efforts for critical minerals. In addition, the bill authorizes funding for a USGS research facility to support energy and minerals research.

The bill also authorizes funding for DOE to demonstrate the feasibility of a full-scale integrated rare earth element concentrator and refinery. The bill creates improvements to the federal permitting process for critical mineral production on federal land.

There is also a focus on batteries for electric vehicles. In particular, the bill includes, among others, the following provisions:

  • Establishes a “Battery Material Processing Grant Program” within DOE’s Office of Fossil Energy.
  • Creates within DOE’s Office of Energy Efficiency and Renewable Energy a battery manufacturing and recycling grant program to support and sustain a North American battery supply chain.
  • Directs the Secretary of Energy to continue the Lithium-Ion Battery Recycling Prize.
  • Expands an existing DOE program for research, development, and demonstration of electric vehicle battery recycling and second-life applications.

Finally, the bill establishes a grant program focused on small- and medium-sized manufacturers to enable them to build new or retrofit existing manufacturing and industrial facilities to produce or recycle advanced energy products in communities where coal mines or coal power plants have closed.

Title III - Fuels and Technology Infrastructure Investments

Carbon Capture, Utilization, and Storage, and Transportation

The Energy Infrastructure Act continues the Committee’s recent focus on the potential of carbon capture, utilization and storage. The bill establishes a grant program for state and local governments to procure and use carbon oxide-derived products and directs DOE to develop standards to support said products.

The Energy Infrastructure Act establishes a program to provide flexible, low-interest loans and grants for CO2 transport infrastructure projects. The bill expands the Carbon Storage Validation and Testing program to include large-scale commercialization of new or expanded carbon sequestration projects and the associated transport infrastructure.

As to sequestration, the Energy Infrastructure Act provides funding for the permitting of wells for geologic sequestration of CO2 and creates a grant program for states to establish their own Class VI permitting programs. It also allows the Department of the Interior to permit geologic carbon sequestration on the Outer Continental Shelf. The bill establishes four regional direct air capture hubs.

Hydrogen Research and Development

There is growing government, industry and stakeholder interest in the potential of hydrogen, and the Energy Infrastructure Act attempts to bolster this industry. In particular, the bill establishes four regional clean hydrogen hubs to demonstrate the production, processing, delivery, storage, and end-use of clean hydrogen. The bill also requires the development of a national strategy and roadmap to facilitate a clean hydrogen economy. It creates a clean hydrogen manufacturing and recycling program to support a clean hydrogen domestic supply chain.

Nuclear Energy

The Biden administration and Congress have increasingly touted how critical nuclear energy is to meeting climate change objectives. As such, this bill establishes a DOE program to support existing reactors. The bill also allows DOE to transfer fee title or property interest acquired by the Secretary from any project funded under the Advanced Reactor Demonstration Program, and extends the confidentiality of intellectual property associated with the Advanced Demonstration Program from five to thirty years.

Hydropower

The Energy Infrastructure Act expands existing incentive programs for hydropower under Section 242 and Section 243 of the Energy Policy Act of 2005. In addition, the bill creates a new program that make payments to hydropower operators for improvements in grid resiliency, dam safety and environmental protections. DOE is also directed to establish a demonstration project for pairing pumped hydropower storage with intermittent renewables.

Miscellaneous

The bill requires DOE to develop a report on the viability of siting solar energy on current and former mine land, including necessary interconnection and transmission siting, and the impact on local job creation.

Title IV - Enabling Energy Infrastructure Investment and Data Collection

Department of Energy Loan Program

The Energy Infrastructure Act clarifies the reasonable prospect of repayment criteria for the Loan Programs Office Title XVII Innovative Loan Energy Guarantee (Title XVII) Program and the Advanced Technology Vehicle Manufacturing (ATVM) Program. It also expands the eligibility of the Title XVII Program to include projects that increase the domestic supply of critical minerals and expands the eligibility of the ATVM program to include medium and heavy duty vehicles, trains, aircraft, marine transportation, and hyperloop technology.

Energy Information Administration (EIA)

The bill directs the EIA to expand its data collection across activities in the building, transportation, and critical minerals sectors, while also bolstering its modeling capabilities. It calls for the EIA to submit a report on the potential use of levelized cost of carbon abatement as a metric to compare system-level costs of technology options to reduce emissions, and a potential process to measure carbon dioxide emissions intensity per unit of output production.

Miscellaneous

The bill directs states to consider measures to advance the electrification of the transportation sector.

Title V - Energy Efficiency and Building Infrastructure

Residential and Commercial Energy Efficiency

The Energy Infrastructure Act creates a revolving loan fund capitalization grant program within the state Energy Program for recipients to conduct commercial energy audits, residential energy audits, or energy upgrades or retrofits. It also establishes a competitive grant program to award grants to states to train individuals to conduct energy audits or surveys of commercial and residential buildings.

Buildings

The Energy Infrastructure Act creates various grants programs to increase buildings’ energy efficiency.

Industrial Energy Efficiency

The bill focuses on efforts to increase efficiency for industrial facilities, such as, among other provisions, grants small- and medium-sized manufacturers and to states to encourage smart manufacturing.

Schools and Nonprofits

The bill directs the Secretary of Energy to award competitive grants for energy efficiency, renewable energy, and electric vehicle upgrades and improvements at public schools. It also establishes a pilot program to award grants to provide nonprofit buildings with energy efficiency materials.

Miscellaneous

The bill authorizes funding for the Weatherization Assistance Program, the Energy Efficiency and Conservation Block Grant Program, the Assisting Federal Facilities with Energy Conservation Technologies grant program, and the extended product system and energy efficient transformer rebate programs. The bill also requires a review of guidance for CHP and waste heat to power systems.

Title VI - Methane Reduction Infrastructure

The Energy Infrastructure Act authorizes funding for programs to plug, remediate, and reclaim orphaned wells on federal, state, and tribal lands.

Title VII - Abandoned Mine Land Reclamation

The bill authorizes appropriations for the Abandoned Mine Land Reclamation Fund. The bill also adjusts the rates of the of the Abandoned Mine Reclamation Fee and extends the fee until 2035. It also extends the distribution of Abandoned Mine Reclamation funds to 2036.

Title VIII - Natural Resources-related Infrastructure, Wildfire Management, and Ecosystem Restoration

The Energy Infrastructure Act provides funding for the Forest Service’s Legacy Road and Trail Remediation Program. In addition, the bill provides funding for the Department of the Interior and the Force Service to reduce wildfire risks and restore ecosystems.

Title IX - Western Water Infrastructure

With the current drought conditions plaguing the Western US, the Energy Infrastructure Act authorizes funding for various water infrastructure needs. The bill also authorizes for funding for a grant program related to habitat restoration projects in rivers basins impacted by the Bureau of Reclamation water projects.

Title X - Authorization of Appropriations for Energy Act of 2020

The bill authorizes funding for select provisions from the Energy Act of 2020, including energy storage demonstration projects; the advanced reactor demonstration program; mineral security projects; carbon capture demonstration and pilot programs; direct air capture technologies prize competitions; water power projects; renewable energy projects; and industrial emissions demonstration projects.

Title XI - Wage Rate Requirements

Projects funded under the bill are required to pay wages that are not less than those prevailing on similar projects in the locality.

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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