This is the twenty-first in our series, “The ABCs of the AJP.”
President Biden’s American Jobs Plan (AJP) sets an ambitious goal of “achieving 100 percent carbon-free electricity by 2035.” To accomplish this, the AJP proposes significant investments in grid modernization, transmission infrastructure, offshore wind, and energy storage, as detailed by our prior posts. Whether these investments – carrots, if you will – will be sufficient to drive down emissions in all states and achieve the 2035 target, in the absence of an enforceable clean electricity standard (CES), remains uncertain. Equally uncertain is the pathway for Congress to enact a CES.
A CES would mandate that electric utilities increase the amount of zero-carbon power they deliver to their customers on a gradually increasing schedule, until the target is achieved. Such “sticks” would not only assure continued addition of renewables to the grid, but would also provide a strong incentive for the preservation of existing zero-carbon power sources at risk of retirement, such as nuclear.
A CES has been described as the backbone of President Biden’s climate policy, given the role that the electricity sector is expected to play in decarbonizing the broader economy through electrification of transportation and buildings. Yet the pathway to enacting a CES as part of an infrastructure package may be narrowing: The Bipartisan Infrastructure Framework that the President announced he would support last week includes no CES. And whether a CES could be enacted through the budget reconciliation process is subject to considerable debate.
Existing CES bills in Congress seem unlikely to gain enough support to overcome a filibuster.
- The CLEAN Future Act, which would aim to achieve the Administration’s goal of 100% zero-emission electricity by 2035, may be too ambitious to gain support of 60 senators.
- The Clean Energy Future Through Innovation Act, which targets an 80% reduction in power sector emissions by 2050, is likely to be dismissed by many within the Democratic caucus as not ambitious enough and because its targets would not go into effect until the DOE Secretary certifies that cost-effective market penetration of advanced clean power generation technologies has occurred, with no date certain.
Given the narrow chances for a true CES to be enacted by Congress, some suggest that the Administration may need a “plan B” to achieve its power-sector decarbonization target, either through EPA regulation of power plants or through a reconciliation-proof approach to a CES, in which the government would spend money to encourage clean generation (more carrots), without any enforceable mandate in place (no sticks).
Indeed, the AJP suggests that a CES could be established by executive action alone, declaring that, “President Biden will establish an Energy Efficiency and Clean Electricity Standard (EECES),” with no mention of a role for Congress. Yet the experience of the Obama Administration, which had its centerpiece Clean Power Plan put on hold by the Supreme Court and then repealed by the Trump Administration, may leave both the Biden-Harris Administration and the electricity sector seeking a more durable policy.
And, despite a decision by the D.C. Circuit on the eve of the inauguration, striking down the Trump Administration’s repeal of the Clean Power Plan and providing the incoming EPA Administrator Michael Regan what he called a “clean slate” to consider how to reduce emissions from the power sector, EPA recently categorized a new set of emission guidelines for power plants as a long-term action, meaning it is unlikely to move forward with a proposal in the near-term.
With total spending included in the Bipartisan Infrastructure Framework scaled down to $1.2 trillion from the AJP’s proposed $2.3 trillion, some Democrats have said they will not support it, unless coupled with a broad reconciliation package. The President himself had to walk back initial remarks, which suggested he would not sign the bipartisan deal unless it came to his desk with a reconciliation bill that fills in its gaps. While that clarification appears to have satisfied key architects of the bipartisan deal for the time being, maintaining both that bipartisan support and the simple majority needed to pass a broader package through reconciliation could prove challenging.
The electricity sector is in the midst of a rapid transformation due to the rapidly declining costs of renewable and storage technologies, the low price of natural gas and customers’ increasing demand for clean power. These market forces so greatly outpaced projections made just a few short years ago that the Clean Power Plan’s 2030 goal for the electricity sector was achieved a decade in advance, even though it never went into effect. While this may beg the question of whether mandatory standards are even necessary if market forces are moving in one inexorable direction, utilities favor certainty due to their long-term planning horizons. And that certainty may be lacking if any infrastructure package includes only a few carrots and no sticks.