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Climate Measures Hang In Balance Amid Fluid Hill Budget Negotiations

September 29, 2021

Major proposals to curb greenhouse gases that cause climate change hang in the balance as congressional Democrats try to knit together different factions of their caucus behind a sweeping budget “reconciliation” package that would enact much of President Joe Biden’s climate and economic agenda.

Negotiations on the bill remain fluid, with top Democrats acknowledging the top-line spending in the measure likely must be curbed from an oft-cited $3.5 trillion figure, while the House is racing toward a pledged Sept. 30 floor vote on a separate but linked $1.2 trillion bipartisan infrastructure bill.

Biden and other top Democratic leaders are trying to nail down an agreement with Senate moderates at least on the broad contours of the reconciliation package, in order to show House progressives that there is forward momentum on the budget plan and defuse their calls to tank the bipartisan infrastructure measure.

The vote on the bipartisan infrastructure package had originally been slated for Sept. 27, though Speaker Nancy Pelosi (D-CA) delayed it until Sept. 30, the date when federal transportation programs are set to expire:

Democrats Tussle Over Climate Policies As Infrastructure Vote Slips

House Democrats continue to struggle with the scope and cost of climate and other provisions for reconciliation legislation after House Speaker Nancy Pelosi (D-CA) announced plans for a Sept. 30 vote on a bipartisan infrastructure bill.

Pelosi recently acknowledged that it “seems self-evident” that the $3.5 trillion figure for reconciliation must come down to appease moderate Democrats, though other lawmakers are striving to protect climate-related elements of the bill amid such a spending squeeze:

Calls Grow To Keep GHG Measures In Budget Bill As Talks Continue

Clean energy advocates and multiple lawmakers are signaling that climate change initiatives must be protected amid expectations that Democrats will scale back the overall scope of their budget “reconciliation” plan, even as details of talks remain under wraps and some major climate measures might be subject to “tweaks.”

Climate provisions “cannot be on the chopping block” of the budget package, Sen. Alex Padilla (D-CA) told reporters Sept. 22.

One moderate Senate Democrat who has been involved in a flurry of White House meetings on the bill -- Sen. Kyrsten Sinema (D-AZ) -- recently told the Arizona Republic that, “We know that a changing climate costs Arizonans, and right now we have the opportunity to pass smart policies to address it -- looking forward to that.”

And a high-profile House moderate, Rep. Stephanie Murphy (D-FL), recently renewed her argument that “the climate provisions within the reconciliation bill aren't subject to being paid for,” because the Congressional Budget Office does not account for the cost of not addressing climate change when it formally assesses the cost of Hill legislation.

Nevertheless, another closely watched moderate, Senate Energy & Natural Resources Committee Chairman Joe Manchin (D-WV), is expressing continued concerns about a proposed $150 billion clean electricity incentive program.

During a recent committee hearing, he pressed federal energy regulators to help him sort through his concerns about whether the plan would threaten grid reliability:

Manchin Urges FERC To Weigh Hill Democrats’ Clean Power Incentives

Senate energy committee Chairman Joe Manchin (D-WV) is expressing concerns that House Democrats’ proposal for a clean electricity performance program (CEPP) as part of budget reconciliation legislation could undermine grid reliability, and is asking federal energy regulators to help him sort through such concerns.

“I just can't for the life of me keep writing checks from our treasury for publicly traded companies that have shareholders that are basically benefiting off of the investments we’re making with no return to taxpayers,” Manchin said at a Sept. 28 energy panel hearing.

At the proceeding, Federal Energy Regulatory Commission (FERC) Chairman Richard Glick (D) did not specifically address the proposed Clean Energy Performance Program (CEPP), though he argued that the nation’s power system already faces reliability threats from climate-related extreme weather, and that FERC is seeking public input on how to harden and modernize the grid against those storms.

“Whether it is prolonged record cold, heat waves, drought and wildfires in the West, or increasingly ferocious hurricanes in the Gulf, climate change poses a distinct threat to grid reliability. The commission recently initiated a docket to examine the impact of extreme weather on grid reliability. We will continue to focus on actions that utilities and others can take to address the growing threat of extreme weather,” he said in his testimony.

But in response to a query from panel ranking member John Barrasso (R-WY), FERC member James Danly (R) charged that the House plan would “create an incentive and penalty structure that would absolutely change and frustrate every subtle expectation we have for these slowly-developed, incrementally-produced markets of ours. Effectively dropping an H-bomb into the middle of them.”

Observers have also been sparring about whether key elements of the CEPP plan would comply with Senate budget procedures:

Sparring Grows Over Clean Electricity Program Amid Senate Pushback

Observers are questioning whether key elements of House Democrats’ proposed incentives and fees to spur clean electricity will comply with Senate budget procedures allowing passage on a party-line vote, while a key senator is reportedly pushing to weaken the plan.

“I personally don’t see it passing muster,” says one environmentalist, alluding to concerns that a provision in a version of the CEPP approved Sept. 14 by the House Energy and Commerce Committee might run afoul of the Senate’s reconciliation procedures, though the source adds it is not clear if the issue is resolved.

At issue are Senate procedures that limit reconciliation bills to policy measures that are deemed to be associated primarily with revenue effects on the federal budget.

Yet, Biden administration officials are expressing confidence that Congress will ultimately enact a reconciliation bill with major climate provisions, with the dynamic underscoring the pressure that looming international climate talks in Scotland are placing on the Biden team to deliver on their climate agenda:

McCarthy ‘Fully Expects’ Hill Budget Package Before Glasgow Meeting

White House National Climate Advisor Gina McCarthy is saying the administration “fully expect[s]” Congress to act on Democrats’ climate-heavy budget “reconciliation” bill ahead of the Nov. 1-12 global climate conference in Glasgow, Scotland, while also arguing federal agencies can still take major steps through the administrative process.

“We fully expect Congress will act within the next couple of weeks, and we’ll have a lot to say there,” White House domestic climate chief Gina McCarthy said during a Sept. 22 event, in response to a question about the United States’ domestic policy position going into the Glasgow summit. She added: “We fully expect we’ll go into Glasgow with our head held high.”

McCarthy stressed the importance of multiple major climate provisions in the reconciliation package, though she also suggested the Biden administration could continue to advance climate policy without the help of Capitol Hill.

“These are important investments … for our country moving forward, both economically and on climate, but we’re not going to rely on that to get us where we need to go. We have the tools that we need available to us to make this the decisive decade and we’re going to keep using them,” she said.

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