An Expert Watches Biden's Clean-Energy Dream Walk a Tightrope

(Bloomberg) --

President Biden managed to come together last week with a group of 21 Senators to wrangle a bipartisan $579 billion infrastructure package that included funding towards old-fashioned projects such as bridges and highways. There's some money, too, for mass transit, research and development for clean energy technologies of the future. It should have been a victory lap. Instead all hell broke loose.

Democrats led by the House and Senate majority leaders insisted that they would never agree to it unless it was passed alongside a much bigger bill ($3 trillion or larger) they are calling “Human Infrastructure” that includes spending for Democrats’ social priorities like child care and home health care. Such a bill has zero chance at bipartisan support and would need to pass as budget bill through a process known as reconciliation.

Biden said he wanted both, and wouldn’t pass one without the other. This angered at least some of the Republicans who had signed on to the bipartisan compromise, raising the threat of defection. South Carolina Senator Lindsey Graham said he had been duped, and the entire legislative agenda was suddenly on precarious footing. On Saturday, Biden said it had not been his intent to threaten a veto.

Was the whole thing a brilliant strategic move or a colossal blunder on the part of the President?  Bloomberg Green talked to Jesse Jenkins, an assistant professor at Princeton University who specializes in energy systems and who has been watching the legislative progress closely. The interview has been condensed and edited.

Why are there two bills moving forward?

Ultimately to drive investment in critical clean energy sectors you need a set of large public investments and tax incentive programs. But there's been no world in which there was a bipartisan path to a trillion dollars of public investment in clean energy.

Several of the moderate Democrats, including Joe Manchin and Kyrsten Sinema, have insisted on pursuit of a bipartisan infrastructure bill. So what we see is a smaller component that can receive bipartisan support, but it has just a small fraction of the overall required investments to get on a pathway to net zero emissions.

The trick here is the two-step dance to secure support of the full caucus of the reconciliation bill. So that's where we're at now.

So Biden lets them secure a bipartisan deal but then immediately undercuts it by saying he won’t sign one without the other.  And then he has to reverse course again.  What is going on ? What’s the bigger picture?

Biden, [House Speaker Nancy] Pelosi, [Senate Majority Leader Chuck] Schumer and Manchin have all been pretty consistent that the Democrats will proceed with a two-track process, including both this bipartisan infrastructure bill and a more expansive budget reconciliation bill advancing other Democrat priorities, including more robust climate investments and tax incentives. Republicans could walk away from the bipartisan package, but there's really nothing stopping Democrats from advancing all of this (both packages) via reconciliation if they are united as a caucus. So the question is: Are there 10 Republicans that want to show America they could actually govern in a divided government?

The bipartisan bill seems to have a lot of things clean-energy advocates should be thrilled about. There’s money for mass transit, electric vehicle charging stations and about $73 billion for power sector infrastructure that could be seen to support a decarbonization of the electric grid.  What’s in the larger bill that’s worth risking it all for?

Anything that can pass with bipartisan support is going to be stronger, and more durable and that’s great. And the smaller bill has increased R&D funding for things like energy storage, and advanced geothermal, advanced nuclear demonstrations, things like that.

But those technologies are ones that play a big role in the 2030s and 2040s, not in driving emissions reductions in the short term. And that's where the bipartisan track diverges. We need a big push this decade to scale up wind and solar and electric vehicles, and energy efficiency to drive down emissions. And there's really nothing in the bipartisan framework that would drive that decarbonization. We need something like a clean electricity standard and then we need to keep pushing electric vehicles over the tipping point. Then are other measures on things like heat pumps and electric efficient buildings and appliances. You need some kind of financing vehicle, like a green bank or green accelerator, to help underwrite critical infrastructure and demonstration projects.What happens next?

I see a path forward but it is narrow path and it's a difficult path that could easily still fall apart. So there is a lot of work for Congress to do over the next few months. But the key takeaway for me is that a path is now open to victory that was not there before.

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