Climate policy crunchtime: We need Congress to pass a clean energy standard and tax credits

This is it, folks! The home stretch. It’s time to pay attention, call your members of Congress and mobilize your networks.

Congress is working on what is likely to be its last big shot at climate change policy for a decade or more. If things go well, the legislation will include a clean energy standard (CES) and clean energy tax credits, which together would revolutionize the U.S. electricity system. If things don’t go well, there will be no substantial climate legislation for many years to come.

That’s the only question being decided: Will we get a CES and tax credits, or will we get nothing that will tackle fossil fuels this decade? That’s the binary. It’s time to focus.

Looking around, it doesn’t seem like clean energy supporters, climate hawks or the left more broadly really get that. So let’s talk about why this is such an important moment and what’s at stake.

The reconciliation bill is likely the last chance for big federal climate legislation

The Democratic approach for a while now has been to proceed along dual tracks. On one track, there’s the bipartisan infrastructure bill, hammered out by a group of just over 20 senators from both parties. On the other track, there’s the budget reconciliation bill, which is meant to contain basically everything else in Biden’s agenda. The former needs 60 votes; the latter can pass with 50 Democratic votes.

This has always been a fraught and delicate strategy. It could crash and burn in any number of ways. But so far, at least, it is hanging together.

The bipartisan group unveiled its bill last week; it is slowly inching toward a vote, though Senate Minority Leader Mitch McConnell (R-Kentucky) is doing everything he can to slow it down and gum it up.

It contains decent chunks of money for things that will indirectly help clean energy — transmission, demonstration projects, R&D — but it lacks anything that will directly confront fossil fuels in the coming decade, the sine qua non of adequate climate policy. As Robinson Meyer argues in The Atlantic, it is not a climate bill, not really.

There’s no guarantee the bipartisan bill will pass, and there’s no way to know how the Senate’s bipartisanship fetishists, Sens. Joe Manchin (D-West Virginia) and Kyrsten Sinema (D-Arizona), will react if it doesn’t.

But whether or not it passes, when it comes to decent climate policy, it’s all about the reconciliation bill. There won’t be another bill this big while Democrats control Congress, and they won’t control Congress for long. What Democrats are able to get through in the reconciliation bill is likely to be the last big federal climate legislation for a decade at least.

This is the key thing to understand, so I’m going to repeat it: What Democrats are able to get through in the reconciliation bill is likely to be the last big federal climate legislation for at least a decade.

(You may be thinking: Can’t Democrats do another reconciliation bill next year? Yes, they can, but the midterms will be in full swing, moderates will be feeling even more cowardly than usual, political appetite for big spending will have dried up in the face of a recovering economy, and focus will have turned, hopefully, to voting reform. This one is it.)

Absent substantial federal voting reform — which is looking less and less likely, certainly nothing anyone should bet on — all signs point toward Republicans taking back the House in 2022. It’s unclear what will happen in the Senate, but regardless, if the GOP controls either chamber, no climate legislation will pass (and neither will voting reform).

Republican presidential candidates can win despite larger and larger losses in the popular vote. And the chances of Democrats controlling both houses of Congress again are only getting dimmer. The structural advantages that favor the GOP in the U.S. system are only tilting further in its favor, while the party is actively extending those advantages with a wave of voter-suppression laws at the state level and an accompanying wave of gerrymandering, which alone could win the GOP the House in 2022, even absent any Dem seats being lost. The GOP is protected in this endeavor by a hyperconservative Supreme Court (which, by the way, could get even more conservative if the disastrously vain Stephen Breyer hangs on until there’s a Republican president again).

The conservative movement in the U.S. is attempting to engineer one-party control of U.S. government (along the lines of their new hero, Hungarian autocrat Viktor Orbán).

There’s no way to know how successful the endeavor will ultimately be, but it’s a pretty good bet, given current trends, that Democrats won’t control the presidency and both houses of Congress at the same time again for a long while. Last time they lost full control (just before a wave of gerrymandering in 2010), it took a decade for them to get it back.

That all begins in January 2023 — which makes this year’s reconciliation bill the Democrats’ last big shot at climate and clean energy policy.

There are two key clean-energy policies on the table

Climate-focused folk are prone to endless policy arguments; everyone has their favorites. But most of those arguments are immaterial right now. Democrats have lined up behind a menu of clean energy policies in line with Biden’s climate plan. What’s on that menu is what might get in the bill. Might.

If it’s not on that menu, it’s not going to get in. There’s no carbon tax. There’s no cap-and-dividend. There’s no prohibition on new fossil fuel infrastructure. You may support any and all of those policies, but they are not live options in the reconciliation bill.

Right now, political pressure is best aligned behind options that actually are on the menu. Two in particular are immensely important — together, they would be transformative.

The first is a clean energy standard that would reduce electricity sector greenhouse gas emissions by 80 percent by 2030. (Biden’s plan calls for 100 percent by 2035, but a reconciliation bill can only extend 10 years out.)

It’s not actually going to be a standard, per se, because you can’t pass regulatory standards through reconciliation. Instead, it’s going to be a system of fines and payments that will incentivize utilities to increase their proportion of renewable energy to meet the targets. It’s called a clean electricity payment program (CEPP).

A CEPP actually has some advantages over the traditional clean energy standards and renewable portfolio standards in place in some U.S. states. For one thing, it’s more progressive: The money to drive the transition comes from federal coffers (via taxes on corporations and the wealthy) rather than from electricity rates, which are regressive.

If you’re interested in the details of how a reconciliation-friendly CEPP could be structured, see this piece from Ben Storrow and Scott Waldman of E&E News, or this thread from Princeton professor Jesse Jenkins:

The second is boosted and expanded clean energy tax credits. The federal Investment Tax Credit and Production Tax Credit for solar and wind would be renewed, but various forms of tax credits would also be extended to energy storage, hydrogen, carbon capture and other key clean energy technologies. (The details are in flux; for a blueprint, see the Senate Finance Committee’s Clean Energy for America Act or the House Ways and Means’ GREEN Act.)

Tax credits will provide the supply push; the CEPP will provide the demand pull. The result will be an enormous surge of clean energy projects and jobs.

This is the core of good climate policy: pushing fossil fuels off the grid over the next decade and replacing them with zero-carbon energy.

There are other good climate provisions on the Democrats’ menu for reconciliation as well. I would love to see a Civilian Climate Corps. I’d love to see more money for public transportation and an electrified postal service fleet. Lots of smaller climate provisions might make it through just by virtue of not drawing much notice, which would be great.

But the clean electricity payment program and the tax credits are the one-two punch needed to make a real short-term difference in the energy system. And they are on the menu.

Manchin is likely to be skeptical of the CEPP. Although carbon capture counts as clean energy under the program, every analyst understands that the practical effect is going to be to ramp up renewables and ramp down fossil fuels on the grid. Manchin doesn’t actually want that.

I have no idea if public pressure will have any effect at all on Manchin, but it couldn’t hurt. Might as well try it.

The perilous path ahead for reconciliation

Everyone on the left is aware that the reconciliation bill is the last big legislative train leaving the station, and every interest group wants a seat on it. Climate policy will be competing with other Democratic priorities. Especially as Sinema and Manchin arbitrarily reduce the total size of the bill, as they surely will, the factions of the party will be fighting it out over a shrinking pie.

It is far from a sure thing that the CEPP and tax credits will survive negotiations. It’s all being decided right now. Everyone who cares about U.S. climate progress should put aside their personal projects and preferences for a few weeks and speak in a unified voice. Call your representatives. Push the groups you’re involved in to make noise about it.

It’s going to be the CEPP and tax credits or nothing big for climate action. If both those policies are put in place, it could set the U.S. power system on a new course and strengthen American credibility at the upcoming COP26 international climate meeting. If they slip through the cracks, the climate crisis will have to settle for scraps, and the U.S. will surrender all hope of meeting its climate targets or influencing others to do the same.

For the next few months, this is all that matters. If you’ve ever considered getting involved, now is the time.

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This article was originally published at Volts.

(Lead photo: ElevenPhotographs/Unsplash)