What the House passage of Biden’s $2T tax and spending bill means for U.S. energy
WASHINGTON (Bloomberg) --The House on Friday passed a roughly $2 trillion bill incorporating the core of President Joe Biden’s economic agenda -- ramping up funding for the social safety net and increasing taxes on corporations and the wealthy -- sending it on to the Senate, where it’s likely to be significantly reshaped.
The legislation will likely undergo several more changes, both to get all 50 members of the Senate Democratic caucus on board with it, and to comply with the chamber’s complicated rules to avert a filibuster, in face of Republican opposition.
Here’s where the bill, which passed the House without any GOP support, stands with regards to U.S. energy policy:
Renewable Energy Benefits
Some $300 billion -- by far the largest component of the climate spending in the package -- would go to expanding a slew of tax credits for renewable power, electric vehicles, biofuels and energy efficiency. The credits could accelerate investments in both utility-scale and residential clean energy as well as electricity transmission, power storage and clean-energy manufacturing.
New Bans, Methane Fees
Plans would block oil drilling in most U.S. offshore waters and Alaska’s Arctic National Wildlife Refuge. Oil and gas companies would be forced to pay for excess methane leaking from wells, storage sites and pipelines for the first time. That methane provision could be watered down in the Senate, however, according to analysts.
EV Tax Credit
Under the bill a $7,500 consumer tax credit would be made refundable and expanded by $4,500 for cars assembled domestically by plants represented by unions. An additional $500 bonus would be added for vehicles that use batteries made in the U.S for a total of $12,500. The legislation also creates a new $4,000 tax credit for the purchase of used electric vehicles.
Commenting on the passage of the bill, American Petroleum Institute President and CEO Mike Sommers said “At a time when energy prices have risen alongside broader economy-wide inflation, the House reconciliation bill would only exacerbate the challenges facing Americans. This bill taxes American energy, restricts access to our own resources and advances the same type of ‘import-more-oil’ strategy that this administration has been promoting as a solution. We urge the Senate to reject these misguided policies and focus on climate solutions that both reduce emissions and ensure Americans have access to the affordable and reliable energy this sector delivers every day.”
National Ocean Industries Association President Erik Milito found both positives and negatives for the U.S. energy sector in the bill, saying “The House budget reconciliation bill does advance smart offshore wind and carbon capture and storage (CCS) policies. These provisions can help the U.S. maximize the economic and environmental benefits of the offshore. Offshore wind provides a generational energy and economic opportunity. The widespread deployment of CCS will be critical for achieving the climate change ambitions and goals that have been established by diverse stakeholders around the world.”
“However, the House language also provides for oil and gas provisions that are nothing more than punitive measures. These include arbitrary new fees that would add millions of dollars in annual operating costs, pricing out U.S. production. These provisions are a gift to higher emitting producers like Russia and China that wield their energy resources as a geopolitical tool and would fundamentally weaken one of America's most important economic, energy, emissions and national security assets.”
"When the Senate takes up its version of budget reconciliation, it must ensure that the energy provisions are aligned in a way that actually enhances all forms of American energy – including offshore oil and gas - and the multitude of benefits it provides.”
