The end-of-the-year spending package passed by Congress on Dec. 21 includes the first major energy legislation to be enacted in more than a decade.
The wide-ranging package extends and introduces new tax credits for renewable energy and carbon capture and sequestration projects, and it funds billions of dollars of for research and demonstration efforts in alternative energy, nuclear power, energy storage and smart grid technology.
President Donald Trump signed the bill on Dec. 27 after initially saying he would not, objecting to the level of COVID-19 related funding for individuals or small businesses also included in the legislation..
The omnibus also includes provisions for a 15-year hydrofluorocarbon (HFC) phasedown, lowering production and consumption of the substances by 2036 to 15% of the annual average between 2011 and 2013. HFCs are greenhouse gasses used in refrigeration, air conditioners and insulation foam, among other products. Replacing HFCs “can avoid as much as another 0.5° C warming by the end of the century,” according to a study in Atmospheric Chemistry and Physics.
The bipartisan energy measure was hailed by energy groups as well as by the U.S. Chamber of Commerce. "We know that the development and commercialization of technology is the single most important factor that will determine how quickly and at what cost greenhouse gas emissions can be reduced around the world," said Marty Durbin, Chamber senior vice president of policy, in a statement. "No emissions goal or degree target will matter if the technology essential to meet it is not developed and deployed."
But others were not so pleased. In particular, union sources say they were deeply disappointed that Congress extended the production tax credit for wind projects and an investment tax credit that did not include Davis-Bacon Act prevailing wage standards that unions favored.
“Congress could not see fit to hold the line on consistent application of labor standards that help all construction workers maintain a middle-class standard of living,” North America’s Building Trades Unions President Sean McGarvey said in a Dec. 21 statement.
Some environmental groups were also displeased the measure had provisions that continue to support fossil fuels, including a production tax credit for coal mined on tribal lands and funding for research to develop high-efficiency gas turbines.
“The bill is a mixed bag because of provisions that prop up dirty fuels and unsafe technologies," said John Bowman, managing director for government affairs at Natural Resources Defense Council, in a statement.
Abigail Hopper, CEO of the Solar Energy Industry Association, said in a call Dec. 22 that passage of the measure is promising for future renewable energy legislation under a Biden Administration. The group says continuation of the tax credits is worth billions of dollars to the solar industry.
The tax credits for land-based wind power projects were extended for two years at 60% of their full value. The investment tax credit for solar power was extended for two years at 26%. The legislation also institutes a new 30% investment tax credit for offshore wind projects.
The energy measure also boosts energy and water efficiency in federal buildings and provides efficiency assistance to schools, but does not include energy-efficient building codes that were floated in earlier versions of energy legislation.
The fossil fuel industry main trade group—the American Petroleum Institute—cheered passage of the bill.
“We urge the president to swiftly sign this bill into law, and we encourage the next Congress and incoming administration to continue to focus on bipartisan climate solutions like [carbon capture utilization and storage], which can reduce GHG emissions from multiple industry sectors and sources and that help build on the progress the natural gas and oil industry is making in improving environmental performance,” Stephen Comstock, API vice president of corporate policy. said in a statement.
The omnibus bill also authorizes appropriations for the Pipelines and Hazardous Materials Safety Administration through 2023.
Long-Awaited HFC Measure
The HFC provision is in line with the international Kigali agreement to lower consumption of the substances, which the U.S. failed to ratify after President Trump took office. A report from the University of Maryland found that 33,000 U.S. manufacturing jobs could have been created directly by signing on to the agreement.
“In our fight to stem the rising tide of catastrophic climate change, phasing down HFCs is one of the most consequential actions ever taken by Congress,” said Energy and Commerce Chairman Frank Pallone Jr. (D-NJ) and Climate Change and Environment Subcommittee Chairman Paul Tonko (D-NY) in a joint statement. “With this action, the U.S. will lead the world in avoiding up to 0.5° Celsius of warming.”
Stephen Yurek, president and CEO of the Air-Conditioning, Heating, and Refrigeration Institute, said in a statement: “Our industry has been working toward this goal for more than 10 years and it is very exciting to see our vision of an HFC phasedown reach the home stretch."
The building trades had wanted Congress to postpone consideration of the tax credit extensions until the new Congress took office in early January.. The energy sector is critically important to construction unions—more than 50% of the building trades’ total job-hours come from the energy industry, a union source said, adding: “We absolutely do not think that you have to sacrifice jobs to help the environment.”
Historically, the core of Davis-Bacon prevailing-wage requirements and other standards has been in projects that draw on direct federal spending. But the building trades say they don’t draw a distinction between a project funded through direct federal appropriations and one that uses incentives contained in the federal tax code.
According to the building trades, In sections of the energy measure, some programs do have prevailing-wage coverage, including wind and solar energy research and development for carbon removal and carbon storage. But others do not, such as in fossil energy, carbon capture and carbon utilization programs and nuclear energy research.
One key House lawmaker, Ways and Means Committee Chairman Richard E. Neal (D-Mass.), seems sympathetic to the unions’ view. “In the years to come, future extensions of federal support for green energy and energy-efficiency incentives must be accompanied by a commitment to strong labor standards and worker protections.” he said in a Dec. 21 statement,
The unions say the renewables business is largely nonunion. But NABTU did reach agreement last month on a national “framework” with wind energy developer Ørsted.
For company projects off the East Coast, the agreement calls for a joint effort to match skills needed to expand the offshore wind construction workforce with such factors as workers availability, schedules, scope of work and certification.