After months of negotiations, the Biden Administration and Congress took steps this week to enact two pieces of legislation that would amount to the largest investment ever made by the federal government to modernize the electric grid, electrify the transportation sector, and support broader deployment of renewable energy. Understandably, there are a lot of questions about what is in these complementary proposals and what the process looks like moving forward. In the summary below, we do our best to answer those questions and are happy to set-up personalized meetings to discuss in deeper detail.
Two Bills, One Goal
As you may recall, soon after his election in November, then President-Elect Biden announced that his priority for the first year of his Administration would be to provide the funding necessary to support communities continuing to suffer as a result of COVID-19 and to pass a large economic stimulus bill that would focus on climate change and the transition to a cleaner economy. His four intertwined pillars would be COVID, jobs, climate, and equity, each receiving an all-of-government focus. The Biden Administration was able to work with Congress to achieve their first objective rather quickly, passing The American Rescue Plan Act in March 2021.
With that accomplished, the Administration and Democratic leadership in Congress turned their attention toward their next objective, passing a large clean-energy focused infrastructure bill. The Administration took their first step toward that goal in April when it released the American Jobs Plan, a $3 trillion proposal that would make significant changes in US policy with regard to climate. It would create a first of its kind national clean energy standard, create a national green bank (The Clean Energy and Sustainability Accelerator), and would expand and extend tax breaks for clean energy technologies. The President doubled down on this plan in his first, and only, address to Congress where he urged action.
Soon, however, the plan began to encounter roadblocks. First, several Democratic Senators indicated that they were not comfortable with the idea of using a budget process called Reconciliation that allows Congress to circumvent the filibuster (which requires 60 votes to move any legislation). Next, several moderate Republicans waged a public campaign to encourage the Administration to work with them on a more targeted infrastructure bill that could garner bipartisan consensus. As a longtime legislator and executive eager to create bipartisan solutions, the President welcomed the opportunity to work across the aisle.
The President invited that group of Republican members to the White House for a meeting, and from that conversation emerged the contours of the Infrastructure Investment and Jobs Act, known more commonly today as the Bipartisan Infrastructure Framework (“BIF”). This bill, which we summarize below, provides more than $500 million in new spending including $73 billion on grid modernization, $55 billion for water infrastructure, and an additional $7.5 billion for EV charging infrastructure.
While these investments are important, and significant, the bill nevertheless falls short of the climate and energy transition expectations and goals (including 100 percent clean electricity by 2035) laid out by the Administration and Congress. As a result, as the BIF was developed, Democratic leaders and the White House worked to develop a second, larger infrastructure bill, one that would utilize the Reconciliation process, and make the types of large-scale investments that that the American Jobs Plan endorsed.
Now that the Senate has passed the BIF and the Budget Resolution, kicking off the Reconciliation process, we expect the House and Senate to work together over the next six weeks, while both chambers are out of session, to write the Reconciliation bill. While timing is always tough to predict, we anticipate the process to play out with the following timing:
August 23rd ->While the Senate passed the Budget Resolution this week, the House is out of session. The Speaker of the House, Nancy Pelosi, is planning to call her members back to town the week of the 23rd to consider and pass an identical Budget Resolution, which will allow key members of both Chambers to begin considering how to design the bill. Big decisions must be reached in these conversations, such as whether to include the House’s tax proposal (which expands and extends the existing tax structure) or to use the Senate’s (which rewrites the code into three technology neutral categories). How to design a Clean Energy Standard will also be debated during this period;
September 20th -> The House and Senate are both back in session together for the first time (the Senate returns briefly and then adjourns earlier in the month). At this point, we expect considerable progress to have been made on the contours of the Reconciliation bill. The House will hold, but not vote on, the BIF, using it as leverage with their Senate colleagues to encourage faster work on the Reconciliation bill;
October 16th -> Congress returns from another recess week. At this point, Reconciliation language should be close to finished and under consideration in the Senate. The House will likely pass the BIF legislation at this time to further compel completion of the Reconciliation bill.
End of October -> This is the projected timeline for the President to sign both the BIF and the Reconciliation bill into law.
Obviously, we anticipate a very complicated process moving forward, but the steps taken this week are enormously important to setting the course for Congress toward passing sweeping climate legislation for the first time in its history. If you have questions about either the BIF or the Reconciliation bill and how it might impact your business, we are always available to provide guidance.
KEY Provisions in the Bipartisan Infrastructure Legislation
Grid Infrastructure Resiliency and Reliability
SEC. 40101. Preventing outages and enhancing the resilience of the electricity industry:
Establishes a grant program to support activities that harden the electric grid, reduce the risk of power lines causing wildfires, and decrease the likelihood and consequences of disruptive events. Eligible recipients include electric grid operators, electricity storage operators, electricity generators, transmission owners or operators, distribution providers, fuel suppliers and other relevant entities. program provides $5 billion for the period of fiscal years 2022 through 2026.
SEC. 40103. Electric grid reliability and resilience research, development, and demonstration:
Establishes a competitive federal financial assistance program to support innovative approaches to transmission, storage and distribution infrastructure hardening and new approaches to regional grid resilience. Eligible recipients include states, a partnership of two or more states, tribes, local governments, and public utility commissions. Cost-sharing requirements shall apply to assistance provided through this program. Provides $5 billion for the program for the period of fiscal years 2022 through 2026.
SEC. 40103. Utility Demand Response
Amends Public Utility Regulatory Policies Act of 1978 (PURPA) to include language instructing utilities to promote the use of demand response programs.
SEC. 40107. Deployment of Technologies to Enhance Grid Flexibility
Authorizes $3 billion for the Smart Grid Investment Matching Grant Program, also expands eligibility to include technologies that provide flexibility and help quickly rebalance the electrical system, facilitate aggregation, and provide voltage support.
SEC. 40207. Battery Processing and Manufacturing Grant Programs
Creates two new grant programs at DOE to incentive battery manufacturing capabilities in the United States. A $3 billion grant program for battery component manufacturing facilities, and a $3 billion grant program for battery manufacturing facilities. Each provides a minimum award of $100 million and prioritizes US-based companies and technologies.
SEC. 40209. Advanced Energy Manufacturing and Recycling Grant Program
Establishes a grant program for small and medium sized manufacturers to enable them to build new or retrofit existing facilities to produce or recycle advanced energy products in communities where coal mines or coal power plans have closed. Provides $750 million over 5 years.
SEC. 41001. Energy Storage Demonstration Projects
Authorizes $350 million over five years to fund energy storage projects as described in the Energy Act of 2020. Also provides $150 million in additional funding for Long Duration Storage demonstrations jointly administered by DOD and DOE.
SEC. 71101. Clean School Bus Program
Authorizes $5 billion over 5 years to provide grants to states and local governments to replace their existing fleet of school buses. Half of the funding is reserved for electric vehicles, the other half is set aside for low-emission vehicles (gas, hydrogen, propane, biofuel). Can cover 100 percent of the cost of the replacement.
Provides $4 billion over 5 years to funds to address emerging contaminants in drinking water with a focus on perfluoroalkyl and polyfluoroalkyl substances (PFAS). Legislation makes clear that the funding under this section shall be considered fully funded grants, or 100 percent forgiven loans.