October 25, 2021

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The tax route – POLITICO

With help from Catherine Morehouse, Zack Colman, Alex Guillén, Shia Kapos and Ximena Bustillo

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— The House Ways and Means Committee tackles its green energy tax package today, which would extend and boost several tax credits in support of the Democrats’ clean energy goals.

— The House Energy Committee had a long night as it worked through portions of the reconciliation bill, with partisan tensions emerging over a planned methane fee.

— Illinois’ long-awaited energy bill is headed to Gov. J.B. Pritzker’s desk today, putting the state on track to have carbon-free power by mid-century, but opening him up to criticism about a nuclear bailout.

HAPPY TUESDAY! I’m your host, Matthew Choi. Congrats to Rachel Gantz of EPRI for knowing Abidjan is the largest city in Côte d’Ivoire. For today’s trivia, where does Helen Fahey hide her ice cream in “Mare of Easttown”? Send your tips and trivia answers to [email protected]. Find me on Twitter @matthewchoi2018.

Check out the POLITICO Energy podcast — all the energy and environmental politics and policy news you need to start your day, in just five minutes. Listen and subscribe for free at politico.com/energy-podcast. On today’s episode: Why some greens feel burnt by Biden’s FERC pick.

HOUSE PANEL TO MARK UP GREEN TAX PACKAGE: The House Ways and Means Committee meets this morning to mark up its sweeping green energy tax package that includes long-term extensions for both the production tax credit and investment tax credit, as well as boosts for EVs, transmission, nuclear and clean hydrogen, among a host of other credits. The package takes a two-pronged approach, establishing both a “base” credit and a higher, “bonus” credit that would be offered to projects that meet prevailing wage and domestic content requirements.

The draft bill is subject to amendment and already agriculture and biofuels groups are sounding the alarm on language that would provide a tax credit for sustainable aviation fuel that they argue should be changed, or else risk undercutting the administration’s new SAF targets. Meanwhile, automakers Toyota and Honda have their own concerns over a provision that would give an additional $4,500 per vehicle to union-made electric vehicles. Some greens are also crying foul over tax breaks for the oil industry that were preserved as part of the package.

Read the bill text and a section-by-section breakdown. The markup begins at 9 a.m.

SOLAR PRICES SOAR: The tax package comes as the solar industry is facing rising prices brought by ongoing supply chain constraints and commodity price increases. In the second quarter of this year, the industry saw price increases across every solar market segment, despite having the largest Q2 on record, according to a new U.S. Solar Market Insight report released today by the Solar Energy Industries Association and Wood Mackenzie.

It marks the first time since Wood Mackenzie began tracking in 2014 that solar prices increased quarter-over-quarter and year-over-year in every market segment. The report cautioned that installations in 2021 are less likely to be impacted by those issues than those slated for 2022. Many developers and distributors say they have sufficient inventory to get through the rest of this year but some projects are already suffering.

The report noted that the Biden administration’s restrictions on solar parts from Xinjiang is also adding to the constraints, as well as potential action of trade, including a recent petition to impose anti-dumping and countervailing duties to certain companies using Chinese wafers for cell production in Malaysia, Thailand and Vietnam. Wood Mackenzie remains confident that manufacturers can adjust their supply chains, the report said, but the withhold release order “represents a significant, widespread downside risk to our near-term outlooks.”

The long-term extension of the ITC and the inclusion of a direct-pay option for several incentives in the Ways and Means package are “critical” to helping the solar industry continue to grow, Abigail Ross Hopper, SEIA president and CEO, told ME, adding that the group is still on the lookout for more details around the prevailing wage requirements. The package also specifically includes a direct-pay option for the ITC for commercial properties under Section 48, but does not mention residential properties under Section 25D, which Hopper said is seen as crucial for equity in the industry.

Related: The Energy Department released two requests for information Monday seeking input on decarbonizing industrial processes with solar thermal technologies and on solar’s impacts on wildlife and wildlife habitat.

FIRST IN ME: SMALL BIZ FOR CLEAN ENERGY: The Clean Energy Business Network is leading over 500 business groups in urging House Speaker Nancy Pelosi and Minority Leader Kevin McCarthy to prioritize clean energy tax credits, research and development, and advanced energy infrastructure, including EV charging stations, in both the bipartisan infrastructure and the reconciliation bills. The groups are pushing for refundable tax credits (or direct pay) to help shore up the industry after the pandemic downturn. Read their letter to House leadership here.

MAKING SOLAR ACCESSIBLE: Over 300 renewable energy firms, activists and environmental groups are banding together to push for greater access to at-home renewable energy via the 25D tax credits. The cohort, branding themselves Residential Renewables for All, is urging Congress to make 25D tax credits refundable or direct pay to make it more accessible to low-income communities. The coalition includes the National Wildlife Federation, the Union of Concerned Scientists, Black Owners of Solar Services and the NAACP. Axios has more.

METHANE MADNESS: The House Energy Committee advanced key water and pollution portions of its share of the reconciliation bill in votes that stretched into Tuesday morning, pushing forward measures addressing lead water pipes, air pollution and hazardous waste, as well as a fee on methane emissions that drew sharp criticism from Republicans.

GOP legislators charged the fee would raise energy costs for people who could ill afford it, worried about jeopardizing energy industry jobs and wondered whether similar penalties lurked for agriculture.

“We’re deciding the nation’s fate for its energy sector for decades to come — unlike just spending our children’s inheritance, which is what we normally do,” Rep. Michael Burgess (R-Texas) said. “We’re also now crippling them in their ability to be able to provide for their families because we’re going to make the cost of energy, of everything that emanates from that, much more expensive.”

But moderate Democrats said they could back the provision, including the methane fee, given the costs climate change is exacting on their constituents. Democrats defeated several amendments along party-line votes that attempted to adjust the fee, arguing in part that it was tailored only to sources included in the EPA’s Greenhouse Gas Reporting Program, which excludes agriculture.

In relation to other provisions of the reconciliation package, a cohort of 19 clean energy groups, including Third Way, American Clean Power Association, Clean Air Task Force and Natural Resources Defense Council, are pushing for more support for the Energy Department’s Loan Programs Office. The groups wrote to the chairs and ranking members of the House and Senate energy committees last week to urge increased funding for programs targeted at energy innovation and clean vehicles, citing potential for the programs to help bolster advanced nuclear energy, energy storage, transmission and carbon capture. Specifically, the groups asked Congress to expand the DOE loan guarantee program’s lending authority by providing $250 million to enable up to $25 billion in additional lending. Read the letter here.

WHAT’S UP IN THE CENTER: Burgess Everett and Marianne LeVine took a temperature check on Senate Democrats after Sen. Joe Manchin continued to voice his opposition to going above $1.5 trillion in reconciliation. There’s a lot of angst that he and Sen. Kyrsten Sinema will whittle down the bill beyond recognition. Sen. Jon Tester was asked if he was aligned with Manchin on reconciliation. He quipped: “Are you crazy? Are you trying to get me shot? I’d never, ever want to be aligned with Joe Manchin. My wife would divorce me.”

Related: “Schumer vows Dems will deliver aggressive climate provisions,” from Pro’s Anthony Adragna.

ILLINOIS GOES ALL IN: The Illinois Senate signed off on a major rewrite of the state’s climate goals Monday after the General Assembly spent months haggling over coal industry jobs and struggling coal and nuclear plants. House lawmakers passed the bill last week and Gov. J.B. Pritzker, who campaigned on clean energy and decarbonization in 2018, is expected to sign the bill. While Illinois is joining several other states that already have plans for carbon-free electricity by mid-century, its measure also sets aside funding for disadvantaged and environmental justice communities.

Republicans are likely to use the measure to challenge the Democratic governor as the legislation also allows for electricity rate hikes to fund a nearly $700 million bailout of three nuclear power plants, one of which Exelon had threatened to close Monday if state funding didn’t materialize. After the Senate vote, Exelon announced it was refueling the reactors.

NRC APPROVES STORAGE SITE THAT TEXAS BANS: The Nuclear Regulatory Commission issued a license Monday to construct and operate an interim storage facility for spent nuclear fuel in Texas’ Permian Basin — despite a new state law that bans storage of highly radioactive waste in the state. It marks only the second license of its sort issued by the NRC, following one in 2006 for a facility that was never constructed. Interim Storage Partners intends to construct the facility on property adjacent to Waste Control Specialists’ low-level radioactive waste disposal site already operating under a Texas license, and it has said it plans to expand the facility in seven additional phases, totaling up to 40,000 metric tons of fuel.

“We’re disappointed by the decision so soon after Texas lawmakers expressed near unanimous opposition to high-level radioactive waste,” said Adrian Shelley, director of Public Citizen’s Texas office, in a statement Monday. “The bill makes it illegal for Texas to issue permits for new types of radioactive waste. They won’t be opening new dumps in Texas without a fight.” Public Citizen supported the vote to ban high-level nuclear waste in the state.

MATCHING GROWTH: FERC today is hosting a technical conference that will examine how reliability services provided by regulated U.S. electricity markets should evolve to meet the growth of renewable energy resources on the grid. The conference will dig into how power markets can better incentivize traditional power plants to operate more flexibly, potentially saving ratepayers money and allowing them to better operate alongside more variable wind and solar resources. Panelists will also consider how newer clean energy resources can be compensated for their role in maintaining a reliable system.

The conference is the first of two focused on energy and ancillary services. It follows the release of a white paper earlier this month, written by FERC staff, which found “broad industry consensus” that the markets need to evolve as renewables become a larger part of the power mix.

EYES ON INDIA: Climate envoy John Kerry is hopeful India will set a target for net-zero emissions before November’s COP26 climate talks, he said during a trip to New Delhi on Monday. “We’re making progress, and my hope is the next six weeks will concentrate people’s minds. Nobody appreciates being pushed around, and I’m not here to do that,” Kerry said, according to The Washington Post. Kerry, along with senior Indian officials, also unveiled a Climate Action and Finance Mobilization Dialogue between the two countries aimed at facilitating financing for clean energy projects in the subcontinent, Zack Colman reports for Pros.

BIDEN OUT WEST: President Joe Biden is expected in Colorado today to visit the National Renewable Energy Laboratory and tout the clean energy segments of his infrastructure agenda. The visit comes after stopovers in Idaho and California on Monday, including a pop-in at the National Interagency Fire Center headquarters in Boise. Biden was the first president to visit NIFC. He also visited Mather, Calif. to view damage caused by the Caldor Fire that has burned over 219,000 acres across the Nevada and California border.

TACKLING GLOBAL METHANE: In a letter to Argentina President Alberto Fernández, Biden said he plans on asking leaders to join a “Global Methane Pledge” during the virtual Major Economies Forum on Energy and Climate on Friday, reports POLITICO Europe’s Karl Mathiesen. Agriculture is the largest global contributor to man-made methane emissions, followed by landfill and energy. Biden said the initiative would be launched by the time of the U.N. climate summit.

— “Senate Republicans Vow to Block Treasury Nominations Until Nord Stream II Firm Is Sanctioned,” via The Wall Street Journal.

— “Britain announces biggest auction round in renewable energy scheme,” via Reuters.

— “Energy Prices in Europe Hit Records After Wind Stops Blowing,” via The Wall Street Journal.

— “U.S., EU pursuing global deal to slash planet-warming methane -documents,” via Reuters.

— “Can a Green-Economy Boom Town Be Built to Last?” via The New York Times.

THAT’S ALL FOR ME!

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