Senate Deal Puts US Back in Climate Fight With ‘Huge’ Emissions Cuts

(Bloomberg) -- After West Virginia Senator Joe Manchin and Senate Majority Leader Chuck Schumer last night introduced a major tax, energy and climate package, experts who specialize in measuring the relationship between policy and climate emissions affirmed the Democrats’ estimate that it would cut US carbon dioxide emissions 40% by 2030. 

They also said if combined with additional policy actions, it might be enough for the US to meet Biden’s Paris Agreement pledge to cut U.S. emissions by 50% in the same time period. 

With $370 billion in energy and climate spending, the Inflation Reduction Act of 2022 could result in “at least 800 million tons and up to 1 billion tons of additional carbon emission reductions in 2030 relative to current policy baseline. That’s huge,” said Jesse Jenkins, who runs the REPEAT modeling project at Princeton University. “That keeps us in the climate fight and makes it possible that executive action, state and local government policies, and private-sector leadership can get us across the finish line.” 

A billion tons of CO₂, or a gigaton, is a threshold number that analysts have eyed through previous versions of the legislation. “Broadly speaking, the bill is different, but it’s not that different from what we looked at in the fall that passed out of the House,” said Robbie Orvis, senior director of energy policy design at the research group Energy Innovation. Key provisions that groups like his and Jenkins’s had previously modeled “are mostly still on the table.” 

Orvis said the estimated reduction of 40% (below the 2005 baseline) by 2030 “seems like a plausible outcome,” albeit in the upper range of what’s probable. 

Even without legislative action, the US is slowly decarbonizing; it is on track to reduce emissions in the range of 24 to 35% below 2005 levels by 2030, according to the research firm Rhodium Group. However, that is far below what scientists say is needed to prevent the planet from baking and below the voluntary targets set by the international community in the Paris Agreement of 2015. Current policies might lead the world far into the danger zone — a 2.7° Celsius rise above pre-industrial temperature averages. 

When Biden came into office he promised to greatly accelerate US progress in the climate fight. Three months into his presidency, he vowed to cut the carbon emissions of the world’s second-largest emitter in half by 2030, a pledge that helped re-establish American climate leadership on the global stage. 

That credibility, however, began to erode quickly as the administration ran into legislative roadblocks. The largest vehicle for Biden’s ambitions, the Build Back Better package, got no Republican support in the Senate and failed to win over a key Democrat: Manchin. Over and over, Manchin, a fossil fuel millionaire from a coal-producing state, negotiated with Democratic leadership to strip provisions from the bill and balked at final passage, most recently just a few weeks ago. 

But behind the scenes, Manchin and Schumer kept negotiating, and the result is the Inflation Reduction Act. There are still many hurdles to its passage. It remains unclear whether the deal will be backed by the full Democratic caucus in the 50-50 Senate. It would also need to pass the House, where progressives sought a much bigger plan. 

Nevertheless, many groups that advocate for decarbonization could not contain their relief and excitement at the new bill, saying it was much better than expected.

“The thing is, you can never see around corners, and nothing is done in Congress until it’s done. So this is extremely positive, and I’m very excited about it, as you might tell from my cadence,” said Christina DeConcini, director of government affairs at the World Resources Institute. 

The bill includes some major wins for the climate agenda, including: ​​tax credits of up to $7,500 for the purchase of a new electric vehicle and $4,000 for lower- and middle-income families who purchase a used EV; $60 billion of incentives to accelerate U.S. manufacturing of solar panels, wind turbines and batteries, and critical minerals processing; and tax credits for consumers who add renewable energy features such as efficient heat pumps, rooftop solar, electric HVAC and water heaters to their home.

Steven Nadel, executive director of the American Council for an Energy-Efficient Economy (ACEEE), called the proposed credits  “transformational investment” that would penetrate deep into the American populace to “accelerate the shift to clean, electric vehicles while widening access to affordable transportation and cutting air pollution in disadvantaged communities.” 

The bill as it stands now does not get Biden all the way to his 50% goal. Ben King, who has been doing modeling for Rhodium Group, said further action by the Biden administration and states “can help close the rest of the gap to the target of a 50 to 52% cut by 2030.” 

The White House has options to cut emissions through existing authorities unaffected by the Supreme Court’s recent decision on Obama-era power-sector regulations. By tightening existing regulations on traditional power-plant pollutants, such as particulate matter and sulfur dioxide, the US Environmental Protection Agency could save lives by making air healthier — consequently making already challenged coal power generation even less economical. Vehicle emission standards could also be a tool for squeezing more emissions reductions, DeConcini said. 

Some in the progressive wing of the environmental activist community say the proposed legislation falls far short of what they were originally hoping for. They are particularly angry about provisions in the bill that will actually prolong the use of fossil fuels. Brett Hartl, government affairs director at the Center for Biological Diversity, objected to the bill’s requirements for new oil and gas leasing on public lands and in offshore waters: “This is a climate suicide pact,” he said.

Jenkins said his models had taken into account much of that drilling.

The nation’s credibility in the international climate arena depends on the success of domestic policy, and the draft bill may give some hope to partners overseas. “I think other countries will be glad that the United States might at last be able to deliver on its NDC,” or nationally determined contribution, said Bob Ward, policy and communications director of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics. “While this deal is undoubtedly a success compared with the prospect of no deal at all, we should be mindful that there is still a significant gap with the level of global ambition needed.” 

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