Biden’s climate targets are possible without clean energy program, but will need tax credits and regulations

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Even if Democrats’ cornerstone climate policy — a clean electricity program — is stripped out of their budget bill, an independent analysis estimates President Joe Biden can still meet his climate goals.

But it would take decisive action and regulations across federal and state governments, at a time when Democrats in Congress are struggling to come together and leverage their majority, and when the Biden administration’s regulatory actions risk being challenged in court.

The nonpartisan Rhodium Group analyzed emissions reductions from several measures in the bills, including clean energy and electric vehicle tax credits, energy efficiency grant programs and funding for agricultural programs that sequester carbon, but left out the clean electricity program and a carbon or methane fee, given how uncertain their legislative survival is.

Passing both the bipartisan infrastructure bill and Democrats’ sweeping economic package — without the clean energy program — combined with federal and state regulatory action could get the US close to Biden’s goal of cutting greenhouse gas emissions in half by the end of the decade, analysis from Larsen and other Rhodium researchers found.

But if nothing is achieved in Congress and new regulations are not implemented, greenhouse gas emissions would only fall by 17-25% by 2030 — between 1.7-2.3 billion tons of emissions short of what the President needs to hit his target.

“I would say a watered down CEPP may be worse than no CEPP,” said John Larsen, director at Rhodium Group, and the lead author of the recent analysis, pointing to another big element of Democrats’ climate policy: Tax credits to amplify clean energy and make electric vehicles cheaper.

“As long as the clean energy tax credit package is in at the scale and ambition people have been talking about for months, you’re already going to have increased acceleration of clean energy in America,” Larsen told CNN. “There are other pieces of the tax credit package that could be amped up to make up for lost ground.”

The clean energy program will likely be dropped from Democrats’ economic package after opposition from Sen. Joe Manchin of West Virginia, and lawmakers are now crafting options to replace it. Some senators told CNN one option is boosting the amount of money in a clean energy tax credit package currently being developed by Senate Finance Chairman Ron Wyden of Oregon.

The tax credits are “going to be responsible for 73% of the emission reductions in the next 10 years,” Wyden told CNN, saying they would provide tax savings to companies the more they reduce carbon emissions. Still, the structure of Wyden’s tax plan is different from the one produced by House Ways and Means Chairman Richard Neal of Massachusetts, a difference House and Senate Democrats will have to work through in the coming weeks.

Rhodium considered agency actions, including the EPA requiring new source performance standards requiring all new fossil fuel-fired electric generators to have 90% of their facilities outfitted with carbon capture technology starting in 2022. Larsen told CNN that congressional action could set a higher bar for Biden’s agencies; for instance, increased electric vehicle tax credits could spur more consumers to buy EVs and push the EPA to set a more ambitious fuel economy standard.

“We can’t say for sure this will make it a slam dunk for EPA to do all the things they’ve got to do to get to the target, but it’s got to make it easier,” Larsen told CNN, adding that the agency would have to increase its regulatory ambition to significantly hit emissions goals.

Democratic Sen. Tina Smith of Minnesota told CNN said she thinks Rhodium’s analysis on executive actions was too optimistic, and that it assumes regulatory actions won’t get hung up in litigation or be overturned by a future administration.

“I think it proposed an administrative role that would go unchallenged, and I find that unrealistic,” said Smith, a longtime advocate for the clean electricity program in the Senate.

Larsen added that under the most optimistic emissions scenario, states and businesses would also back away from fossil fuels, moving to net-zero carbon emissions themselves.

“There’s not going to be one big thing that Congress or EPA or states do that just solves it,” Larsen said. “There will be a few actions that are going to have outsized impact on their own like a congressional bill, but no one should look to congress and expect that’s the lion’s share of the contribution.”

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