Posted in GreenBiz
January 19, 2022

What you need to know about the new infrastructure law’s climate provisions


This article was originally published by World Resource Institute.

For those following Congressional climate policy in the United States, 2021 is ending with disappointment following setbacks to the Build Back Better Act in its current form, as Senate Democrats have (at time of writing) been unable to secure sufficient votes for passage.

The Build Back Better Act contains the heart of President Joe Biden’s domestic agenda, including over $500 billion in climate and clean energy provisions necessary for the U.S. to meet its climate goals. Congress must continue work towards passing needed climate and clean energy provisions that will build new sources of clean energy, make cost-saving energy technologies available to more households, invest in next-generation technologies and support energy workers.

While the fight for the Build Back Better Act is not over, we also must ensure that existing federal funds are put to the best decarbonization uses possible. In November, Biden signed the $1.2 Trillion Infrastructure Investment and Jobs Act, also known as the Bipartisan Infrastructure Law.

This record-setting legislation focuses on transportation, water and broadband infrastructure, but also contains important energy provisions that are a down payment towards building the clean grid of the future and strengthening system resiliency. Now that the law is enacted, federal, state and local agencies and other stakeholders must focus on implementing these climate-relevant provisions as rapidly, effectively and equitably as possible.

Federal, state and local agencies and other stakeholders must focus on implementing these climate-relevant provisions as rapidly, effectively and equitably as possible.

The law includes tens of billions in climate-smart funding, and agencies need to move quickly to get funds out the door to support clean energy and grid projects. And as 2022 will be a key implementation period for these programs, interested stakeholders should organize to make sure these funds are leveraged to achieve the greatest climate impact possible. Equity and Justice 40 requirements — Biden’s commitment that 40 percent of federal climate and clean energy investments benefit disadvantaged communities — should be centered in the distribution of these funds.

While some funded programs have clear equity components (including substantial investments to reduce household energy burdens), the implementation of the broader suite of grid measures must involve impacted communities, workers and ratepayer advocates to ensure that the Bipartisan Infrastructure Law supports an equitable clean energy transition.

Here we highlight some key clean energy provisions within the Bipartisan Infrastructure Law:

1. Driving transmission investment and deployment

Adding new transmission lines is vital to decarbonizing the electric grid. Studies show that transmission capacity must increase by at least 60 percent by the end of this decade to enable a net-zero emissions electricity system. The Bipartisan Infrastructure Law provides funds for substantial investments in transmission that would help develop nationally significant transmission lines, increase resilience by connecting regions of the country and improve access to cheaper clean energy sources.

It also creates a new Transmission Facilitation Program through which the Department of Energy will support electric transmission projects, particularly aimed at supporting a national transmission backbone, to increase access to clean energy and improve grid resilience. This program includes $50 million in direct funding and $2.5 billion in a revolving loan fund. As written, the program will allow DOE to provide technical and planning assistance and loans that will leverage private investment to build needed transmission lines.

The Bipartisan Infrastructure Law provides funds for substantial investments in transmission that would help develop nationally significant transmission lines.

In addition to these funds, the bill includes important policy changes to federal transmission siting authority. It clarifies Federal Energy Regulatory Commission (FERC) authority on siting decisions for lines deemed to be in the national interest. This would enable FERC to authorize permits for interstate lines, and potentially overrule state siting decisions, for transmission lines determined to be part of national interstate transmission corridors.

The transmission provisions raise a number of implementation issues, including defining nationally significant transmission, where to prioritize investments, and how to address state and federal siting authority. Substantial stakeholder input will be needed to get these details right. The rules around siting will be critical for enabling the transmission build-out needed in the next decade and beyond.

2. Enabling smart and resilient grids

The large number of wildfires, hurricanes, heat waves and extreme cold events experienced this last year demonstrate the need for increasing grid resiliency. To address this, the Bipartisan Infrastructure Law provides $11 billion over a suite of provisions to states, tribes and utilities to help make electric systems resilient to extreme weather, disasters and cyber-attacks.

The law also provides a $3 billion expansion of the Smart Grid Investment Matching Grant Program to support upgrades to existing transmission and distribution grids to increase their efficiency, their reliability and the flexibility of the grid to enable more clean energy. These investments can include storage, microgrids and upgrades that can enable distributed energy resources.

In addition to these grants, the bill makes numerous policy changes to help adapt the grid to a changing climate. One example includes reforming hazard mitigation disaster assistance under the Stafford Act to cover the undergrounding of power lines in areas of high wildfire risk.

Effective implementation of these provisions to encourage smart and resilient grids will need to include input from all key stakeholders, including states, tribes, utilities and other interested parties. A diverse set of technologies will be needed in different regions because of the range of threats and grid conditions that exist.

3. Driving equitable clean energy deployment by cities and states

The Bipartisan Infrastructure Law includes funds for cities and states to help alleviate energy burden, implement clean energy projects that create jobs and support cleaner transportation that will reduce harmful emissions in communities.

To reduce energy burden for low-income residents, the bill includes $3.5 billion for the Weatherization Assistance Program to increase energy efficiency and lower energy costs for customers vulnerable to energy price spikes and additional energy assistance funds for low-income households. There is also $7.5 billion to build out electric vehicle charging infrastructure, and $5 billion is available to help schools replace polluting diesel buses with electric and low-emission buses, helping kids breathe cleaner air. And $500 million will go toward energy efficiency and renewable energy projects at public schools, which can help reduce long-term energy costs for schools and provide protection against energy price spikes to free up school funds for teachers and students.

To reduce energy burden for low-income residents, the bill includes $3.5 billion for the Weatherization Assistance Program to increase energy efficiency and lower energy costs for customers.

Funding will also be available for states, cities and tribes to implement clean energy programs and projects through $500 million each for the Energy Efficiency and Conservation Block Grant Program and the State Energy Program. This would include creating a revolving loan fund within the latter program to conduct energy audits and retrofits, which can help local governments improve the efficiency of their buildings and achieve long-term energy savings and reduced emissions.  

Implementation of clean energy investments in communities and schools is sorely needed. Ensuring a broad distribution of funds across regions, including in marginalized communities, is essential. Criteria for equitable distribution will be essential for effective distribution of these funds. Agencies should emphasize stakeholder outreach to historically marginalized communities and ensure that there is adequate input from a diverse set of stakeholders.

4. Maintaining existing carbon-free electricity generation sources

Clean energy investments in the Bipartisan Infrastructure Law will help support two of the nation’s biggest existing sources of carbon-free energy: nuclear and hydropower, which generated 20 percent and 7 percent of 2020 U.S. electricity, respectively. These carbon-free energy sources must be maintained to decarbonize the electricity grid.

One notable new program is the Civil Nuclear Credit Program, which authorizes up to $6 billion in financial support from the Department of Energy to nuclear reactors at risk of closing due to economic factors. The program would first have the department identify eligible nuclear reactors at risk of closing, and eligible nuclear reactors would then submit sealed bids for requested credits in terms of dollars per megawatt-hour. These credits are not allowed to exceed the reactor’s annual operating losses, a financial safeguard ensuring that the federal support is only bringing the reactor “back into the black” and keeping it online. Implementing this program is an important step to keep the country’s existing nuclear fleet and the carbon-free baseload power which it provides online.  

A key implementation challenge will be determining at-risk facilities and establishing criteria for accessing funds and level of investment needed. The design details of the bidding processes will determine the efficiency of federal investments. Stakeholder input will be essential for getting these rules right.

5. Advancing emerging technologies needed for a carbon-free grid

Substantial funding is also available to accelerate the deployment of technologies needed to achieve net-zero emissions in the power sector, including batteries and new types of storage, advanced nuclear, hydrogen and carbon capture. For batteries, $6 billion in grants will be available to expand battery research and development, increase domestic battery production and support the domestic supply chain and recycling of critical materials. There is also $500 million available for long duration storage technologies that can operate for days or weeks and help address weather-related and seasonal variability of renewables.

$6 billion in grants will be available to expand battery research and development, increase domestic battery production and support the domestic supply chain and recycling of critical materials.

A total of $21.5 billion will be available for demonstration projects and research hubs through the Department of Energy, including $2.5 billion for advanced nuclear reactor projects and $1.5 billion for demonstration projects in rural and economically distressed areas. More than $8 billion will be available to advance clean hydrogen, including funds to support four regional clean hydrogen hubs to capture economies of scale in production, storage, distribution and use of hydrogen. This funding also includes research to reduce the cost of hydrogen production from electrolyzers and enable recycling and reuse of system components.

In addition, there is more than $10 billion for advance carbon capture technology, including direct air capture hubs, commercialization of large-scale carbon storage, carbon capture demonstration projects, carbon capture transportation and use of captured carbon.  

These technology research, development and demonstration provisions for emerging technologies will benefit from competitive solicitations and stakeholder input to determine how to target funds. Regional considerations around deployment of hydrogen hubs and encouraging domestic battery manufacturing are important issues that will benefit from stakeholder input.

The Build Back Better Act must also pass to enable the clean energy transition

The investments in the Bipartisan Infrastructure Law are essential to help shore up the energy systems that people in the U.S. rely on for clean, safe and affordable energy — and effective implementation of these funds is critical. The country’s electricity system must modernize and adapt to withstand weather extremes, minimize climate impacts and ensure reliable energy for all. Ensuring that we strategically and effectively implement these funds is essential to increase grid resiliency.

While implementation of the electric sector investments in the Bipartisan Infrastructure Law are vitally important, they are insufficient to fully decarbonize the power sector. More is needed with the climate provisions in the Build Back Better Act — a transformational package that would play a critical role in decarbonizing the grid and rapidly scaling deployment of new clean energy generation over the next decade.

While implementation of the electric sector investments in the Bipartisan Infrastructure Law are vitally important, they are insufficient to fully decarbonize the power sector.

The House-passed version of the Build Back Better Act includes a $300 billion package of clean energy tax credits that are essential to drive the renewable energy, transmission and storage projects needed to meet U.S. climate goals. These provisions are critical to deploying clean energy affordably and equitably. The Build Back Better Act makes important reforms to existing tax credits by expanding eligibility to new technologies such as battery energy storage and transmission, and makes direct pay reforms that will increase the accessibility of these technologies to public entities and households without significant tax liability. This will make technologies such as rooftop solar, residential energy efficiency and electric vehicles affordable for more households. Such tax credit reforms are just one piece of the important clean energy provisions within the Build Back Better Act.

The grid-readiness measures of the Bipartisan Infrastructure Law must be paired with the clean energy measures of the Build Back Better Act. Recent WRI analysis shows that a combination of climate-smart infrastructure investments and federal support for clean energy through tax credits are necessary to put the U.S. on the path to net-zero emissions by mid-century. These investments can also help lower household energy costs, with one analysis estimating household energy savings of almost $500 per year.

Independent analysis consistently shows that enacting the Bipartisan Infrastructure Law alone will leave a significant emissions gap of almost 1 billion tons between current policy and the country’s international climate commitment to reduce greenhouse gas emissions 50-52 percent below 2005 levels by 2030.

The Bipartisan Infrastructure Law is a noteworthy step forward, but the work is far from done. Congress must pass the Build Back Better Act to achieve U.S. climate targets and secure a safe, clean and resilient future for the U.S.

January 19, 2022 at 02:21PM

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