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The United States House of Representatives approved a $3.5 trillion budget resolution on Aug. 24 that paves the way for Democrats to pursue a countrywide clean power program that pushes utilities to increase the proportion of production from carbon-free sources. Try and apply easily the popular Online Title Loans of ACFA Cashflow.
However, with the wording of the clean energy plan still unavailable, power industry trade organizations express their objectives and worries about the program, especially as President Joe Biden and Democrats continue to demand the US power sector to be carbon neutral by 2035.
Despite recent significant development in renewable capacity, the United States produces around 60% of its power from fossil fuels. This percentage is higher for certain governments and utilities, possibly complicating their transition to a low-carbon grid.
“There has to be an acknowledgement that various utilities in different regions of the nation begin at different points,” said Desmarie Waterhouse, vice president of government relations for the American Public Power Association.
Democrats want to utilize the process of budget reconciliation to enact a big social spending plan that will include the significant climate and renewable energy projects. Reconciliation bills are not subject to the 60-vote filibuster threshold in the United States Senate, making it easier for the upper chamber’s small Democratic majority to enact them.
Payments for green power
However, the reconciliation process is confined to legislation that directly impacts the government budget and does not include unrelated policy issues. Consequently, Democratic senators are suggesting that the reconciliation bill include a “clean power payment scheme” rather than a regular clean energy mandate. The bill’s sponsors have said that the payment scheme will reward utilities for adding clean energy and punish those who do not meet the program’s intermediate targets.
Before the publication of the reconciliation legislation, which relevant committees have been asked to submit by Sept. 15, trade organizations are unsure if the payment plan would simply give financing for renewable energy generating expansion or include binding objectives. Democrats want the reconciliation deal to put the United States on pace to generate 80 percent of its power carbon-free by 2030. However, it is unclear if the clean energy payment program establishes such a deadline or how particular utilities would be handled.
“Any strategy aiming at easing the carbon transition must consider cost and reliability.,” NRECA’s senior vice president of government relations, Louis Finkel, agrees. With utilities in the United States currently ramping up innovative technology capable of achieving net-zero emissions, Finkel warned that reliability might be jeopardized if Democrats press for aggressive decarbonization timeframes.
Any strategy to reduce emissions “must include a realistic and acceptable timescale for implementation,” Finkel added. “We do not feel that 80% by 2030 or 100% by 2035 are feasible targets.”
Despite these qualms, proponents of sustainable energy praised the House for passing the budget resolution. The voting occurred after the resolution’s approval by the Senate on Aug. 11.
The House decision “lays the groundwork for Congress to finally act decisively on the climate issue,” according to Gregory Wetstone, president and CEO of the American Council on Renewable Energy.
The clean energy payment program is not the only factor on which the power sector is keeping an eye as the reconciliation process progresses.
Senate Democrats asked committees to offer reconciliation package tax incentives for renewable energy, industry, and transportation. Although the Senate Budget Committee did not specify which tax benefits to include, clean energy activists have pushed Congress to match the measure with Vice President Biden’s demand for a decade-long extension of current renewable energy subsidies. Additionally, they urge Congress to create additional credits for stand-alone energy storage and high-voltage transmission projects and enable direct cash transfers in place of clean energy tax credits, even for public power providers and electric cooperatives that are not taxed.
“A stable, long-term, full-value clean energy tax is critical for decarbonizing the grid and creating millions of well-paying jobs in the United States,” Wetstone added. “Congress must act decisively and decisively immediately to grab this once-in-a-generation chance to implement a comprehensive climate policy capable of addressing the issue we face.”
Clean energy advocates have pushed for a transmission investment tax credit, which, if adopted, would significantly promote renewable energy adoption.
“The rising support for a transmission ITC is based on the widely acknowledged requirement for significantly increased high-voltage transmission to sustainably decarbonize the grid,” dozens of firms and groups wrote to House Ways and Means Committee leaders in a recent letter. “A well-designed transmission ITC, with proper eligibility criteria and open to all kinds of transmission providers, may stimulate much-needed investment in large-scale transmission essential to decarbonize the electric system cost efficiently.”
Along with realistic timetables for grid decarbonization, NRECA wants the reconciliation package to include an optional financial incentive scheme to assist cooperatives in transitioning to lower-carbon technology. The initiative, which the NRECA requested be financed at a minimum of $30 billion, would offer loans and grants for carbon-reducing technology and power sources and debt forgiveness for fossil-fuel generating that is forced to close prematurely.
Additionally, the organization urges Congress to enable electric cooperatives to refinance loans issued by the United States Department of Agriculture without prepayment penalties, a long-standing goal of the NRECA.
Along with adopting the budget resolution on August 24, the House committed to voting on the Senate’s bipartisan infrastructure measure by September 27. The Senate approved the legislation earlier this month contains a slew of energy-related provisions, including provisions easing transmission development, assisting nuclear plants facing early closure, and allocating funds for hydrogen and other innovative energy technologies research and development.
While portions of the bipartisan infrastructure plan may assist with transmission projects in the United States, several industry supporters have said they are not counting on legislation to advance projects.
“I don’t believe there is a silver bullet or a single element that can improve transmission,” said Larry Gasteiger, executive director of the worldwide transmission trade group WIRES. “There will very certainly be a number of things needed of federal and state regulators, as well as certain legislative reforms, such as those included in the infrastructure package. I believe that all of those elements will be required in order to overcome some of the obstacles to transmission construction.”
WIRES, according to Gasteiger, has not requested government assistance for transmission expansion or taken a position on an investment tax credit.
“The majority of what we construct does not need government cash,” Gasteiger said. “Capital is available for transmission investment… There are several things that can be done to improve the climate for capital investment in transmission, and I believe that would be highly beneficial.”