Clean energy in the infrastructure and budget bills

Infrastructure bill

On Earth Day 2021, the Biden Administration announced its goal "to reach 100 percent carbon pollution-free electricity by 2035"– but until recently, no legislation had been passed to meet this target. This all started to shift in August 2021, when the Senate passed a $1.2 trillion infrastructure bill and immediately advanced a $3.5 trillion budget resolution to lay the framework for a reconciliation bill. So, what's the status of these bills? And how will they advance the U.S.'s clean energy transition?

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Key takeaways

  • The infrastructure bill has bipartisan support, whereas the reconciliation bill requires a budget resolution to pass.

  • The reconciliation bill can pass with a simple majority (over 50 percent) in the Senate.

  • Both bills include funding for a clean energy transition, but the reconciliation bill would consist of substantially more funding.

  • Solar specifically will likely be a significant focus in the reconciliation bill.

  • Don't wait to go solar – visit the EnergySage Marketplace today to see how much you can start saving.

The critical difference between these bills comes from their support and what's required to pass. The $1.2 trillion infrastructure bill was subject to the filibuster – a political tactic used by the Senate to delay or prevent legislation from passing. To overcome the filibuster and pass, legislation requires a 60 percent Senate majority. The infrastructure bill garnered bipartisan support in the Senate, with votes from all 50 Democrats and 19 Republicans. Now, the infrastructure bill must pass through the House of Representatives, which doesn't have a filibuster, meaning the bill can pass by a simple majority (over 50 percent). The bill would then head to President Biden for his signature.

The $3.5 trillion reconciliation bill doesn't have bipartisan support, so if it were to undergo the typical legislative process, it would fail in the Senate due to the filibuster. However, Senate Democrats are employing a special process called reconciliation that allows for bills related to tax, spending, and debt to bypass the filibuster. For the reconciliation bill to pass, a simple majority of the House and Senate must agree on a budget resolution, which presents recommendations from the Senate Budget Committee to other committees. Budget resolutions cannot be filibustered and are not signed into law; instead, they lay the framework for reconciliation bills. This budget resolution is what the Senate just passed – so, for the reconciliation bill to be enacted, the House of Representatives needs to pass the budget resolution, and then the reconciliation bill itself needs to be passed by the Senate, House of Representatives, and be signed by the President.

The infrastructure bill is not all about clean energy but includes several provisions that would aid in the U.S.'s clean energy transition. According to a fact sheet released in early August from the White House, the bill would provide:

  • $65 billion to update the power grid and transmission lines. This funding would support the expansion of renewable energy; according to Canary Media, it would provide resources for research and demonstration of batteries (about $6 billion), carbon capture and storage (about $8 billion), clean hydrogen production (about $9.5 billion), nuclear power (about $6 billion), and power grid improvements (about $11-14 billion, with the majority supporting grid resiliency and about $2.5 billion towards grid expansion).

  • $7.5 billion to build the first-ever national electric vehicle (EV) charging station network. This funding would accelerate the adoption of EVs by deploying EV chargers along highways corridors, and within communities, with a particular focus on rural, disadvantaged, and hard-to-reach communities.

  • $7.5 billion for no- and low-emission buses and ferries. This funding would drive demand for batteries and EVs manufactured in the U.S. while reducing pollution exposure for children. It would include $5 billion for zero-emission and clean buses and $2.5 billion for ferries.

While the infrastructure bill is essential in advancing clean energy infrastructure in the U.S., much more is needed to reach the 2035 carbon-free electricity target.

The reconciliation bill has not yet been written; however, based on the budget resolution, it won't be exclusive to clean energy but will contain considerably more funding for the clean energy transition. The budget resolution includes $198 billion for the Energy and Natural Resources Committee with instructions primarily related to clean energy development. Funding for other committees would also be used towards promoting clean energy, though likely on smaller scales. According to CNN, the budget resolution calls for:

  • Implementing new polluter fees;

  • Creating new consumer rebates for home electrification and weatherization;

  • Providing clean energy, manufacturing, and transportation tax incentives and grants;

  • And they are electrifying the federal vehicle fleet and buildings.

Once written, the bill will likely undergo multiple revisions before voting. However, based on a memo recently published by the Department of Energy (DOE), we can expect the reconciliation bill to provide strong support for solar development. The message states that if Congress adopts policies such as tax credits for renewable energy projects and component factories, solar alone could supply over 40 percent of the U.S.'s electricity by 2035–a significant increase from the three percent it provides today. To attain this target, solar would need to grow at about three to four times its current rate by 2030, based on an unpublished analysis by the National Renewable Energy Laboratory (NREL) cited in the memo.

The bipartisan support for the infrastructure bill was historic – but that doesn't necessarily mean smooth sailing from here. The two bills are politically intertwined, with many members of Congress refusing to pass one without the other. Specifically, the House of Representatives Speaker, Nancy Pelosi (D-CA), has maintained that she will not take up either bill until the Senate passes both of them. According to Senate Majority Leader Chuck Schumer (D-NY), the Senate has a target date of September 15 to submit its detailed reconciliation bill. However, nine House Democrats have refused to back the budget resolution unless Pelosi agrees to first vote on the bipartisan infrastructure bill. Without support from these nine Democrats, the budget resolution would not pass the House, delaying the reconciliation bill. Democrats only narrowly control the House and Senate, so they must reach a compromise to pass both–or either–pieces of legislation.

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With all of this uncertainty, you might be considering waiting to see what happens before going solar–but it could take months before Congress reaches any agreements. There's a possibility the legislation could be derailed altogether. We know that you can currently take advantage of the investment tax credit (set at 26 percent), and the sooner you install a solar system, the sooner you can start saving on your electricity bills. By going solar through EnergySage, you can maximize these savings by comparing quotes from pre-vetted solar installers in your area. Visit the EnergySage Marketplace today to see how much you can save.

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