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What Biden’s $2-trillion spending bill could mean for climate change

What Biden’s $2-trillion spending bill could mean for climate change

U.S. President Joe Biden at a press conference to discuss the Build Back Better legislation's new rules.

U.S. President Joe Biden at a press conference to discuss the Build Back Better legislation's new rules.

Joe Biden, US President, discusses aspects of the Build back Better bill.Credit: Chip Somodevilla/Getty

The US President Joe Biden is rushing to pass a US$2 trillion budget bill with his fellow Democrats in Congress. This bill would increase US investments in technology to combat climate change to new heights. If it passes, and everything goes just right, some scientists say that the legislation — dubbed the ‘Build Back Better’ act — could bring the United States closer to meeting the goals that Biden laid out during a major United Nations climate summit in Glasgow, UK, last month. According to researchers interviewed by Nature, the latest economic models suggest that the massive cash infusion could drive down prices for clean-energy technologies and help put the United States on a path to reduce greenhouse gases to 50% below 2005 levels by 2030 — although they also warn that there are still plenty of potential barriers and roadblocks ahead.

“If Build Back Better passes, it basically buys us a decade of climate progress in the United States,” says Jesse Jenkins, who models energy systems at Princeton University in New Jersey and who is heading up a consortium there that has been analysing the potential impacts of the legislation. “It’s a huge deal.”

But the bill’s fate remains up in the air. The US House of Representatives already passed the bill, but Senate Democrats are stuck on their draft, which could be extended into next year. Many Republicans supported the related trillion-dollar infrastructure bill that Biden signed last month. However, they are determinedly opposed to the larger budget bill. It includes new investments in climate technology and energy, as well as controversial social programs that are stalling negotiations. Some oppose certain elements of the bill, while others disagree with it. Biden and the Democratic Leadership are currently trying to secure the support from all 48 Democratic senators as well as two independents. This would allow the legislation to be passed with a tie-breaking vote of Vice-president Kamala Hariri.

Big money

Build Back Better is a strategic shift in the political strategy regarding climate change. During former president Barack Obama’s time in office, Democrats tried to pass legislation to cap the country’s overall greenhouse-gas emissions and force companies to clean up — or compete for an ever-declining pool of carbon credits to cover their emissions. The Biden administration now wants to make large investments in government to reduce emissions. This includes driving down the cost for low-carbon technologies, creating jobs and strengthening US competitiveness overseas.

“This represents a much more robust role for the US government in the commercialization and scale-up of energy technologies, and it’s something that a lot of academics, analysts and scientists have been calling for quite a long time,” Jenkins says.

Budget boost: Bar chart showing US Department of Energy budget from 1978 with projections for 2022 to 2026.

Source: Information Technology and Innovation Foundation/Belfer Center for Science and International Affairs

The new spending legislation will allocate more than $550 million to climate and energy programs. This includes an estimated $320billion in tax cuts for individuals and businesses who invest in clean energy technologies like solar, wind, electric vehicles, and nuclear power. The legislation would expand on the clean-energy provisions of the bipartisan infrastructure package. It includes $66 billion to modernize rail systems, $90 billion for larger public-transport investments, and $72.5 billion for clean energy transmission, grid infrastructure, and charging stations for electric cars.

All told, the US Department of Energy could see its budget for energy research and development more than double if Build Back Better passes — from around $8 billion to more than $20 billion annually over the next five years — according to an analysis by the Information Technology and Innovation Foundation, a think tank based in Washington DC (see ‘Budget boost’). Most of the infrastructure act funding has been secured for large-scale projects to prove that technologies such as clean hydrogen production and carbon-capture system are feasible.

Scientists and environmentalists agree that investments combined with tax credits, incentives and other incentives could change the energy landscape in the coming decades. And by mostly focusing on financial rewards rather than punitive regulations — which can be overturned by courts and future administrations — advocates say that the agenda could build crucial political support among businesses and industries in the years to come.

“We’re always trying to look for the durable, lasting solution,” says Lindsey Baxter Griffith, federal policy director at the Clean Air Task Force, an environmental advocacy group based in Boston, Massachusetts. “The nice thing about an innovation agenda and a government investment agenda is that if it’s done correctly, you can actually grow the political support while it’s happening.”

Model behaviour

Academics and energy experts have been running various models to determine the likely impact of the legislation, and their results suggest that the spending bill and infrastructure bill combined could reduce annual US emissions by anywhere from the equivalent of 739 million to 1.3 billion tonnes of carbon dioxide by 2030 (see ‘A cleaner future’). At the upper end, this would be enough to nearly meet Biden’s Glasgow pledge to curb US greenhouse-gas emissionsComparable to 2005 emissions levels, this figure has been reduced by 50%.

Modelling by Jenkins and his colleagues in the Princeton consortium suggest that the bills’ biggest impacts could be in the electricity and transport sectors, each responsible for one-third of potential emissions reductions. Electricity consumption would actually rise — partly owing to the electrification of transport, driven by tax credits for electric passenger vehicles and zero-emission commercial vehicles. But emissions would drop for electricity generation, accomplished largely through the introduction of more wind and solar technology — at three to four times the current pace — and a continued decline in coal-fired power generation.

A cleaner future: Line chart showing how the Build Back Better Act could potentially reduce future greenhouse-gas emissions.

Sources: REPEAT Project (Princeton University),/Energy Innovation Policy and Technology

“This is classic industrial policy,” Jenkins says. He says that rather than telling people what to do they are trying to change people’s behaviour by making clean technologies the most lucrative.

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The Build Back Better bill would increase the subsidy for projects that capture and sequester carbon emissions from natural-gas power stations and coal, from $50 to $85 a tonne.2While providing $180 subsidy to facilities that extract CO,2directly from the atmosphere. According to the Princeton model, this could be enough for the start of the carbon-capture sector that has been struggling for more than a decade. Facilities participating in the practice would account roughly 12% of the 1.3 million tonnes of emissions reductions in the model.

Although models tend to agree on general trends, they can differ in details. Energy Innovation, a San Francisco, California-based consultancy, projects a slower rollout for clean electricity, electric-vehicle sales, and carbon capture technologies. This will significantly reduce the Princeton group’s projected emissions reductions. “The modelling approaches are producing somewhat different results, but it’s more important to focus on the overlap: there’s a really significant amount of emissions reductions that are on the table with this legislation,” says Robbie Orvis, a senior director at Energy Innovation. Orvis states that the main factor in all models is the declining price of clean energy technologies. This allows every dollar invested to do 10x more work today than it would have done a decade earlier.

Reality check

Modelers face the greatest challenge in representing the real world. While models agree on the economic incentives, the reality will drive what happens over the next decade. This will be driven by human behavior, bureaucratic delays and supply chains, as well as technical obstacles. Modelers are the first ones to admit this: Increasing renewable energy requires connecting more solar panels and turbines, as well as expanding power-transmission lines. Carbon capture requires CO2Pipelines and injection wells. Political will is needed to shut down coal plants.

“Just because models say something is economic doesn’t mean that it will happen,” Orvis says. Ultimately, incentives won’t be enough, he says, without parallel standards and regulations — such as A rule was proposed last monthThe US Environmental Protection Agency has been working to reduce methane emissions from oil and gas sectors.

Leon Clarke is a climate and energy modeller from the University of Maryland in College Park. The key is momentum. He says that models can only achieve the projected emissions reductions if everyone takes determined and consistent action, regardless who is in charge of Congress or in the White House. “There’s no way that we can succeed unless we keep the pedal on the gas across the country, across all levels of society.”

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