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Democrats seek 80% carbon cuts from US power sector by 2030, fossil-free grid by 2035

03 March 2021 Karin Rives

House of Representatives Democrats on 2 March unveiled $565-billion bill to set the US economy on a path to net-zero emissions by 2050 that would require all electric utilities to generate 80% clean energy by 2030 and to be fully decarbonized by 2035.

Those requirements are consistent with the target President Joe Biden set for the sector, and they represent a more ambitious plan than the draft bill that lawmakers released in 2020.

(See here for full bill text and here for a section-by-section summary.)

The CLEAN Futures Act includes a clean electricity standard (CES) under which utilities would earn credits for phasing out fossil fuel-fired power plants. They would then be able to sell the credits for profit on a new federally regulated market, giving climate-focused power companies a competitive edge.

Overall, the bill would set an interim national goal for the US to reduce greenhouse pollution by no less than 50% below 2005 levels by 2030. That is the target environmental groups are urging the Biden administration to pledge under the Paris Agreement next month, the global climate treaty the nation rejoined in February.

The CLEAN Futures Act includes provisions to incentivize fossil fuel plants to lower their carbon intensity over time. They would earn partial credits by cutting emissions intensity from 0.82 metric tons (mt) of carbon dioxide per megawatt-hour by 2030 to 0.4 mt in 2035, before phasing out their carbon-emitting generation.

Utilities that have difficulty meeting their CES compliance obligations would be allowed to make payments to extend their deadlines up to five years, at the discretion of the US Environmental Protection Agency administrator. To qualify for credits, new power production facilities that are being built would also have to pay prevailing wages and respect labor bargaining rights.

The legislation earmarks hundreds of billions of federal dollars to help achieve carbon reductions in the transportation, building, industrial, and other sectors. It was developed by House Energy and Commerce Committee Chairman Frank Pallone (Democrat-New Jersey) and other senior Democrats on the panel and has no Republican sponsors so far. The lawmakers said on 2 March they believe some moderate-leaning Republicans could still be swayed to join the initiative.

"This is exactly the kind of federal leadership the moment demands," Pallone said during a press call. "I really believe that the time for small, marginal change has long since passed. This crisis presents one of the biggest challenges of our lifetime."

Carbon pricing off the table

With only a razor-thin majority in the Senate, Democrats may have to resort to the budget reconciliation process to push through the bill — a strategy Pallone wouldn't rule out. That special budgetary process requires only a 51-vote majority for passage of bills in the Senate, as opposed to the regular 60-vote majority. Democrats could get to the needed 51 votes with Vice President Kamala Harris casting the tie-breaker vote.

"I'm hoping Republicans will participate so we don't have to go through reconciliation," Pallone said. "We'd like to get them onboard."

Pallone and the other Democrats sponsoring the bill said the CES, while a big ask for most Republicans, remains more politically feasible than carbon pricing. Many economists favor a price on carbon, but that solution has never gained traction in Congress.

"This is the plan, a blueprint that takes us forward," Representative Paul Tonko (Democrat-New York) said. "We start off with what's achievable."

A competing and significantly less ambitious bipartisan bill -- the Clean Energy Future through Innovation Act -- was introduced last year by Representatives David McKinley (Republican-West Virginia) and Kurt Schrader (Democrat-Oregon), and has the support of organizations such as the US Chamber of Commerce.

Pallone said he's happy climate change is an issue around which members of both parties can now rally, even if his colleagues' bill would only achieve an 80% clean grid by 2050. His colleague Bobby Rush (Democrat-Illinois) added that his committee "stands ready to work across the aisle."

Massive grid and EV investments

To accommodate an economy-wide shift to clean energy, the bill calls for a major revamp and build-out of the nation's electric grid. A new Office of Transmission at the Federal Energy Regulatory Commission would oversee this effort and help state, local, and tribal governments speed up permitting and siting of new interstate transmission lines.

States would be allowed to design their own carbon reduction plans for transitioning to a net-zero economy, modeled after the federalism concept used by the Clean Air Act. The legislation earmarks $200 million to help states develop such plans and does not specify technology solutions or what type of electric generation states choose as long as they meet the CES standard.

That could benefit states with significant nuclear capacity, or states that may get carbon capture and sequestration projects going.

To help reduce emissions from transportation, the nation's largest source of carbon emissions, the bill authorizes $500 million for electric vehicle recharging stations, and another $2.5 billion annually to speed up the adoption of zero-emission school buses, among other measures.

A $100-billion green bank focused on accelerating clean energy would help states and businesses decarbonize, while - the bill's sponsors promise - spurring new investments and job growth, especially in communities that will see fossil fuel-based jobs disappear. The lawmakers hope such themes will resonate with some Republicans.

The bill also stipulates that 40% of available funds be dedicated to environmental justice communities, reflecting Biden's Justice40 Initiative, and it provides for a new program to fund lead water-service line removal at no cost to homeowners. Also in the environmental justice area, it creates a new Office of Energy Equity at the Department of Energy and adds a new climate justice grants program.

Billions for energy conservation programs

With an eye on new jobs, the bill would allocate $500 million for workforce training and $8 billion in rebates for home retrofits to meet new energy efficiency standards for buildings — also a major priority for Democrats. Under the energy conservation rubric, it provides another $17.5 billion for the federal Energy Efficiency and Conservation Block Grant Program.

A new program would be set up to track commercial and multifamily building energy and water use, and to help reduce emissions from such buildings. Buildings in the United States account for more than one-third of the nation's energy use and as much in related greenhouse gas emissions.

Energy conservation groups, renewable trade groups and environmental advocates in general cheered the proposed CLEAN Futures Act. It "reflects the kind of comprehensive legislative approach we will need to start tackling the climate crisis," Gregory Wetstone, president and CEO of the American Council on Renewable Energy, said in a statement.

"The clean electricity standard represents a meaningful step forward on national energy policy that will help unleash massive new investments into American communities, while helping our country meet its economic and environmental needs simultaneously," stated the American Clean Power Association.

Posted 03 March 2021 by Karin Rives, Senior Journalist, IHS Markit

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