Climate-Related Provisions in Biden’s Infrastructure Plan: An Update
The Biden-Harris Administration and Congress have been focused on addressing the nation’s infrastructure for the first half of 2021. So far this year, the White House rolled out the American Jobs Plan and has been engaged in talks primarily between President Biden and Sen. Shelley Moore Capito (R-WV). In addition, lawmakers on Capitol Hill are negotiating an alternative proposal. How to address climate has sat front and center in these discussions, particularly for President Biden and many Democratic lawmakers. This Advisory provides an update on these climate-related provisions and the current status of the negotiations. We will provide further periodic updates as negotiations between the White House and Capitol Hill continue.
President Biden’s $2 trillion American Jobs Plan was released by the White House on March 31, 2021. The White House announced the plan would “invest in America in a way we have not invested since we built the interstate highways and won the Space Race.” The plan set forth the investments President Biden believes are needed to reach his goals of a carbon-free power sector by 2035 and net-zero emissions, economy-wide, by 2050.
Republicans were swift to criticize the plan for its spending levels and broad definition of “infrastructure.” Senate Republicans, led by Sen. Capito, countered with a smaller package, starting a back-and-forth that ultimately led to President Biden ending negotiations with Senate Republicans on June 8. While the two sides managed to narrow the spending gap between their proposals, they remained hundreds of billions of dollars apart and disagreed on how to pay for the package: President Biden pushed for various tax proposals, including a tax increase for corporations, which Republicans strongly opposed. Despite the fate of these negotiations, a bipartisan group of senators have been developing an alternative, compromise proposal but its contours have not been made public.
While questions remain regarding what path an infrastructure package will take, the President and many Democrats have remained steadfast in the need for strongly addressing climate. The American Jobs Plan provides an overview of the President’s position on the issue and what he hopes to achieve in the White House, both through investments and policy shifts. The plan builds on his Build Back Better campaign platform, which emphasized the jobs these investments will create as the nation transitions to a clean energy economy.
The following summarizes the major climate, renewable energy and other environmental provisions included in the American Jobs Plan.
The American Jobs Plan and Climate
Rebuild and repair transportation infrastructure to be sustainable. The American Jobs Plan calls for $621 billion in transportation infrastructure and resilience, which includes various climate priorities for President. For example, the plan would fund repairing roads and bridges to improve air quality, limit greenhouse gas (GHG) emissions, and reduce congestion; incentivizing the expansion of the domestic electric vehicle (EV) industry for passenger and fleet vehicles; investing in a national network of 500,000 EV chargers by 2030; and using the federal procurement system to electrify the federal fleet. In these transportation investments, the plan prioritizes equity and forward-thinking investments. For example, the plan includes $20 billion for a new program to reconnect neighborhoods that have been divided by transportation infrastructure, as well as $25 billion for a dedicated fund to support ambitious projects that have tangible benefits to the regional or national economy but are too large or complex for existing funding programs.
Climate resilience of infrastructure. President Biden notes the role climate change-fueled extreme weather plays in harming our infrastructure. The plan calls for $50 billion in dedicated investments to improve infrastructure resilience, including the electric grid, food systems, urban infrastructure, community health and hospitals, and transportation assets. These investments would target those communities most vulnerable physically and financially to climate-driven disasters and would be used to “build back above existing codes and standards.” The plan also calls on Congress to invest in protection from extreme weather events, support for agricultural resources management, and restoration of major land and water resources, in line with the Outdoor Restoration Force Act. Lastly, the plan would address the western drought crisis by investing in water efficiency and recycling programs, Tribal Water Settlements and dam safety.
Drinking water infrastructure. The plan invests $111 billion to replace all of the nation’s lead pipes and service lines, upgrade and modernize the water systems (i.e., drinking water, wastewater and stormwater), address new water contaminants such as PFAS, and support clean water infrastructure in rural America.
Grid infrastructure. Referencing the Texas power outages, the plan calls on Congress to invest $100 billion in the nation’s power infrastructure. That investment would be used to build a more resilient electric transmission system through creating an investment tax credit (ITC) for transmission buildout and establishing a new Grid Deployment Authority at the Department of Energy that supports innovative tools to spur the development of high priority, high-voltage transmission lines. The plan also proposes a ten-year extension and phase down of an expanded direct-pay ITC and production tax credit (PTC) for clean energy generation and storage, which will be paired with strong labor standards; clean energy block grants for state, local, and tribal governments; and federal procurement of 24/7 clean power for federal buildings. The plan also calls for establishing an Energy Efficiency and Clean Electricity Standard (EECES) to achieve 100 percent carbon-pollution free power by 2035.
Transforming former industrial and energy sites. The plan calls for a $16 billion investment to plug orphaned oil and gas wells and restore and reclaim abandoned coal, hardrock, and uranium mines; $5 billion to remediate and redevelop Brownfield and Superfund sites; and targeted investments to support the Economic Development Agency’s Public Works program, “Main Street” revitalization efforts, the Appalachian Regional Commission’s POWER grant program, and community-driven environmental justice efforts.
Civilian Climate Corps. The plan invests $10 billion for a new generation of Americans to work on conserving our public lands and waters, bolstering community resilience, and advancing environmental justice, “all while placing good-paying union jobs within reach for more Americans.”
Carbon capture. The plan establishes 10 pioneer facilities that demonstrate carbon capture retrofits for large steel, cement, and chemical production facilities and supports large-scale sequestration efforts. In addition, the plan reforms and expands the Section 45Q carbon oxide sequestration tax credit, making it direct pay and available for hard-to-decarbonize industrial applications, direct air capture, and retrofits of existing power plants.
Residential building retrofits. The plan sets a goal of building, preserving, and retrofitting more than two million homes and commercial buildings to address the housing crisis through a $213 billion investment. Of that amount, the plan calls for targeted tax credits, formula funding, grants, and project-based rental assistance to “produce, preserve, and retrofit more than a million affordable, resilient, accessible, energy efficient, and electrified housing units.” The plan would establish a $27 billion Clean Energy and Sustainability Accelerator to encourage private investment into distributed energy resources; retrofits of residential, commercial, and municipal buildings; and clean transportation.
Public building modernization. The plan calls for $100 billion to upgrade and building new public schools, which can be used, in part, to improve indoor air quality and ventilation. The goal is to create better operating school facilities that reduce their GHG emissions and their overall environmental footprint. The plan also calls for improving energy efficiency and resilience of community college facilities, child care facilities, VA hospitals, and federal buildings. In particular, the plan calls for using federal procurement to purchase low-carbon materials for construction and clean power for newly constructed VA hospitals and federal buildings.
Climate-focused research funding. The plan calls on Congress to invest $35 billion in technological solutions for addressing the climate crisis, including innovation in clean energy technology. As he proposed on the campaign trail, President Biden’s plan alludes to launching ARPA-C, which would focus on new methods for reducing emissions and be resilience, as well as other climate research. The plan would invest an additional $5 billion for other climate-focused research and $15 billion in demonstration projects for climate R&D priorities, including 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.
In addition, the plan calls for $50 billion in the National Science Foundation to create a technology directorate that will collaborate with and build on existing programs; $30 billion in additional R&D funding to “spur[ ] innovation and job creation, including in rural areas,” and $40 billion to upgrade research infrastructure in the U.S. The plan would reserve half of these funds for Historically Black College and Universities (HBCUs) and other Minority Serving Institutions (MSIs), including the creation of a new national climate lab to be affiliated with an HBCU.
Clean Energy Manufacturing. The plan calls on Congress to enable the manufacture of electric vehicles, charging ports, electric heat pumps for residential heating and commercial buildings, clean materials, and critical technologies like advanced nuclear reactors and fuel through a $46 billion investment in federal procurement.
Eliminating fossil fuel funding. The plan would eliminate subsidies and special foreign tax credits for the fossil fuel industry. In addition, the plan proposes to restore payments into the Superfund Trust Fund, which is used to help cover the cost of Superfund site cleanups.
What Comes Next
As we noted at the outset, President Biden ended negotiations with Sen. Capito and Senate Republicans early last week, raising the possibility of Democrats in Congress using budget reconciliation to pass President Biden’s infrastructure package. However, the proposal being assembled by the bipartisan group of ten senators may provide a pathway to link a bipartisan package passed through regular order with a more partisan, budget reconciliation package, potentially providing political cover for more moderate Democrats.
As the debate over the overall infrastructure package continues, various committees have begun consideration and debate of aspects of the plan, including surface transportation. The Senate Environment and Public Works (EPW) Committee unanimously advanced a $312.4 billion surface transportation bill in May, and the House Transportation and Infrastructure Committee passed their $547 billion bill on June 10. The House Energy and Commerce Committee is expected to consider their portion of the infrastructure package this summer.
The infrastructure debate is far from over as President Biden and lawmakers maneuver campaign pledges, a closely-divided Senate, and an upcoming 2022 congressional election. We will continue to monitor the climate and environmental provisions of the Biden-Harris Administration’s infrastructure plan, and will provide further updates on our blog, Environmental Edge.
© Arnold & Porter Kaye Scholer LLP 2021 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.