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House Democrats have decided to keep natural gas out of the “Clean Electricity Payment Program,” the centerpiece climate policy of their $3.5 trillion infrastructure and social spending reconciliation package, delivering a big win for environmental activists.
Democrats on the Energy and Commerce Committee released a fact sheet Thursday on their portion of the reconciliation package, headlined by a plan to pay electric utilities to generate a growing percentage of power from clean sources.
Natural gas won’t be counted as a clean power source as part of the program, which would pay utilities to generate electricity from clean sources with the end goal of having 80% clean power by 2030.
That target would align with President Joe Biden’s goal, submitted as part of the Paris Climate Agreement, to cut U.S. emissions across the economy by 50% by the end of the decade.
As part of their legislation, Energy and Commerce Committee Democrats included other climate policies that they are counting on to meet Biden’s goals, including $13.5 billion in spending on electric vehicle charging stations, $9 billion for electric transmission lines to deliver renewable energy, $30 billion to replace lead pipes, and $27.5 billion for a green bank.
"The resources for clean energy provided in our bill, including under our Clean Electricity Performance Program, are especially crucial to that goal," said Rep. Frank Pallone of New Jersey, the chairman of the Energy and Commerce Committee.
While the fact sheet does not explicitly rule out natural gas as part of the payment program, it says the legislation will require utilities to meet a carbon intensity of 0.10 metric tons of CO2e/MWh to qualify for federal subsidies — such a low level of emissions that gas won’t qualify.
“We’re grateful the House is moving to keep dirty gas from getting support under the Build Back Better Act,” said Jean Su, director of the Center for Biological Diversity’s Energy Justice Program.
Utilities would still be able to receive payments if they equip their natural gas plants with carbon capture technology that stops their emissions from entering the atmosphere, although such methods are expensive and unproven.
It’s unclear if the more centrist Senate will also choose to exclude most uses of natural gas in its version of the CEPP. That’s a crucial question, as the chairman of the Senate Energy Committee, Joe Manchin, represents West Virginia, a top state for natural gas production.
Manchin has threatened to oppose policies that are overly prescriptive on curbing fossil fuel use and has touted how the boom in natural gas from the advent of fracking has helped the U.S. reduce emissions more than any other country over the last 15 years.
While natural gas produces half the carbon emissions of coal, the fuel is getting more scrutiny as policymakers look to set more aggressive emissions reduction targets.
The Democrats’ CEPP would use a carrot-and-stick approach to push the utility sector to reach 80% clean electricity by 2030, issuing grants to power companies to increase their clean energy portfolio while imposing financial penalties to ensure utilities don’t fall behind.
The House Energy and Commerce Committee plan would allocate $150 billion for the program, making a utility eligible for a grant from the Department of Energy if it increases the amount of clean electricity it supplies by 4% compared to the previous year, starting from 2023 through 2030.
For example, a utility starting at 40% clean power in 2022 would need to get to 44% clean power by 2023, but an electricity supplier with a smaller starting percentage would not need to reach as high an amount of clean power.
This flexibility enables utilities in carbon-intensive states to have more time to wean off fossil fuels.
If utilities hit their annual targets, they will get grants. Those federal dollars would have to be used exclusively for “the benefit of customers,” helping to lower electricity bills and cover the costs of new clean power.
An electricity supplier that does not increase its clean electricity percentage by at least 4% compared to the previous year will owe a payment to the Energy Department based on the shortfall.
The program differs from a typical clean electricity standard as imposed in several states.
To distinguish it from a standard, a policy Manchin has expressed doubts about, Democrats are pitching their plan as not being a binding regulatory mandate.
Democrats hope structuring the plan as an investment program involving federal expenditures will allow it to pass muster with the Senate parliamentarian, who rules on whether policies fit the strict rules of reconciliation, a special legislative process that allows legislation to be passed with a simple majority in the Senate, eliminating the possibility of a GOP filibuster.
Democrats are also betting that paying utilities to use clean energy will mean that any higher costs are burdened by the federal government rather than passed through to electricity rates, a key consideration for a state such as West Virginia, which has been slow to shift its generation mix.
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Original Author: Josh Siegel
Original Location: Natural gas blocked from Democrats' clean electricity plan