Week Ending April 2, 2021

Groups Wary on Taxes, Clean Energy Standard in Biden Infrastructure Plan

This Article Appears as Published in Foster Report No 3343

In the $2 trillion infrastructure package announced by President Joe Biden March 31, items that have attracted the most attention from energy groups and Republican lawmakers are higher taxes to pay for the plan and a national clean energy standard to speed deployment of renewable resources.

A national standard is likely to include nuclear energy and carbon capture and storage (CCS) technologies as a means to reach decarbonization goals, Gina McCarthy, national climate advisor for the White House, told reporters April 1. Including those elements appears to be an attempt to gain bipartisan support for the measure in Congress, but the early reactions show that there is a lot more needed to get Republicans on board.

Senate Minority Leader Mitch McConnell (R-Ky.) deemed the plan a “liberal wish list” and a missed opportunity to gain Republican support. “This proposal appears to use ‘infrastructure’ as a Trojan horse for the largest set of tax hikes in a generation. These sweeping tax hikes would kill jobs and hold down wages at the worst possible time,” McConnell said.

The Biden administration plan would increase the corporate tax rate to 28% to help pay for infrastructure and other spending, undoing the tax cut of 2017. Republicans have indicated resistance to a tax increase, and a mandated transition to clean energy away from fossil fuels is being panned.

Sen. Shelley Moore Capito (R-W.Va.) said the proposal “would aggressively drive down the use of traditional energy resources and eliminate good-paying jobs in West Virginia and across the country. Perhaps worst of all, it would burden the American economy with tax increases as our country attempts to recover from economic hardship.”

The ranking member of the Senate Environment and Public Works Committee, Capito said the committee has a strong track record of bipartisan support for addressing infrastructure challenges, and she stands ready to work on legislation in a bipartisan manner. Instead of crafting a proposal with Republican input, the White House proposal is an attempt to advance progressive priorities, Capito said in a statement.

From the House of Representatives, Rep. Cathy McMorris Rodgers said Biden and Democrats are trying to jam through “a massive expansion in federal bureaucracy and government control . . . with mandates and regulations that will take us back to the dark ages.” The jobs element of the proposal is a “PR stunt” masking federal moves that would kill employment in critical industries that employ millions of workers, Rodgers said in a statement.

Addressing some of the criticism April 1, Energy Secretary Jennifer Granholm said Republicans have endorsed power grid investments and other measures contained in the plan, and said Biden is inviting GOP lawmakers to the negotiating table. The proposal does not amount to a big government bureaucracy because the work to be accomplished will be through the private sector, Granholm said in an interview on PBS Newshour. The large spending plan is designed to fund private sector activities and put more Americans to work in the clean energy transition, she said.

Granholm said the U.S. transmission grid is “very old in many places,” with the generation outages in Texas during February an example of how the grid needs to be more resilient and transformed to withstand the effects of climate change and extreme weather.

In addition to changing the transportation sector to emphasize electric vehicles (EVs) and adding employment to install EV charging stations, the White House proposal is designed to improve domestic manufacturing of solar panels and clean energy components, where China and other nations have leaped ahead of the U.S., Granholm said.

Granholm noted that many companies in the oil and natural gas industry are pivoting to lower greenhouse gas emissions and embracing new technologies to lower their carbon footprint. The Biden administration does not want to disenfranchise oil and gas workers who helped the nation prosper and become energy independent, and the proposal will “put people to work,” she said.

Biden said the proposal includes a $16 billion effort to put “hundreds of thousands” of people to work in the oil fields plugging abandoned oil and natural gas wells. That is something a few states have tackled when oil production plunged and unemployment rose during the COVID-19 pandemic, and the White House plan would increase such efforts on a large scale.

Rolling out the plan in Pennsylvania, which was key to his election victory and is home to plenty of energy jobs and union representatives, Biden praised workers in the utility sector and energy industry who keep energy flowing to homes and businesses. His speech in Pittsburgh emphasized union jobs, employment opportunities and steps to change the energy sector. He likened the plan to past efforts on the Interstate highway system and space exploration, deeming it “the largest American jobs investment since World War Two.”

In a fact sheet on the plan, the White House emphasizes making all infrastructure more resilient and less susceptible to climate change and extreme weather events.

The national standard setting a percentage of power sales from clean energy resources has not been set yet, though it is likely to start at a certain level and increase over time, as the state renewable portfolio standards (RPS) do in a majority of states. Roughly 30 states and the District of Columbia have RPS measures that call for higher levels of renewable resources to diminish fossil fuel use in the power sector. The Biden administration’s campaign pledge is to put the nation on a path to decarbonize the power sector by 2035, and the U.S. economy by 2050.

White House officials were scheduled to meet with the Edison Electric Institute leaders April 1 to discuss the clean energy standard and other elements of the package.

Aiming to accelerate the clean energy transition and give a boost to the U.S. economy, the package seeks billions of dollars for efforts such as a Civilian Climate Corps, transmission investments to tap increasing amounts of renewable resources, EV charging stations and supply chains, hydrogen demonstration projects and CCS plans.

Democrats in Congress and state elected leaders praised the plan, as did environmental groups, clean energy advocates and others. Some Republicans in coastal states that have weighed in on an earlier announcement by the Biden administration on offshore wind power plans addressed the proposal as a starting point. Maryland Governor Larry Hogan, a Republican, said the proposal’s emphasis on infrastructure and jobs is the correct priority. “Infrastructure is a bipartisan problem that demands two-party solutions,” Hogan said in a statement.

During an April 1 online event hosted by the U.S. Chamber of Commerce Global Energy Institute, Rep. Lizzie Fletcher (D-Texas) expressed hope for bipartisan energy legislation this year, even if it is not a large package encompassing all elements of the Biden infrastructure plan. Democrat leaders have tasked committee chairmen to work with ranking members on shared priorities, and energy issues should not be divided along partisan lines, Fletcher said.

Fletcher, who sits on the Energy & Commerce Committee and the Science, Space & Technology Committee, said “the politicization of energy” issues is bad for business and harms the energy sector. Energy policy needs to be durable from one Congress to the next and from one administration to the next, she said. The nation can’t afford to have questions about energy be subject to partisan bickering, and “I think we’ll see collaboration across the aisle,” she said.

The American Petroleum Institute (API) welcomed the plan’s incentives for modernizing infrastructure and investments in hydrogen and CCS. However, it misses an opportunity to address all infrastructure, including pipelines, said Frank Macchiarola, senior vice president for policy, economic and regulatory affairs.

“Targeting specific industries with new taxes would only undermine the nation’s economic recovery and jeopardize good-paying jobs, including union jobs. It’s important to note that our industry receives no special tax treatment, and we will continue to advocate for a tax code that supports a level playing field for all economic sectors,” Macchiarola said.

By Tom Tiernan ttiernan@fosterreport.com

Want to try it out? Sign up for a free trial!
Subscribe Here