Manchin Signs on to Biden’s Climate Agenda. But There’s a Catch.
The compromise offsets climate spending with big wins for oil and gas, too
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Update: August 8, 10 A.M.: On August 7, the Senate passed the Inflation Reduction Act. It now goes to the House for a final vote, where it is expected to pass.
On Thursday, Senator Joe Manchin (D-WV), reached an agreement with Senate Majority Leader Chuck Schumer (D-NY) to support an array of spending priorities that the Biden Administration put forward. Dubbed the Inflation Reduction Act, it includes $369 billion in new money to address climate change—the largest investment in emissions reduction ever. But to get Manchin’s approval, the bill’s fine print links any development of renewable energy on federal land to an expansion of oil and gas drilling on those lands. Environmentalists are calling the requirement a “poison pill” and say it defeats the administration’s climate goals.
The House of Representatives passed a bill last year called the Build Back Better Act that included $555 billion in climate investments. But in the evenly divided Senate, where Vice President Kamala Harris’ vote serves as a tiebreaker, and where the GOP remains united in its opposition to pretty much everything, every single Democrat senator needs to support a bill if it’s to stand any chance of passing.
Even then, bills are only able to pass the Senate through a political maneuver known as budget reconciliation. Since that process can only be used infrequently, and only for spending measures, Democrats must stuff a variety of their priorities into large spending packages. In this case, the climate change money is included in the bill alongside a provision that will allow Medicare to negotiate prescription drug prices, and one which extends funding for the Affordable Care Act through 2025.
Spending in the Inflation Reduction Act totals $433 billion over ten years. To pay for that, the bill proposes raising $739 billion by increasing the corporate minimum tax rate to 15 percent, reducing the prices Medicare pays for prescription drugs, eliminating the carried interest corporate tax loophole, and expanding the IRS’ ability to pursue corporate tax cheats. The $300 billion surplus will go to reducing the federal deficit, which Democrats claim will help reduce inflation.
Manchin, who owns a coal company, has long opposed taking any action to address climate change. So the rest of the Democratic Party has been forced to negotiate with him in order to pass any sort of spending of that nature. Manchin’s demands brought that $555 billion climate budget down to $369 billion.
Here’s how that $369 billion will be spent.
Clean Energy and Electric Vehicles: There are a variety of tax cuts aimed at reducing the cost of green technologies in transportation and electricity generation, for both manufacturers and consumers. Those two sectors are responsible for 52 percent of total U.S. greenhouse gas emissions.
For example, some tax credits would incentivize power companies to use more solar, wind, and batteries while producing, transmitting, and storing electricity for the public. Another would incentivize the public to install heat pumps and add solar panels to their homes.
The bill will expand the tax credit for purchasing an electric vehicle through 2032, offering people purchasing a new EV a $7,500 break, and those buying a used one $4,000.
There’s also money to make public housing energy efficient, and to help home owners purchase more efficient appliances.
Methane Emissions: Methane may not stay in the atmosphere as long as carbon does, but it generates 86 times as much heat during the 20 or so years in which it does. Plus, governments have not traditionally regulated methane emissions to the same degree as carbon, and methane is emitted during every stage of oil and gas production.
The bill will impose limits on methane leakage and impose hefty fines on violators, while creating a royalty fee for all methane extraction on public lands, including methane that’s vented or flared from oil and gas wells. There’s even budget for the Environmental Protection Agency to monitor methane producers and enforce these regulations.
Environmental Justice: The bill provides $60 billion for environmental justice, including $15 billion to provide clean energy to low-income communities, $3 billion in grants for those communities to clean up mines, and improve their resilience to climate change, and $3 billion to reconnect communities divided by highway construction.
Clean Technology: There’s $60 billion earmarked for domestic manufacturing of zero emissions technology. That will provide incentives and financing for domestic production of solar panels, wind turbines, batteries, and for extraction of the minerals necessary to create batteries.
Overall, Democrats estimate the bill will reduce carbon emissions “roughly 40 percent” by 2030, when compared to 2005 levels. That amount is substantial, but still behind Biden’s target to reduce emissions by 50 percent this decade.
The problem is that Manchin’s negotiations are also going to increase oil and gas production during that time. So, it’s unlikely the bill will have the total impact Democrats claim.
Buried in sections 50264 and 50265 of the 725-page bill are provisions that require any renewable energy projects on federal land be predicated on lease sales first being held for the oil and gas industry. .In order for rights-of-way to be granted to utility-scale renewable energy projects on public lands, the bill requires the Department of the Interior first offer two million acres of public land and 60 million acres of offshore waters to the oil and gas industry, each year, for the next decade.
“The legislation all but ensures that the fossil fuel industry will maintain current oil and gas production levels without any change for the next decade,” says Brett Hartl, from the Center For Biological Diversity.
The Washington Post reports that, separately from this bill, Schumer and House Speaker Nancy Pelosi also promised Manchin legislation that will ease permitting rules for new oil and gas pipelines, including one that runs through West Virginia.
“Passing new laws to mandate oil and gas leasing would fundamentally conflict with the Biden administration’s climate goals,” says Hartl.