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Democrats Include Clean Electricity Standard, Border Carbon Tax in $3.5-Trillion Budget Plan

A clean electricity standard, a border tax on imports from polluting countries, renewable energy and electric vehicle tax breaks, a new “methane reduction fee”, funding for a civilian climate corps, and a raft of health care and family service elements are central elements of a US$3.5-trillion budget that U.S. Senate Democrats unveiled Wednesday.

“Democrats behind the agreement face possible objections from their rival moderate and progressive factions, and will have to work hard to convert their plans into legislation they can push through the closely divided Congress over what could be unanimous Republican opposition,” The Associated Press reports. But “all told, the ambitious proposal reflects [U.S. President Joe] Biden’s vision for making the most substantive potential investments in the nation in years, some say on par with the New Deal of the 1930s.”

Along with a more conventional, trillion-dollar infrastructure package the White House negotiated across party lines [despite the best efforts of a now-outed Exxon lobbyist—Ed.], the measure comes “close to the president’s initial $4-trillion-plus effort that could reach almost every corner of the country,” AP writes.

“We are very proud of this plan,” Senate Majority Leader Chuck Schumer (D-NY) told media. “We know we have a long road to go,” but “we’re going to get this done for the sake of making average Americans’ lives a whole lot better.”

Democrats are planning to push the budget bill through with a simple senate majority, with Vice-President Kamala Harris breaking the inevitable tie vote, before legislators head home for summer holidays, AP says. They’ll get to work on a more detailed spending plan in the fall.

Senate Finance Chair Bernie Saunders (I-VT) said the deal would bring an end to an era when big companies and the richest Americans failed to bear their share of the burden for financing government programs. “Those days are gone,” he said. “The wealthy and large corporations are going to start paying their fair share of taxes, so that we can protect the working families of this country.”

Even though the plan falls $2.5 trillion short of his original budget proposal, Sanders hailed it as “the most significant piece of legislation to be passed since the Great Depression, and I’m delighted to be a part of it.”

Citing a tweet from Sen. Tina Smith (D-MN), Utility Dive says the all-important clean electricity standard is included in the deal—and the White House has a fallback plan in case the standard falls out of the package.

“Smith, who is working on the legislation for the clean electricity standard with Sen. Ben Ray Luján (D-NM), told The Hill she wants to include not just wind, solar, and geothermal, but also nuclear energy and fossil fuels, provided the latter resources use carbon capture technology,” the industry newsletter writes. “However, Smith also said she opposes partial credit for unabated natural gas, despite industry arguments of the fuel’s importance as a bridge to a cleaner energy future.”

White House National Climate Advisor Gina McCarthy said the Biden administration strongly favours a standard, but isn’t treating it as a make-or-break component of the bigger package.

“I don’t want to say anything is a red line,” she told participants  at the Bloomberg Sustainable Business Summit. “We have a lot of regulatory authority we intend to use regardless.”

But “what the clean electricity standard says is go, don’t wait, go,” she added. “We are going to put you on the schedule. You get out there…and run and keep running.”

If all else fails, the White House “is also prepared to pursue efforts to push utilities to ratchet down their emissions through the federal regulatory process,” Utility Dive writes. But “McCarthy said the administration believes a national clean energy standard would be more effective in prompting action on part of the utility industry to reduce emissions.”

Late last week, veteran U.S. climate journalist veteran climate journalist David Roberts explained why the Clean Electricity Standard is the “one main thing” in U.S. climate strategy.

“How can the U.S. hit net-zero emissions by or before 2050, a goal shared by almost every Democrat and, at least rhetorically, by some Republicans?” Roberts asked. “The key is to immediately begin reducing emissions and maintain a rapid pace of reduction for the coming three decades. That is the only way we have a shot. If we wait another decade to start rapid reductions, the curve will simply be too steep. It has to start now.”

But the challenge the White House faces to bring the budget bill home was already coming into focus this week, with Sen. Joe Manchin (D-WV) warning his caucus colleagues they can’t expect his support for a measure that scales back subsidies for coal and natural gas. “Anybody moving in a direction where they think they can walk away and not have any fossil (fuel) in play, that’s just wrong,″ he said Wednesday. Eliminating fossil fuels “can’t happen, and it doesn’t do a darn thing but makes the world worse,” he added.

The Senate measure also includes a carbon border tax—on the same day that the European Union introduced a similar measure. “The two actions in concert suggest that government leaders are turning toward trade policy as a way to attack climate change,” the New York Times writes. “Top Democrats called the timing coincidental but said both the United States and Europe must work together to put pressure on China and other heavy polluting countries to reduce emissions.” (Although one recent analysis suggests China is responsible for a smaller share of those emissions than private companies and investors from places like the U.S. and Europe.)

“The United States and the EU have to think in terms of the leadership that we can provide and the message that we have to send to China and other countries that would take advantage of the high standards that we are going to enact,” Sen. Ed Markey (D-MA) told the Times.

Just like the budget itself, the Democrats’ plan for a border carbon adjustment is still a work in progress.

“Unlike the Europeans, who outlined their plan in a 291-page document, Democrats released no details about their tax proposal on Wednesday. Calling it simply a ‘polluter import fee’, the framework does not explain what would be taxed, at what rate, or how much revenue it would expect to generate,” the Times reports. Other small details include the need for the measure to navigate a hostile U.S. Congress, not to mention a potential challenge before the World Trade Organization.

“But in theory, a carbon border tax would require companies that want to sell steel, iron, and other goods to the United States to pay a price for every tonne of carbon dioxide that is emitted during their manufacturing processes. If countries can’t or won’t do that, the United States could impose its own price. But verifying the amount of carbon pollution produced by foreign manufacturing is tricky, experts say.”

In addition to the climate and carbon measures, the budget package “would pave the way for hundreds of billions of dollars in areas including elder care, home care, child care, pre-kindergarten, and paid family and medical leave,” the Washington Post says, citing the bill’s legislative sponsors. “On health care, it would open the door for millions of seniors to obtain vision, dental, and hearing coverage on Medicare and allow more low-income families to enroll in Medicaid. And it would aid parents by extending the recently expanded child tax credit, the full benefits of which will start to be paid out this week.”

Earlier in the week, AP reported that the Biden administration is approving oil and gas leases on public lands at a faster rate than the Donald Trump regime, with Interior Secretary Deb Haaland reassuring Republicans on the House Natural Resources Committee that there are no plans right now to make a temporary drilling ban permanent. “He’s walking the tightrope,” S&P Global Platts analyst Parker Fawcett said of Biden, after the administration moved to cancel the Keystone XL pipeline and protect the environmentally sensitive Arctic National Wildlife Refuge.

“Those easy wins don’t necessarily have huge impacts on the market today,” Fawcett said. But the White House “is definitely backing off taking drastic action that would rock the market….What you’re going to see is U.S. oil production is going to continue to rebound.”

And on Wednesday, Boston-based Ceres reported that while 80% of the biggest companies in the U.S. have set emission reduction targets, fewer than half of them have lobbied for science-based climate policies, and more than 20% have lobbied against them.

“Claiming credit for making operational climate change commitments while undermining the necessary policy measures to achieve those very commitments poses significant reputational and financial risks to companies,” the organization stated.

2 Comments (Open | Close)

2 Comments To "Democrats Include Clean Electricity Standard, Border Carbon Tax in $3.5-Trillion Budget Plan"

#1 Comment By Guy Hanchet On July 16, 2021 @ 6:32 PM

Canada’s legitimate excuse for not moving on a Border Carbon Tax has been that we can’t move forward without the USA. Well, now we have the USA and the EU, so let’s get on with it and remove the exemptions for steel and cement companies.

#2 Comment By Mitchell Beer On July 16, 2021 @ 6:49 PM

Guy, the only barrier — and the interesting twist on this — is that border carbon adjustments can work to the deep disadvantage of developing countries that only account for the tiniest share of historic emissions. When multinationals operating in rich countries decided to shift their manufacturing offshore, other countries took on the emissions footprint, but the consumer demand still came largely from the countries that also bear the lion’s share of the responsibility for the climate emergency. So — I gather there are ways to structure a border carbon adjustment in a way that recognizes and reconciles with the history, but it will be very important to sweat that detail. I’m still learning about this aspect, but hoping we’ll be able to carry the story in the not-too-distant future.