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BREAKING: Senate Democrats Finalize Biggest Climate Spend in U.S. History as Schumer, Manchin Outfox McConnell

The United States is back on the cusp of the biggest climate investment in its history after Senate Majority Leader Charles Schumer (D-NY) and coal state Senator Joe Manchin (D-WV) agreed to a US$370-billion climate and clean energy package, ending months of negotiations on what one elated advocate called the “best-kept secret in Washington”.

“I now propose and will vote for the Inflation Reduction Act of 2022,”Manchin said late Wednesday afternoon, in a statement that underscored the breadth of the victory for Senate Democrats as well as the depth of the compromise Manchin had levered compared to the Build Back Better plan originally proposed by President Joe Biden.

“Rather than risking more inflation with trillions in new spending,” he said, “this bill will cut the inflation taxes Americans are paying, lower the cost of health insurance and prescription drugs, and ensure our country invests in the energy security and climate change solutions we need to remain a global superpower through innovation rather than elimination.”

On Wednesday evening, pundits’ attention was beginning to turn to whether Sen. Kyrsten Sinema (D-AZ), Democrats’ second-most high-maintenance vote in an evenly-divided senate, would support the Schumer-Manchin package. While “the provisions that mirror the White House framework for the Build Back Better Act are likely to be fine with her,” NBC writes, she may balk at a smaller provision in the deal that sustains a specific tax break for investment managers. She had not yet commented on the new agreement as The Energy Mix went to virtual press.

But until and unless Sinema throws U.S. climate action into another round of high-stakes legislative drama, U.S. climate hawks were celebrating a massive, unexpected, and desperately-needed win last night, with some news reports also pointing to a clever strategy to circumvent opposition orchestrated by Senate Minority Leader Mitch McConnell (R-KY).

The deal is “aimed at slashing carbon emissions an estimated 40% from 2005 levels economy-wide by 2030,” Politico reports. “But it also comes with plans to ease rules that the West Virginia senator has said are constricting fossil fuel production and slowing needed upgrades to the power grid.” It “invests in the technologies needed for all fuel types—from hydrogen, nuclear, renewables, fossil fuels, and energy storage,” and “does not arbitrarily shut off our abundant fossil fuels,” Manchin said in a statement Wednesday.

Utility Dive says the agreement includes moves by the end of the government fiscal year to speed up permitting for clean energy infrastructure. “Permitting reform is essential to unlocking domestic energy and transmission projects, which will lower costs for consumers and help us meet our long-term emissions goals,” states a one-page summary released by Senate Democrats.

Politico traces the “intensive effort to convince [Manchin] of the merits of supporting the new technologies—including from company executives who came forward with new plans to build manufacturing in West Virginia.”

“I want to thank Senator Schumer and Senator Manchin for the extraordinary effort that it took to reach this result,” Biden said in a statement supporting the compromise. “If enacted, this legislation will be historic, and I urge the Senate to move on this bill as soon as possible, and for the House to follow as well.”

Congressional Republicans “appeared to be livid as the news broke,” Axios writes, “with some accusing Manchin of being ‘deceitful’” in the way he had walked away from negotiations earlier this month, only to announce a fully-formed deal after the Senate passed an unrelated piece of legislation earlier in the day.

Climate champions on Capitol Hill were surprised but ecstatic, after the double hit of seeing a deeply radicalized U.S. Supreme Court severely undercut the authority of the Environmental Protection Agency to regulate carbon pollution, then Manchin apparently withdraw support for Biden’s climate agenda.

“The entire clean energy industry just breathed an enormous sigh of relief,” American Clean Power CEO Heather Zichal said in a release. This is an 11th hour reprieve for climate action and clean energy jobs, and America’s biggest legislative moment for climate and energy policy.”

Yesterday’s announcement puts the U.S. Congress “inches away” from a 10-year commitment that amounts to “the biggest climate and clean energy investment in American history,” Zichal added. “Passing this bill sends a message to the world that America is leading on climate, and sends a message at home that we will create more great jobs for Americans in this industry.”

Christina Deconcini, director of government affairs at the World Resources Institute, said the announcement was “the best news I’ve had in many years.”

“Yes, I’m surprised, but I’m also just elated,” she told The Mix, just minutes after the 900-page legislative text was released. “It makes me happy and proud that the United States is standing up to do what it needs to do to make a real commitment to dealing with climate change.”

That text in itself “is really a big deal,” Deconcini explained. “It’s not just more articles in newspapers about ‘so-and-so says this and that’. We have legislative text, and that’s just phenomenal.”

She added that “I have three adult children, I care about generations that come after me and after that, I care a lot about the planet, and we’re all reading about the warming happening every day and people suffering all over the world. It’s just a wonderful thing to realize the United States is going to step forward and do this. It just causes me great joy.”

The Inflation Reduction Act must now be reviewed by the Senate Parliamentarian to ensure it meets the rules for a legislative process called reconciliation, under which the Senate can pass bills with a simple majority, rather than the 60 votes it would need to clear a filibuster mounted by the minority party. But Deconcini said Democrats have been negotiating and crafting the bill for months with that hurdle clearly in mind.

“I read somewhere that it was the best-kept secret in Washington that they were working on this, but more power to them,” she said. “It’s just an incredible thing.”

The deal matters for the rest of the world, as well, making it likely the U.S. can deliver on its commitments under the Paris climate agreement. “Analysis really did show that even with executive action, states, and sub-national action, without this kind of significant federal policy it would be near-impossible for us to achieve the very bold climate commitments the President has made,” Deconcini said. “And we know that what the U.S. does [on emission reductions] has always had a big influence on what other countries do, as well.”

Schumer and Manchin released their joint statement just hours after the Senate adopted the CHIPS Act, a $52-billion measure to fund domestic production of the semiconductors that go into cars, computers, appliances, and an array of other devices and equipment, by a 64-33 vote. And that’s why Republicans are complaining they’ve been outmanoeuvred.

McConnell “had previously threatened to hold the CHIPS Act hostage if Democrats continued negotiating with Manchin, but that threat evaporated after Manchin opposed new climate spending earlier this month,” Axios writes. Now, some Republicans are urging their colleagues in the House of Representatives to retaliate by voting down the semiconductor measure, but one close observer said the bill has enough support in both parties to withstand the attack.

5 Comments (Open | Close)

5 Comments To "BREAKING: Senate Democrats Finalize Biggest Climate Spend in U.S. History as Schumer, Manchin Outfox McConnell"

#1 Comment By Pam FitzGerald On July 28, 2022 @ 6:28 AM

This is the best news that I’ve read in forever. Thanks Mitchell!

#2 Comment By Mitchell Beer On July 28, 2022 @ 10:54 AM

Me too, Pam. I was in a meeting until about 6:15 last night, and when I checked my phone I saw a reference to Joe Manchin on our team Slack channel. It was a deadline night, I thought I was almost caught up on my stories, and my first reaction was that I really hoped Manchin hadn’t “committed news” again. Then I read in on the actual news, and the adrenaline rush carried me well past midnight. Now I just hope Sinema decides not to complicate matters.

#3 Comment By John Englart On July 28, 2022 @ 11:10 PM

I had a twitter conversation with Professor Mann about this. A positive outcome within the constraints of US politics, although far less than what Biden had originally proposed ($3 trillion?).
John Englart: “So it sounds like Manchin has negotiated new gas pipeline infrastructure for passing the climate legislation – #fossilfuel deals a backwards step. But maybe on balance small step forward for energy and climate funding? Hard for us to assess here in Oz”
Michael Mann: “yep. the massive spending potentially puts us on a trajectory for reducing emissions by 50% (probably closer to 40%). But investing in new fossil fuel infrastructure is a step backward. On the whole a big step forward. But more work to be done. I’ll be discussing today on @MSNBC” https://twitter.com/MichaelEMann/status/1552665021536210944

The New York times mentions “the bill would mandate new lease sales for oil drilling in the Gulf of Mexico and Alaska’s Cook Inlet” as well as “a separate measure to address the permitting of energy infrastructure, potentially including natural gas pipelines, before the end of the fiscal year on Sept. 30.” Mann was spot on with package achieving 40% emissions reduction by 2030. NYT says “Senate Democrats estimated that the legislation would enable the United States to cut greenhouse gas emissions by 40 percent below 2005 levels by 2030”. https://www.nytimes.com/2022/07/28/climate/climate-change-deal-manchin.html

I know most of the package will be a big boost for renewables and energy transition, but the concessions will also lock in emissions intensive infrastructure. A political compromise.

The “$27 billion for a “green bank” aimed at delivering financial support to clean energy projects” is particularly important for leveraging private capital for innovative projects. That has been the experience of the Clean Energy Finance Corporation (CEFC) and Australian Renewable Energy Agency (ARENA) which were established by Australian Labor government in 2012 and withstood attempts to abolish them or change there focus in the last 10 years of conservative government here in Australia. They have contributed subtantially to Australia’s growth in renewables, storage and energy transition,
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#4 Comment By Mitchell Beer On July 29, 2022 @ 12:53 PM

This is really helpful, John, thanks. The full details emerged after our initial coverage for Thursday morning, and we’ll be updating next week–but not until next Wednesday due to vacation scheduling. We’re hearing the same thing everywhere — unprecedented progress, with a lot of concessions needed to get the deal done.

What I wonder is whether fossils will actually be very interested in the offshore leases, given their tepid response to recent auctions. It has me thinking that the metaphor of using “both ends of the scissors” by curtailing fossil supply as well as demand cuts both ways — the concessions to Manchin are a step backward from a supply-side point of view, but won’t do much damage if fossils and their investors can’t see sufficient future demand for the product. It wouldn’t be the clean win we need and want, but if that’s the way it went, it would still be a win.

#5 Comment By Bernie McComb On August 1, 2022 @ 9:05 PM

Great news from DC, almost a wonder of the world