What Biden's $1.9 T Infrastructure Plan Does and Doesn't Include

by Herman Trabish

The Biden administration’s $1.9 trillion spending plan to make the U.S. power sector 100% clean energy by 2035 has generated great attention but barely begun its way through Congress.

Clean energy proposals in the Biden American Jobs Plan would expand the renewable energy tax credits and mandate spending for clean energy and power system modernization. Its details and costs, however, are to be determined by a rigorous legislative process , according to power system analysts and Washington insiders.

“It is a set of potential bills,” said Stoel Rives Energy Development Practice Partner Morten Lund. “There is a lot of electrification , but there is not a lot of specificity.” Bills like the CLEAN Future Act ( H.R. 1512 ) and the GREEN Act of 2021 ( H.R. 848 ) have begun to appear that specify where some of the electrification could come from.

The Biden proposal includes a national tax credit for energy storage , a 10-year extension of current renewables tax credits, and a “direct pay” provision allowing tax credits to be used like cash. They are likely to be approved, according to Norton Rose Fulbright Law Firm Co-Head of Projects Keith Martin, a veteran renewables finance consultant. But the extension might be shortened to less than 10 years to accommodate Senate rules on long-term budget impacts.

Concern about the cost is real, but the 22 “weather and climate disasters last year caused $95 billion in damages," according to the White House . Power outages cost the U.S. economy up to $70 billion annually. The plan’s proposed corporate tax rate changes would “more than pay for the mostly one-time investments,” the White House said.

Recent studies from the Rhodium Group and the University of California Goldman School show the Biden plan’s climate goals can be reached without increasing electricity bills. And new “economy wide” planning done by the Los Angeles Department of Water and Power shows how the proposal’s environmental and economic justice targets and reliability can be of part of utility planning.

If the Energy Efficiency and Clean Electricity Standard for 100% clean energy by 2035 in the Biden package passes, “ studies show the annual demand for new renewables could be 60 GW or more,” said Energy Innovation Director of Electricity Policy Michael O’Boyle. “Last year’s 35 GW is the record so far. There will be opportunity for all power system participants to meet that demand.”

Proposals and questions

The Efficiency and Clean Electricity Standard is “aspirational” because federal authority over state-regulated utilities is limited, Lund said. A Federal Energy Regulatory Commission ruling would only address organized markets, and the renewables mandate in the Obama administration’s energy bill would face litigation decided by a now largely Republican-appointed Supreme Court.

While the Federal Power Act gives states authority over utilities, arguably that electricity is federally administered interstate commerce across multi-state power systems, EI’s O’Boyle pointed out.

In addition to the clean energy standard, the renewables tax credits, and the direct pay provision, the Biden plan provides a limited tax credit for a near-term transmission build out and new Department of Energy authority to facilitate long-term transmission development policies.

The transmission tax credit has been endorsed by national transmission advocates like Grid Strategies and national renewables advocates like the American Council on Renewable Energy.

But still more new transmission is needed, said EI’s O’Boyle. The DOE authority “is a more important potential lever” because the real challenge for transmission developers are siting, permitting, and cost allocation.

Much of the tax credit investment would retool manufacturing and supply chain capabilities for building zero emission transportation infrastructure. It also would fund incentives for the purchase and use of vehicles and fueling and charging stations, and transition the federal fleet away from fossil fuels.

Investments would fund the building and retrofitting of more than two million homes and commercial buildings and the modernizing of community colleges, schools, childcare facilities, and veterans’ facilities and hospitals.

Significant research and development funding would support demonstrations of emerging emissions reduction technologies. Utility-scale energy storage, carbon capture and storage, green hydrogen, advanced nuclear, floating offshore wind, biofuels, quantum computing, and electric vehicles and their components would be eligible.

The R&D would target revitalization by building next generation industries like decarbonized green hydrogen manufacturing and carbon capture and sequestration retrofits in “distressed communities,” the White House said.

A higher-value 45Q tax credit for CCS , which now pays $50 per ton of reduced carbon dioxide, could make natural gas-generated “blue” hydrogen cost-competitive with green hydrogen, Steptoe and Johnson partner and veteran energy lobbyist Hunter Johnston said.

But that higher-value 45Q tax credit will not make a difference to BloombergNEF’s projected economics of green hydrogen made from electrolysis, according to Bloomberg’s Advanced Materials Decarbonization team leader Julia Attwood. “Green H2 will outcompete blue H2 by 2030 .”

Giant carbon pits

The real problem with the 45Q tax credit is that CCS has not worked to date, Stoel’s Lund said. Even if it cost-effectively captured power plant carbon emissions, there would be production and delivery emissions and result in “giant pits of carbon.”

Significant investments target domestic workforce development. The objectives are “good paying jobs” and the opportunity to be “part of a union” by providing under-served groups with training programs and dislocated worker retraining.

Proposed investments also would go to modernizing U.S. highways, roads, bridges, trains, buses, ports, and airports. Others would replace upgrade and modernize water systems and extend high-speed broadband to all users and revitalize polluted lands.

Cost, affordability, reliability

The “Made in America Tax Plan” included in the Biden proposal covers its costs by resetting the average corporate tax rate at 28% from the Trump Administration reduction of 8%. It also eliminates corporate incentives to offshore profits and jobs. It enforces penalties on polluting industries. The changes would cover the Biden plan’s investments of about 1% of GDP per year over eight years, the White House said.

Debate has started over the $1.9 trillion cost, and the assumption is that some of the proposals along with their costs will be eliminated. Objections to the 28% corporate tax may support a lower rate to pay for a lower cost program, Norton Rose’s Martin said.

Some of the plan’s goals can be achieved through “ incremental legislation and executive orders,” Lund said. An executive order moving the federal government to zero emissions “would drive the renewables industries for decades.”

The challenge with both the efficiency and clean energy standard and the tax credit extensions is that they could provide unequal support for different resources, said Steptoe’s Johnston. That could pit one technology against another.

National advocacy groups for the nuclear, carbon sequestration, solar, wind, and energy storage sectors, and national electric utility trade organizations have endorsed the plan. Fossil fuel advocacy groups have not. But the United Mine Workers, the biggest U.S. coal miners’ union, has expressed support of its clean energy jobs program .

There are ways to protect affordability and reliability through the transition proposed by the Biden plan, especially because continued declining costs of wind, solar, and storage, EI’s O’Boyle said. “We have the technologies we need, and this federal support makes the opportunity better. Action is needed now because climate crisis costs are accelerating.

— Herman K. Trabish

Over 11K Stories!

| Independently Powered Energy News

What Biden’s $1.9 T Infrastructure Plan Does and Doesn’t Include

Herman Trabish

Related Posts

Concerns Aired about Seismic Study Update of Diablo Nuclear Plant

PG&E Seeks to Sell 49.9% of its Non-Nuclear Generation

CPUC Says Aliso Canyon is Needed, Replacement Specifics Postponed

Building Decarbonization Bills & Proposed Rule Changes Face Headwinds