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Bidens $2 trillion infrastructure plan includes support for power grid, EVs, cleantech

31 March 2021 Amena Saiyid Kevin Adler

The American Jobs Plan announced 31 March by President Joe Biden in Pittsburgh would invest more than $2 trillion over eight years in a range of projects to repair existing transportation infrastructure, expand and fix the power grid, and retrofit homes for energy efficiency — all with an eye to creating jobs, reducing carbon emissions, and improving public health.

Calling for "transformational progress" to tackle climate change, Biden described his plan as "big, yes, it's bold, and yes we can get it done."

"It's not a plan that tinkers around the edges. It's a once-in-a-generation investment ... unlike everything we have seen or done since we built the interstate highway system and the space race decades ago. In fact, the largest American jobs investment since World War II," Biden added, as he proceeded to spell out the plan's details.

While the bill would invest in infrastructure from highways and bridges to high-speed internet to water systems, the White House explained in a 31 March statement that the bill would both generate jobs in the short run and improve economic output in the long run. "The American Jobs Plan is an investment in America that will create millions of good jobs, rebuild our country's infrastructure, and position the United States to out-compete China," the White House said in the statement.

At the same time, the plan puts climate change and environmental justice front and center.

"It will invest in Americans and deliver the jobs and opportunities they deserve. But unlike past major investments, the plan prioritizes addressing long-standing and persistent racial injustice. The plan targets 40% of the benefits of climate and clean infrastructure investments to disadvantaged communities. And, the plan invests in rural communities and communities impacted by the market-based transition to clean energy," the White House added.

The challenge for Biden now is to get Congress on board.

Energy impacts of the plan

According to the White House, the plan would include the following elements that are directly related to the energy transition and future demand for fossil fuels and renewable power:

  • Power grid: Hiring of workers for "laying thousands of miles of high-voltage capacity transmission lines" to add at least 20 GW of capacity.
  • Clean energy: 10-year extension of the investment tax credit and production tax credit for clean energy and storage projects.
  • Clean Energy Standard: This would mandate reductions in US energy sector emissions, similar to the plan in the CLEAN Future Act introduced by Democrats in the House of Representatives in March.
  • Electric vehicles (EVs): Invest $174 billion in rebates and tax incentives to buy US-made EVs, install 500,000 EV chargers by 2030, and replace 50,000 diesel buses.
  • Climate science: Investment of $35 billion to "position America as the global leader in clean energy technology and clean energy jobs." This includes research on "utility-scale energy storage, carbon capture and storage, hydrogen, advanced nuclear, rare earth element separations, floating offshore wind, biofuel/bioproducts, quantum computing, and electric vehicles."
  • Buildings: Retrofitting more than 2 million homes and commercial buildings for energy efficiency, resiliency, and safety, at a cost of $213 billion.
  • Roads: Spending $115 billion on modernization of 20,000 miles of highways, roads, and main streets. Fixing the "10 most economically significant bridges in the country in need of reconstruction," and repairing 10,000 smaller bridges.
  • Public transport: Double congressional spending to support transit systems to $85 billion.

The investments also would "revitalize manufacturing, secure US supply chains, invest in [research and development], and train Americans for the jobs of the future," the White House said. And those hired would be paid prevailing wages and "be given a free and fair choice" to unionize.

Other parts of the package would invest in safe drinking water supplies (such as replacing all lead pipes), high-speed broadband, and repairs to and upgrades of public schools and Veterans Administration facilities.

Can it pass?

After information on the plan was released, discussions began about whether it prioritizes the right issues, whether it's too big or too small, whether parts can be implemented without congressional approval, and whether it will have sufficient political support to pass both chambers of Congress.

Most of the infrastructure plan will require congressional approval, though already proposed federal legislation could target some of the goals of the bill, observed Lisa Frank, executive director for Environment America's Washington, DC legislative office.

The bill is similar in size to the $1.9-trillion COVID-19 relief package that Biden signed on 11 March, though the American Jobs Plan's spending would be spread out over eight years instead of dedicated immediately. But the COVID package passed Congress without a single Republican vote, in part due to Republicans' objections to its cost.

One top House Republican, Sam Graves of Missouri, the ranking member on the Transportation and Infrastructure Committee that would have to pass the bill, commented that "only 25% of this package is dedicated to our roads, bridges, transit, rail, airports, ports and other traditional transportation infrastructure that the committee is charged with overseeing," and that the bill demonstrates "fiscal recklessness."

The other difference between the infrastructure and COVID spending packages is on the tax side. The COVID plan simply added to US debt. The American Jobs Plan would be paid for by raising the corporate tax rate from 21% to 28% and upping taxes on Americans making $400,000 or more per year, through additional legislation, known as the Made in America Tax Plan. Also announced on 31 March, the tax plan would reverse much of the Tax Cuts and Jobs Act signed by President Donald Trump in December 2017.

Republicans said they oppose raising taxes. "The plan is a Trojan horse for more liberal spending and higher taxes," said Wyoming Senator John Barrasso on Fox News on 30 March.

"I don't think there's going to be any enthusiasm on our side for a tax increase," Senate Minority Leader Mitch McConnell, Republican-Kentucky, said on 25 March in discussing Biden's possible plan.

The US Chamber of Commerce made the same point in a statement on 31 March. "We need a big and bold program to modernize our nation's crumbling infrastructure and we applaud the Biden administration for making infrastructure a top priority. However, we believe the proposal is dangerously misguided when it comes to how to pay for infrastructure," CEO Neil Bradley said. "Properly done, a major investment in infrastructure today is an investment in the future, and like a new home, should be paid for over time -- say 30 years -- by the users who benefit from the investment."

Senate Majority Leader Chuck Schumer, Democrat-New York, said he supports the bill. "Addressing infrastructure, climate, & environmental justice together to create millions of good paying jobs is the right combination to meet America's challenges. I'll work with POTUS to pass a big, bold bill to drive America forward for decades to come," he tweeted.

The Speaker of the House Nancy Pelosi, Democrat-California, has yet to issue a statement about the plan. But Frank Pallone, Jr., Democrat-New Jersey, and chair of the House Energy and Commerce Committee said he's onboard with the plan. "I commend the President for including a national Clean Electricity Standard in his plan that meets the same aggressive targets of the CLEAN Future Act and the investments necessary to make it a reality," Pallone said. Pallone and 31 other Democrats had introduced the LIFT Act in March to direct $312 billion to clean energy, efficiency, and drinking water projects that are incorporated in Biden's plan.

However, progressives in the Democratic Party said the $2-trillion plan is too modest, given the scale of the climate change problem. "Needs to be way bigger," tweeted Representative Alexandra Ocasio-Cortez, Democrat-New York.

Knowing the Biden plan was coming, Senator Ed Markey, Democrat-Massachusetts, and Representative Debbie Dingell, Democrat-Michigan, in February sponsored legislation to spend $10 trillion over a decade on infrastructure, carbon reduction, and health initiatives. The Transform, Heal and Renew by Investing in a Vibrant Economy (THRIVE) Act would mandate reducing US GHG emissions by 50% by 2030 and establish net-zero goals for new buildings by 2025 and the electricity sector by 2035.

Full or partial?

Renewable energy trade associations announced their support. The Energy Storage Association (ESA) said the tax policies, such as making the investment tax credit for renewables apply to battery storage, "will level the playing field with other clean energy technologies and accelerate storage deployments."

By 2030, the US needs to have 100 GW of energy storage, compared with the 3 GW in operation today, said ESA Interim CEO Jason Burwen, and that bipartisan legislation in Congress aims for that goal already. "To build back better, the United States must deploy energy storage at an unprecedented scale. President Biden's American Jobs Plan would put us on that path," Burwen said.

The American Council on Renewable Energy (ACORE) praised the bill for including a federal Clean Electricity Standard, which it called "vital to ensure we stay on track with the critical emissions reductions needed to make progress addressing climate change." ACORE also supports the creation of a Grid Deployment Authority to facilitate infrastructure upgrades and better linkage across regions.

The American Petroleum Institute (API) said it supports modernizing nation's infrastructure and it "welcome[s] the administration's efforts to address the risks of climate change by incentivizing innovation for hydrogen and CCUS as part of this infrastructure package."

But API said the bill should include support for modernizing the nation's oil and gas pipeline networks as well, and said it opposes tax hikes. "Targeting specific industries with new taxes would only undermine the nation's economic recovery and jeopardize good-paying jobs, including union jobs," said API on 31 March.

Environmental and public health groups said they will push hard for passage. "We can't let Republican obstruction stand in the way of taking the bold action that the science and the economy demand," Evergreen Action stated. "We cannot water down this proposal as it winds through Congress. If anything, the package should get more robust to meet all the critical investments we need to make. Congress must finally address the existential crisis of our time and get to work building our clean energy future."

But praise from the environmental community was not universal. While the American Jobs Plan is substantial, Mindy Lubber, CEO of Ceres, said it must be seen as part of the bigger picture. "The administration must now set a strong national target for reducing greenhouse gas emissions in half by 2030 and putting the country on the path to reach net-zero emissions by 2050," she said.

Taking a harsher line, Brett Hartl, government affairs director at the Center for Biological Diversity, deemed it far short of what's needed. "President Biden's industry-friendly infrastructure plan squanders one of our last, best chances to stop the climate emergency," Hartl said. "Instead of a Marshall Plan approach that moves our economy to renewable energy, it includes gimmicky subsidies for carbon capture, fantastically wishes the free market will save us, and fails to take crucial and ambitious steps toward phasing out fossil fuels. Biden has pledged to cut carbon emissions 50% and decarbonize our electricity sector, but this proposal won't even come close."

Finding that fine line to satisfy many parties will be a challenge, said Michael Krancer, former Pennsylvania Department of Environmental Protection secretary and now principal of Silent Majority Strategies, a regulatory and permitting advisory firm.

"President Biden will get something passed, just not this bill," Krancer predicted. "The question is what gets changed and whether he wants to make a real play for Republican votes. It's clear that he is trying to coax union voters back -- particularly the building trades -- which have been peeling off in droves in recent years from the Democrat base. There is also a big question whether the progressive wing of his own party will hold out for more concessions."

Of interest to the oil and natural gas sector, the Western Organization of Resource Councils pointed out the plan would spend $16 billion to plug and reclaim abandoned and orphaned oil and gas wells, which it said leak an estimated 281 kg of methane and 7 million mt of carbon dioxide annually. However, the group called that a "one-time fix" that leaves unsolved the problem that oil and gas companies are not issuing bonds or holding sufficient funds to clean wells that they drill.

Environmental justice

The infrastructure plan announcement came the day after the first meeting of the White House Environmental Justice Advisory Committee. At the 30 March meeting, participants discussed the Justice40 Initiative, which would require that 40% of all investment in climate and clean energy infrastructure benefit disadvantaged and low-income communities that have borne the burden of toxic air pollution and climate impacts. Cecilia Martinez, senior director for environmental justice at the White House Council on Environmental Quality, said the administration would "listen" to the recommendations of the committee before acting.

Reflecting that issue, Biden's plan targets 40% of the benefits of climate and clean infrastructure investments to disadvantaged communities. It sets aside $5 billion to remediate and rejuvenate communities that are home to legacy pollution caused by contaminated industrial sites; $10 billion for a new Civilian Climate Corps; and $56 billion in grants and low-cost flexible loans to states, Tribes, territories, and disadvantaged communities to upgrade and modernize stormwater, wastewater, and drinking water infrastructure.

The plan also would pair investment in 15 decarbonized hydrogen demonstration projects in distressed communities with a new production tax credit, and establish 10 pilot facilities that demonstrate carbon capture retrofits for large steel, cement, and chemical production facilities, "all while ensuring that overburdened communities are protected from increases in cumulative pollution."

Even while the infrastructure bill is being considered in Congress, Jahi Wise, senior advisor on climate policy at the White House Climate Office, said the administration will be looking for ways to allocate authorized spending to improve environmental justice. Also, an interagency task force has submitted an interim report to Biden that looks at the impact of coal, oil, and gas infrastructure on communities, especially front-line communities and approaches to revitalizing them under a cleaner, greener economy, Wise said.

Posted 31 March 2021 by Amena Saiyid, Senior Climate & Energy Research Analyst, IHS Markit and

Kevin Adler, Editor, Climate & Sustainability Group, IHS Markit

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