Democrats — in control of the House, Senate and White House — have the ability to make sweeping changes to our country to improve the lives of citizens in myriad ways we sorely need, now and for generations to come. Thankfully, they are working out how to do so right now through the bipartisan infrastructure bill and the budget reconciliation process. First and foremost on their to-do list must be addressing the climate crisis.
While visiting New York in the destructive wake of Hurricane Ida last week, President Biden said, “folks, the evidence is clear: Climate change poses an existential threat to our lives, to our economy and the threat is here … We can stop it from getting worse.”
Democrats are well aware that their window to get things done is not guaranteed past the midterm elections. Whatever they do, they have to do it now. To make things more complicated, in order to avoid a filibuster from Senate Republicans, they have to bake all their big plans into the budget reconciliation process that only needs a simple majority to pass. As if that wasn’t complicated enough, the Democrats also have to worry about defectors within their ranks.
If you haven’t been able to keep up with all the moving parts of the budget reconciliation process and what it means for the climate, no need to fret. There are a number of exciting developments, but the ones to really keep your eyes on are the clean energy tax incentives and the Clean Electricity Performance Program.
Moving budget reconciliation forward
The $3.5 trillion budget reconciliation bill has a lot in it. Expanded health care benefits, paid family leave, universal pre-K, affordable housing, infrastructure and more. But given the strong opposition to the price tag from more centrist democrats like Sen. Joe Manchin (D-W.Va.), this may not be such a done deal. Some of these initiatives might have to be cut.
Some are hopeful that even Democrats like Manchin will rally behind their party.
Political strategist Brandon Hurlbut highlighted on a recent episode of the podcast Political Climate, “Democrats give themselves a better chance of winning in the midterms if they can run on both of these [legislative] packages. Joe Biden can claim ‘I got the government to function again … and pass massive policies that are going to help the American people.’”
Others in Washington believe there will need to be “painful sacrifices” to negotiate down the scope and price tag of the bill.
I’m hopeful that the full $3.5 trillion package gets passed. But if it does get whittled down, how should they decide what to keep and what to cut?
Climate has to be the top priority
Of course, all of the issues addressed by the reconciliation package are in desperate need of attention.
But with climate change, we have to remember that the window to act to preserve a livable climate is very short, and we’re literally out of time. The UN climate report released earlier this month declared climate change a “code red for humanity” and called for a quadrupling of solar and wind capacity worldwide and a tripling of renewable energy investment by 2030.
If the big pieces make it through Congress (the clean energy tax credits and the Clean Electricity Performance Program) it will really help to move the needle.
Tax credits
A recent DOE report called for increasing solar energy from 4 percent of the nation’s electricity today to 45 percent by 2050 and laying out a plan of how we can get there.
To date, one of the key drivers of the solar industry has been the solar Investment Tax Credit (ITC), which has been a moving target for decades, extended or threatened by one Congress after another. For starters, the new budget proposal would add a 10-year extension onto the ITC. The tax credit would also now have the option to be “refundable,” allowing a direct payment instead of a reduction of taxes owed — a massive opportunity for industry expansion. Unfortunately, this critical improvement would only be available commercially — not for residential customers. There’s a coalition of advocates, myself included, working to amend this oversight before the bill is finalized.
Jesse Jenkins, assistant professor at Princeton University’s Andlinger Center for Energy and Environment, estimates that streamlining the process in this way will create an additional 15 to 25 percent value for the tax credits.
Solar system owners will be incentivized to build with local materials, pay prevailing wages to installers, hire qualified apprentices and there will be bonuses for solar systems deployed in low-income and environmental justice communities.
There are also a plethora of tax credits available for storage, electric vehicles, energy efficiency measures, sustainable aviation fuels, even e-bikes. There’s also a new environmental justice refundable tax credit for universities working on programs to better understand addressing matters of environmental justice.
Clean Electricity Performance Program
The Clean Electricity Performance Program (CEPP) structure seems straightforward as drafted. Utilities across the country will be incentivized to meet 80 percent of the country’s electricity needs with clean energy by 2030 and 100 percent by 2035. Each utility will receive payments if they meet their annual targets and will have to pay a fine if they miss them. An independent analysis found that the CEPP “would increase the U.S. workforce by 7.7 million new jobs and add nearly $1 trillion to the economy by 2031.” That would certainly be appreciated by Americans across the board right about now, don’t you think?
There are many facets to addressing the climate crisis. Getting the United States to 100 percent clean energy by 2035 — and the ripple effects that will have in supply chains and electricity markets around the world — would be an absolute game changer. If the CEPP and the clean energy incentives don’t make it into the final version of the budget reconciliation bill, we’re likely kissing goodbye our best chance to address the climate crisis.
Andreas Karelas is author of the book “Climate Courage: How Tackling Climate Change Can Build Community, Transform the Economy, and Bridge the Political Divide in America” published by Beacon Press. He is also the founder and executive director of RE-volv, a nonprofit climate justice organization that helps fellow nonprofits across the country go solar. Follow him on Twitter: @AndreasKarelas
Previously Featured on The Hill
