The Relief Bill and the Climate Action Decade

As global temperatures continue to rise and destructive storms, wildfires, and heatwaves take their toll, the 2020’s are the crucial time to tackle the climate crisis head on at a national scale. The just-enacted omnibus spending and relief bill provides a down payment on that climate action, while also leaving a lot left to do in the next 10 years.

Here are some of the highlights of the legislation finally signed into last night by President Trump:

Energy Innovation
 

What Just Passed: The bill includes the Energy Policy Act of 2020, the first update in 13 years to Department of Energy (DOE) research and development initiatives, including those that invest in clean energy, distributed energy, energy storage, and transmission. The measure:

• Authorizes nearly $4 billion for RD&D (Research, Development and Demonstration) to advance the next generation of renewable energy technologies, including solar, wind, geothermal, and waterpower.
• Better coordinates DOE energy storage initiatives, with $1 billion in funding for RD&D and deployment.
• Establishes new programs to accelerate RD&D of technologies to decarbonize the industrial sector, including $500 million in grants for demonstration projects.
• Unlocks $23.9 billion in existing loan guarantee authority for projects to deploy innovative emission-reducing technologies while paying prevailing wages for workers, though we still need to ensure this money goes to worthy projects that are commercially viable and reduce emissions.
• Enhances RD&D funding for transmission initiatives for projects that help connect renewable energy generation to population centers across the country.

What Needs to Happen Next: Updates to various parts of DOE’s RD&D offices are an essential first step to addressing the climate crisis, but there is much more to be done. More needs to be done to focus DOE on an inevitable carbon-free future. Congress needs to follow up the bill’s increased authorizations by appropriating funding next year, with a goal of doubling innovation investment in the next few years. Congress also needs to shift billions of public dollars still allocated for RD&D into new fossil energy generation toward clean energy and toward cutting the emissions from legacy fossil generation. We need also need to move additional energy efficiency and clean transportation initiatives in the next Congress.

Reducing Greenhouse Gas Emissions
 

What Just Passed: A critical piece of the legislation phases down production and consumption of hydrofluorocarbons (HFCs), highly potent greenhouse gases, by 85 percent over 15 years. The Rhodium Group calculates that the HFC phasedown will avoid the equivalent of 900 million tons of carbon dioxide over the next 15 years. Enacting this provision positions the United States to join the rest of the world in avoiding 70 billion tons of carbon dioxide equivalent by 2050 and up to a half of a degree Celsius of additional warming by the end of the century. With more than 120 countries already onboard with the Kigali Amendment, there’s every reason to see the United States join the agreement next year.

What Needs to Happen Next: Phasing down HFCs is a huge climate victory, but to truly address the climate crisis, we need a mechanism (or mechanisms) to address emissions of carbon and other greenhouse gases, in a multisector fashion—so in the power sector, extraction, mining, land use and transportation sectors, for instance. There are many ways of doing this, and that could be its own blog, but sector-by-sector these will need to guarantee a wholesale reduction in emissions over a set period of time—a dimension that is growing shorter and shorter

Clean Energy Tax Incentives
 

What Just Passed: The bill extended tax incentives for solar generation and onshore and offshore wind generation, which are essential to meeting President-Elect Biden’s goal of 100 percent clean electricity by 2035. This included a one-year extension of the wind power Production Tax Credit (PTC) at 60 percent of its original value (eligible to projects that begin construction in 2021) and an extension of the solar power Investment Tax Credit (ITC) for two years (26 percent for 2021, 22 percent 2022). Offshore wind facilities that begin construction through 2025 are eligible for the 30 percent ITC credit. In addition, Congress made permanent the 179D energy efficiency credit—often utilized by businesses and school systems or other public sector organizations. It is also now tied to inflation, which should help it be used more often and save businesses and many communities millions over the long term.

What Needs to Happen Next: Short-term extensions are helpful, but to really deploy renewables and energy efficient technologies at the rates needed to meet our climate goals, longer-term extensions are needed for both the ITC and PTC. These can either be 5- or 10-year extensions, and for part of that time should be coupled with direct pay, that would help industries to utilize the credits without the need for complicated equity schemes which the current economic downturn makes difficult. A deal on opening the ITC to energy storage technologies beyond solar can also help other clean energy sources ramp up in deployment, as can lifting a cap on the Electric Vehicle Tax Credit, so that more Americans can take advantage of zero-emissions vehicles.

What Else Needs to Happen? Well, a lot. While this measure had some problematic provisions, it’s a good start. But from farming to vehicle standards, forestry to transit-friendly development, there are many more actions the federal government will need to take. This measure shows that we can make progress, even among the divisions in Washington. We look forward to working with the new administration and Congress to deliver on the actions necessary.

There is much to be done, and we are short on time. Though the omnibus/relief legislation was far from perfect in terms of its climate wins—it was perhaps most progressive in the view that we can make progress. And in the 2020’s, we not only can, but must.