As party politics play out in Washington, the clean energy sector focuses on climate priorities

On Day One of his administration, President Joe Biden made good on several of his campaign promises around climate action, rejoining the Paris Agreement and initiating a wholesale review of the Trump Administration’s clean energy rollbacks.

Since then, Biden has taken a number of executive actions to tackle the climate crisis at home and abroad. Consistent with his USD 2t plan to decarbonize the power sector by 2035 and put the U.S. on a path to a net-zero economy by 2050, the Biden administration has directed federal agencies to procure clean electricity and zero-emissions vehicles, and to make major public investments in EV infrastructure, including half a million EV charging stations.

Biden's recent climate action blitz also included measures to accelerate domestic production of battery technology, as well as jumpstarting historic investments in clean transmission infrastructure and large-scale renewables like offshore wind.

“The federal procurement provision is functioning like something of a down payment to decarbonize the power sector by 2035,” said Bill Parsons, American Council on Renewable Energy (ACORE) COO, at a recent roundtable discussion. “As the nation’s largest energy consumer, that makes good sense. Additionally, this was a commitment to double offshore wind by 2030. It’s also the first time in many people’s memory that a president so early in their administration made the direct connection between the need for transmission infrastructure investment as an integral part of the ongoing energy transition. And I think that was really heralded as signaling a new day, that this is an administration that understands that piece of the puzzle.”.

With a Democratic majority in both the House and the Senate, the renewables sector has high hopes for getting many of its climate priorities across the finish line. Additional opportunities lie with budget reconciliation to fast track high-priority fiscal legislation, allowing for expedited congressional review of certain tax and spending legislation. Because reconciliation bills aren’t subject to a Senate filibuster or expansive amendments, enacting controversial budget and tax measures becomes that much more feasible.

The renewable sector is now looking to ongoing efforts in both chambers to pass a USD 1.9t COVID relief package as a bellwether of whether Biden’s sweeping climate legislation will ultimately get passed.

As the Senate tees up for a vote on a budget resolution--a critical step to passing the COVID relief bill--Sen. Joe Manchin (D-W.Va.) has said he'll back the resolution that makes reconciliation protection possible, but indicated that he would not cast a vote for any final partisan legislative proposal.

Now, clean energy leaders are wondering how this might play out when it's their turn at bat.

“And so it surfaces that even when you have budget reconciliation available with the Democratic majority, you really require all 50 votes at a minimum for that to be a viable option,” Parsons said. “And if just one senator--in this case Sen. Manchin--says he's not going to do that, then the budget reconciliation is not available. And what that means on a go-forward basis is that this negotiation of the first package could take longer than folks anticipated. It might be reshaped significantly by the need for bipartisan agreement. It will spill into the schedule for impeachment, and that may very well push the second legislative package around infrastructure, on which many of our priorities are expected to ride, further into the second quarter.”

With trillions of dollars at stake, the industry continues to monitor ongoing COVID efforts on the Hill against the backdrop of the imminent impeachment trial of the former president.

"There’s only so many times that Congress is going to pass legislation measured in the trillions of dollars," Parsons said. "Then you layer on top of that an intervening impeachment proceeding that may poison the well, and then you layer on top of that a more tortuous first go-round here than might have been envisioned a week or two ago, there can be some fatigue that sets in. I think we do need to be watchful as it relates to when it's our turn. How much gas is left in the tank to get this across the finish line?”

Will Republicans go all in?

State policies have markedly bolstered the renewable energy sector’s relative resiliency in the face of the global health crisis, as well as four years of critical climate rollbacks on the part of the Trump administration.

“Clean energy is thriving,” said Tom Starrs, Vice President, Government Affairs, at EDP Renewables. “I think the lesson from the last four years is that even a quite hostile federal government isn't enough to reverse the trend toward the clean energy transition. It helps that over the last four years, many states--including quite a number of so-called red states-- have adopted policies, including decarbonization goals and higher clean energy standards, that helped drive the market during that time.”

As part of the Biden agenda, state-level clean energy standards would be scaled up and implemented in a way that provides renewable credits to developers that follow high labor standards through measures like Project Labor and Community Labor Agreements and paying prevailing wages. The plan is expected to spur the installation of millions of solar panels – including utility-scale, rooftop, and community solar systems – and tens of thousands of wind turbines. It would also mean leveraging the carbon-emissions free energy provided by existing sources like nuclear and hydropower.

But the clean energy industry is waiting to see how far Biden and the new Democratic majority will go to pass substantially more aggressive climate measures. And while some of these measures can be passed via executive orders and budget reconciliation, there remains a laundry list of climate items that will require Republican support.

“The question is, will the renewable energy sector embrace Biden’s emphasis on increased use of human labor and increased domestic manufacturing, which I think is essentially shaping up to be sort of a quid pro quo to some extent with respect to the Biden administration’s support,” Starrs said. “There’s no question that Biden’s plan is in favor of clean energy investment across the board, but I think there’s going to be strong pressure on the renewable energy sector to step up their commitments looking at stronger, better supply chains that are independent of China, and even domestic manufacturing for clean energy technologies.”