The surprise climate bill's electricity provisions would help the country surge toward its emissions reduction goals
CLIMATEWIRE | The Senate budget reconciliation deal could open the door to a green power grid, a key ingredient in slashing emissions enough to meet the country’s near-term climate ambitions.
“This is the thing that allows us to potentially surge forward and get on a path to our NDC targets,” said Conrad Schneider, advocacy director at Clean Air Task Force, referring to the United States’ nationally determined contribution for cutting emissions under the Paris climate accord. The “Inflation Reduction Act,” which includes $369 billion in energy and climate spending, aims to slash emissions by 40 percent. The electricity provisions in the bill would put the U.S. in good shape to hit that threshold and potentially exceed it, Schneider said.
Clean electricity can further aid the decarbonization of the economy by providing a way to green transportation and space heating. That is why climate efforts at the state and federal level have long focused on curbing emissions from power plants, the second largest source of greenhouse gases in the U.S. after transportation.
The base payment for the PTC — adjusted for inflation — is about 0.6 cent per kilowatt-hour, rising to around 2.6 cents per kWh for developers that pay a prevailing wage and offer apprenticeship programs. Two additional bonuses are available to developers that use domestically built materials and site their facilities in communities where a sizable percent of the population is employed by the fossil fuel industry. The maximum PTC would be roughly 3.
The change toward a technologically neutral standard focused on emissions reductions has long been championed by Sen. Ron Wyden, the Oregon Democrat who leads the Senate Finance Committee. “Build Back Better” also adopted Wyden’s proposal, but the “Inflation Reduction Act” would implement it sooner. But one of the most consequential provisions concerns how the subsidy is actually paid. Renewable interests lobbied to turn the tax credit into a direct payment, saying it would free them of the need to go to the tax equity markets and speed development. But the provision was opposed by Manchin.
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