An unexpected deal reached by Senate Democrats would be the most ambitious action ever taken by the United States to address global warming and could help President Joe Biden come close to meeting his pledge to cut greenhouse gas emissions in half by 2030, experts said Thursday, as they sifted through a massive bill that revives action on climate change weeks after the legislation appeared dead.
The deal would spend nearly $370 billion over ten years to boost electric vehicles, jump-start renewable energy such as solar and wind power, and develop alternative energy sources like hydrogen. The deal stunned lawmakers and activists who had given up hope that legislation could be enacted after West Virginia Sen. Joe Manchin said he could not support the measure because of inflation concerns.
While analysts were still studying the 725-page bill, the deal announced late Wednesday includes a long-term extension of clean energy tax credits that “could plausibly put the U.S. on track to reduce emissions by 40% in 2030,″ said Ben King, associate director of the Rhodium Group, an independent research firm.
Additional action by the Biden administration and Democratic-controlled states could “help close the rest of the gap to the target of a 50-52% cut in emissions by 2030,″ King said.
But approval of the bill is far from certain in a 50-50 Senate, where support from every Democrat will be needed to overcome unanimous Republican opposition. Sen. Kyrsten Sinema, D-Ariz., who forced changes in earlier versions of the plan, declined to reveal her stance Thursday.
In the narrowly divided House, Democrats can lose no more than four votes and prevail on a possible party-line vote.
Still, Biden called the bill “historic” and urged quick passage.
“We will improve our energy security and tackle the climate crisis — by providing tax credits and investments for energy projects,″ he said in a statement, adding that the bill “will create thousands of new jobs and help lower energy costs in the future.″
Environmental groups and Democrats also hailed the legislation.
“This is an 11th-hour reprieve for climate action and clean energy jobs, and America’s biggest legislative moment for climate and energy policy,″ said Heather Zichal, CEO of America’s Clean Power, a clean energy group.
“Passing this bill sends a message to the world that America is leading on climate and sends a message at home that we will create more great jobs for Americans in this industry,″ added Zichal, a former energy adviser to President Barack Obama.
Tiernan Sittenfeld, senior vice president of the League of Conservation Voters, summed up her reaction in a single word: “Wow!”
Sen. Tina Smith, D-Minn., tweeted that she was “stunned, but in a good way.″
Manchin, who chairs the Senate energy panel, insisted that he had not changed his mind after he told Senate Majority Leader Chuck Schumer two weeks ago that he could not support the bill because of inflation concerns.
“There should be no surprises. I’ve never walked away from anything in my life,″ he told reporters on a Zoom call from West Virginia, where he is recovering from COVID-19.
Manchin called the bill an opportunity “to really give us an energy policy with security that we need for our nation” while also driving down inflation and high gasoline prices.
The bill, which Manchin dubbed the “Inflation Reduction Act of 2022,” includes $300 billion for deficit reduction, as well as measures to lower prescription drug prices and extend subsidies to help Americans who buy health insurance on their own.
Besides investments in renewable energy like wind and solar power, the bill includes incentives for consumers to buy energy-efficient appliances such as heat pumps and water heaters, electric vehicles, and rooftop solar panels. The bill creates a $4,000 tax credit for purchases of used electric vehicles and up to $7,500 for new EVs.
The tax credit includes income limits for buyers and caps on sticker prices of new EVs — $80,000 for pickups, SUVs, and vans and $55,000 for smaller vehicles. A $25,000 limit would be set on used vehicles.
Even with the restrictions, the credits should help stimulate already rising electric vehicle sales, said Jessica Caldwell, senior analyst for Edmunds.com. Electric vehicles accounted for about 5% of new vehicle sales in the U.S. in the first half of the year and are projected to reach up to 37% by 2030.
The bill also invests over $60 billion in environmental justice priorities, including block grants to address disproportionate environmental and public health harms related to pollution and climate change in poor and disadvantaged communities.
Beverly Wright, executive director of the Deep South Center for Environmental Justice, called the bill a step forward but said she was concerned about tax credits for “polluting industries” such as coal, oil, and gas. “We need bolder action to achieve environmental and climate justice for ourselves and future generations,″ she said.
The bill would set a fee on excess methane emissions by oil and gas producers while offering up to $850 million in grants to industry to monitor and reduce methane.
The bill’s mixture of tax incentives, grants, and other investments in clean energy, transportation, energy storage, home electrification, agriculture, and manufacturing “makes this a real climate bill,″ said Sen. Brian Schatz, D-Hawaii. “The planet is on fire. This is enormous progress. Let’s get it done.”
But not all environmental groups were celebrating.
The deal includes promises by Schumer and other Democratic leaders to pursue permitting reforms that Manchin called “essential to unlocking domestic energy and transmission projects,″ including a controversial natural gas pipeline planned in his home state and Virginia. More than 90% of the proposed Mountain Valley Pipeline has been completed, but the project has been delayed by court battles and other issues.
The pipeline should be “at the top of the heap” for federal approval, Manchin said and is a good example of why permitting reform is needed to speed energy project approvals. Manchin, a longtime supporter of coal and other fossil fuels, said environmental reviews of such major projects should be concluded within two years instead of lasting up to 10 years as under current practice.
“Other countries around the world — developed nations — do it extremely well, and they do it in a very short period of time. We should be able to do the same,″ he said.
While permitting reforms would be considered in separate legislation, the budget deal would require the Interior Department to offer at least 2 million acres of public lands and 60 million acres of offshore waters for oil and gas leasing each year. If the Interior fails to offer minimum amounts for leasing, the department would not be allowed to grant approvals to any utility-scale renewable energy project on public lands or waters.
That requirement “is a climate suicide pact,” said Brett Hartl, government affairs director at the Center for Biological Diversity, an environmental group.
“It’s self-defeating to handcuff renewable energy development to massive new oil and gas extraction,″ Hartl said, adding that new fossil fuel leasing required under the bill would “fan the flames of the climate disasters torching our country.″
But an oil industry group blasted the bill as punitive and inflationary.
“We are very concerned about this bill’s potential negative impact on energy prices and American competitiveness, especially in the midst of a global energy crisis and record high inflation,” said Anne Bradbury, CEO of the American Exploration and Production Council, which represents independent oil and natural gas companies.
Republished with the permission of The Associated Press.