Democrats Weigh Options for Clean Energy Standard

Copyright © 2023 Energy Intelligence Group All rights reserved. Unauthorized access or electronic forwarding, even for internal use, is prohibited.

With the bipartisan infrastructure bill sent to the US House of Representatives, senators coming back from August recess will turn their attention to a Democrats-only spending bill containing several key climate measures sought by progressives, including a clean energy standard. A clean electricity standard typically requires utilities to add low-carbon resources and charge a fee to those that don’t add enough. Biden administration officials are generally supportive of the idea as a way of working toward the White House's goal of a net-zero electricity sector in 2035, but they have acknowledged the legislative hurdles one could face (OD Jun.30'21). Different Paths Sen. Tina Smith (D-Minnesota) has publicly taken up the cause of trying to adapt a clean energy standard to the peculiarities of the budget reconciliation process. She has recently put forward a new proposal called the Clean Energy Payment Program that is designed to meet the requirement that reconciliation measures pertain to the budget (OD Aug.10'21). Key elements of the Clean Energy Payment Program include: • Achieving 80% zero-carbon energy in the electricity sector by 2030; • Paying companies to add a prescribed amount of clean electricity every year and charging a fee to those that fall short; • Ensuring payments to utilities for adding zero-carbon energy sources are passed on to customers. Smith’s aim of an 80% zero-carbon electricity sector is in line with rhetoric from the Biden administration officials and the more conventional clean energy standard outlined in the Clean Future Act introduced by Rep. Frank Pallone (D-New Jersey). Key elements of Clean Future Act include: • Targeting 80% zero-carbon electricity by 2030, with the entire sector at net zero by 2035; • Requiring electricity suppliers to add zero-carbon sources beginning in 2023; • Companies that don’t comply can buy clean energy credits or pay a fee. Reps. David McKinley (R-WV) and Kurt Schrader (D-OR) also introduced a bill in July, updated from last year’s version. Its key features include: • A 10-year period focused on incentives for low-carbon investments, including carbon capture, nuclear and other renewables; • Aiming for an 80% reduction in electricity sector carbon emissions by 2050; • A clean energy standard enforced from 2031; • Electricity suppliers that don’t comply can buy clean energy credits or pay a fee; • A pause on Clean Air Act greenhouse gas regulations as long as the clean energy standard is being met. The hope from supporters of Smith’s Clean Energy Payment Program is that it pushes what is effectively a clean energy standard over the finish line. The payments to electricity suppliers would have an impact on the federal budget, said Conrad Schneider, the advocacy director for the Clean Air Task Force. By contrast, a more conventionally designed standard is a regulation, in which money only changes hands if a company doesn’t add enough net-zero resources. Uncertain Support However, moderate Democratic senators are vacillating on the proposals, with West Virginia Sen. Joe Manchin saying he has “serious concerns” over the reconciliation bill's headline $3.5 trillion cost and regulations designed to shutter fossil fuel facilities. The path forward for Reps. McKinley and Schrader's bill opens up if lawmakers do not fold a clean energy standard into the reconciliation package, said Sam Thernstrom, CEO of the nonprofit Energy Innovation Reform Project and a longtime supporter of the idea. That bill’s decarbonization timeline notably lags those laid out in the others. That’s by design, Thernstrom said, and is meant to remove the threat that natural gas and coal plants would be shut down to make way for renewables in the near term, giving utilities time to deploy carbon capture operations at those facilities. “We need to do what we can to give carbon capture the best chance of competing in the market,” said Thernstrom. However, Schneider argues that the proposed 10-year pause for government programs to fund innovation and investment programs is too long at a time when policymakers have already approved large amounts of funding along similar lines. “The box is checked, or is close to being checked, so why wait?” Emily Meredith, Washington

Electricity Prices
Wanda Ad #2 (article footer)
Saudi Arabia offered a surprise additional 1 million b/d cut in Vienna this weekend, the only Opec-plus producer to do so.
Sun, Jun 4, 2023
Russia's exports of crude oil to India hit a new record in May as its heavily discounted crude undercut competing Mideast Gulf grades.
Mon, Jun 5, 2023
Despite many headwinds associated with price inflation and volatile wholesale electricity markets, the European corporate PPA market continues to grow.
Wed, May 31, 2023