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Biden Crafts a Climate Plan B: Tax Credits, Regulation and State Action

The United States has a new plan that will still meet its ambitions to sharply cut greenhouse gases that are warming the planet

Sen. Joe Manchin (D-W.Va.) speaks to reporters while walking through the U.S. Capitol in Washington, Oct. 21, 2021. (Stefani Reynolds/The New York Times)

By Coral Davenport, The New York Times

WASHINGTON — After losing the centerpiece of his climate agenda just a week before heading to a major global warming summit, President Joe Biden intends to make the case that the United States has a new plan that will still meet its ambitions to sharply cut greenhouse gases that are warming the planet.

The administration’s strategy now consists of a three-pronged approach of generous tax incentives for wind, solar and other clean energy; tough regulations to restrict pollution coming from power plants and automobile tailpipes; and a slew of clean energy laws enacted by states.

An analysis released this week by Rhodium Group, a nonpartisan analysis firm, found that strategy could technically fulfill Biden’s ambitious pledge to cut the country’s emissions 50% from 2005 levels by 2030. The United States is historically the largest source of the pollution that is heating the planet.

But chances for success are slim; the approach faces significant legal, logistical and political challenges. The process of crafting regulations could take years, and the conservative-leaning Supreme Court could overrule them, or a future president could simply roll them back. And relying on states to amp up their clean energy laws just shifts the fight to statehouses for environmentalists and fossil fuel interests to battle it out on the local level.

“That mix of tax credits, and new federal regulations, and new state actions puts the target within reach. But there are a lot of ifs,” said John Larsen, an author of the Rhodium analysis. “You need states to up the ante on clean energy at a level they haven’t yet done. You need the Environmental Protection Agency to put regulations on every power plant in America in a way they haven’t yet done. And then you have to hope the Supreme Court doesn’t throw that out. Everything has to break in the right way.”

The White House fell back on the plan after its main hope to significantly cut emissions, a clean electricity program, was blocked by Sen. Joe Manchin III of West Virginia, a pivotal vote in an evenly divided Senate.

The clean electricity program would have rapidly cleaned up the electricity sector by rewarding power plants that switched from burning coal, oil and gas to wind, solar, nuclear and other clean energy, and penalizing those that do not switch. It was intended to push the nation’s electricity sector to generate 80% of its power from clean energy sources by 2030, from 40% now.

Manchin, who has financial ties to the coal industry and whose state also produces natural gas, has said he is opposed to any measure that would hurt coal and gas companies.

A major scientific report released in August concluded that countries must immediately shift away from burning fossil fuels to avoid a future of severe drought, intense heat waves, water shortages, devastating storms, rising seas and ecosystem collapse.

The deletion of a clean electricity program from a massive budget bill now being negotiated on Capitol Hill weakened the hand of Biden, who is set to arrive in Glasgow, Scotland, on Nov. 1 for a pivotal U.N. summit where he had hoped to reestablish U.S. leadership on the fight against climate change.

Speaking at a CNN Town Hall on Thursday night, Biden pledged that when he arrives in Scotland, “I’m presenting a commitment to the world that we will in fact get to net zero emissions on electric power by 2035 and net zero emissions across the board by 2050 or before, but we have to do so much, between now and 2030, to demonstrate what we’re going to do to get there.”

Accompanying the president to Scotland, in addition to a significant portion of his Cabinet, will be Biden’s top climate change advisers, John Kerry and Gina McCarthy, both veterans of the Obama administration. During that administration, Kerry and McCarthy traveled to multiple international climate negotiations, where Kerry promised that the United States would pass a tough climate law, which it never did, and McCarthy detailed tough pollution rules governing smokestacks and power plants, which were enacted but then rolled back by the Trump administration.

Biden is likely to present his Plan B to a skeptical audience in Glasgow.

“Biden has been forceful with what he says on climate change,” said Laurence Tubiana, France’s former climate change ambassador who is now the chief executive of the European Climate Foundation. “But credibility is a problem. There will still be a question mark — how can he deliver?”

Still, Biden does appear poised to deliver one of three major carbon dioxide-cutting policies.

The broad spending bill now before Congress includes about $300 billion in tax incentives for producers and purchasers of wind, solar and nuclear power, and for consumers who buy electric vehicles. The tax incentives would remain in place for a decade — a change from existing clean energy tax credit programs, which typically lapse after one to five years, although they are often renewed. It also includes $13.5 billion to construct charging stations for electric vehicles and promote the electrification of heavy-duty vehicles. It would spend $9 billion to update the electric grid, making it more conducive to transmitting wind and solar power, and $17.5 billion to reduce carbon dioxide emissions from federal buildings and vehicles.

That package would be the single largest federal expenditure to promote clean energy, and the Rhodium analysis found that it could lower pollution enough to meet one-third to one-half of Biden’s emissions reduction goals, cutting carbon dioxide emissions about 25% from 2005 levels by 2030.

Ron Wyden, D-Ore., who chairs the Senate Finance Committee, is the chief author of that clean energy tax credit package. If the legislation passes before the Glasgow summit ends Nov. 14, Wyden said he would fly to Scotland to deliver the message that the United States has enacted a law that will take a big bite out of its carbon dioxide emissions.

“The president will be able to say that this is the most far-reaching climate bill ever enacted by Congress,” Wyden said, although he conceded that the bar was low: The United States has never passed a major climate change law.

“This is the first-ever tax overhaul that ties cash incentives to actually reducing emissions, and it says, the more you reduce emissions, the bigger your savings,” Wyden said. “We think you’ll have an extraordinary increase in renewables and clean transportation.”

Larsen, the Rhodium analyst, agreed. “The U.S. has never had this foundation for long-term clean energy tax credits before,” he said. “This would give electric power utilities, car manufacturers and builders the certainty they’ve never had before.

“But they don’t get you to the president’s target on their own,” he said.

For that, the Rhodium analysis finds, the Environmental Protection Agency would need to release a suite of tough regulations aimed at the nation’s three main greenhouse polluters: cars, electric power plants, and oil and gas wells that leak methane, a potent heat-trapping gas.

While running the EPA under President Barack Obama, McCarthy helped craft the most ambitious climate rules that the United States had ever seen, aimed at reining in pollution from those three sources of pollution.

None of them remain in place today. The Supreme Court halted implementation of McCarthy’s rule to cut pollution from coal-fired power plants, and the Trump administration rolled back the rest.

“There was a lot of support and faith in the Obama administration when it did these regulations,” said Joseph Aldy, who served as one of Obama’s negotiators at a major 2009 climate summit in Copenhagen, Denmark. “But now there will be skeptics saying, ‘We’re worried about the next administration undoing what’s been done.’ The question is, how durable will this be legally and politically?”

Looming over that question is the shadow of former President Donald Trump, who relished dismantling Obama’s climate policies. The fossil fuel industry would almost certainly challenge new environmental regulations, which could end up before a Supreme Court with a conservative majority, including three justices appointed by Trump. The former president also appears to be weighing another run for the White House in 2024.

State action, which does not depend on the occupant of the White House, is an essential part of the national emissions strategy, Larsen said.

Already, 29 states have enacted their own versions of the clean electricity program that Biden had hoped to implement for the entire country. Led by California, several states have updated those laws to make them more ambitious. If many or most of those states enact laws designed to generate all of their electricity from zero-carbon sources by 2035 — the same target set nationally by Biden — it could significantly lower the nation’s carbon footprint.

Larsen pointed to a law just passed in Illinois that would phase out coal and gas-powered electricity by 2050.

But the continued passage of such legislation also depends on the makeup of statehouses — and some of the states with the most abundant renewable resources also have strong political opposition to such policies.

“If my state, the Sunshine State, had a clean energy standard, the whole U.S. would be much further along in meeting our clean energy goals,” said Rep. Kathy Castor, D-Fla., who chairs the House Select Committee on the Climate Crisis. “But the electric utility industry in my state is against it.”

Still, Democrats will keep pushing, Castor said. “We’re going to do as much as we can,” she said, “and then we’ll wake up and do more.”

This article originally appeared in The New York Times.

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