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Bipartisan Bill Funds Moderate Climate Steps

Copyright © 2021 Energy Intelligence Group

A bipartisan group of lawmakers shepherding a $1.2 trillion spending package through the Senate released the text of the bill late Sunday evening. The bill largely deals with surface transportation, but there is government funding for carbon capture programs, a buildout of hydrogen and electric vehicle (EV) fueling stations and a landmark program aimed at plugging abandoned oil and natural gas wells as well. More impactful climate-related legislation is expected to come later, in what is likely a Democrats-only bill passed using the budget-related reconciliation process (OD Jun.29'21). Lawmakers could vote on a high-level spending figure before recessing on Aug. 9, but aren’t expected to finalize the text until their summer recess. The bipartisan bill on the table this week is not set in stone, with lawmakers kicking off an amendments process on Monday. Still, the picture may become clear very soon. According to published reports, key Democrat Sen. Joe Manchin (West Virginia) said he hopes the process is wrapped up by Thursday. Below, Energy Intelligence outlines a few key areas of the bipartisan infrastructure bill text: • The bill includes a total of $7.5 billion in funding for EV and alternative fueling infrastructure: A total of $5 billion is allocated for states to build out EV charging infrastructure, while another $2.5 billion is available for building out alternative fuel corridors, which includes EV infrastructure but also hydrogen and natural gas fueling stations. The bill also requires states to ensure their grids are amenable to a wider deployment of EVs. Separately, there is a push to reduce the carbon intensity of regional transportation through study grants by shifting travel away from single-occupancy vehicles and toward other modes of transportation like walking, biking and higher-occupancy public transit. • Carbon capture, utilization and storage (CCUS) gets a sizable boost in funding, especially for pipelines: The bill frees up money to implement language in an energy bill passed late last year that would establish a Department of Energy (DOE) program for funding the development of up to 20 new or expanded large-scale CCUS projects (OD Dec.28'20). Additionally, the bill incorporates the SCALE Act legislation, backed by Occidental Petroleum and a broad swath of bipartisan lawmakers, that is aimed at facilitating buildout for networks of carbon capture facilities (OD Apr.15'21). The bill language includes requirements that some of the projects be located in fossil fuel regions or natural gas power plants. The bill also establishes a $5 billion low-interest loan program at the DOE for building out CO2 pipeline transport – with the mandate that steel and other products must be produced in the US. In all, the bill would expand federal programs and spending for CCUS by roughly $12 billion. The bill would also amend the Outer Continental Shelf Lands Act to allow leasing for expanding offshore geologic sequestration projects. But CCUS proponents caution that while the bill marks significant steps forward, it does not include expanded tax incentives that they argue are essential for getting such projects off the ground. • New hydrogen programs preserve opportunities for natural gas: The bipartisan bill allots roughly $8 billion in funding through 2026 for creating new hydrogen research, development and deployment programs at the DOE. That includes a new program to support developing at least four regional “clean hydrogen” hubs, at least one of which must demonstrate production of hydrogen from natural gas with CCUS, and two of which must be located in gas-producing regions. The bill also amends the Energy Policy Act of 2005 to define “clean hydrogen” to include hydrogen produced from natural gas with CCUS, which could help cement future support for those technologies. Like with geologic sequestration, the bill would open up new opportunities for leasing in the Gulf of Mexico for hydrogen projects. • The bill establishes a landmark federal program for reducing methane from abandoned wells: The bipartisan legislation includes language to establish a new federal program aimed at reducing methane leakage from abandoned wells on public lands while enabling job creation for oil and gas workers. The program, to be housed at the Interior Department, would be funded at $5 billion, with the lion’s share of the $16 billion for the program called for by the Biden administration going to cleaning up mines in coal communities. • The bill requires the energy secretary to examine pain points in the country’s electric grid: The secretary will designate particular areas as “national interest electric transmission corridors," and can then take action to facilitate approvals that improve grid reliability if local authorities aren’t doing so on their own. The bill also creates a revolving $2.5 billion Transmission Facilitation Fund, a revolving loan facility that will give federal assistance to states and localities to maintain electric reliability. • Bringing critical minerals production and battery manufacturing home: Critics of the progressive push to “electrify everything” argue that it makes the US reliant on supply chains dominated by China. The bipartisan bill instructs the sitting presidential administration to ease permitting for critical mineral production and recycling at home, and it provides $200 million in funding for three demonstration projects aimed at processing battery inputs, constructing a commercial-scale battery material processing facility, and retooling or retrofitting an existing battery material processing facility. • Further selling off strategic oil stocks: Senators agreed to sell off 87.6 million barrels of oil from emergency stocks in the bipartisan package over a three-year period beginning in October 2027, and they lowered the minimum amount required to be held in the Strategic Petroleum Reserve (SPR) from 340 million bbl to 252.4 million bbl. Lawmakers have dipped into the SPR several times in the last few years to fund other priorities (OD Jul.29'21). • Keystone XL post-mortem: Three months after the bill passes, the administration is required to report to Congress on the number of potential jobs lost over a 10-year period stemming from Biden’s decision to withdraw the permit for the controversial Keystone XL pipeline, a key critique from Republican lawmakers (OD Feb.9'21). • Government analysis for those who argue that the focus on stemming carbon emissions leaves aside other costs: Within six months of the bill’s passage, the administration is required to produce a cradle-to-grave study of the environmental impact of EVs and a study on the impact of forced labor in China on the EV supply chain. Emily Meredith and Bridget DiCosmo, Washington

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