WASHINGTON — Climate advocates in Pennsylvania say they feel like they were released from “the jaws of defeat,” after West Virginia Sen. Joe Manchin announced he would back the historic clean energy incentives that earlier this month had effectively killed in the Democrats’ massive embattled budget deal.
A deal between the Democratic senator and Majority Leader Chuck Schumer was abruptly announced Wednesday evening, surprising the advocates and clean energy producers that saw a major setback this month when Mr. Manchin cited inflation concerns as his reason for not supporting any climate funding or tax hikes in the budget reconciliation bill, formerly known as Build Back Better.
“We’re certainly excited that level heads prevailed,” said David Masur, executive director of the advocacy group PennEnvironment. “We’re most excited about game-changing investments in clean energy and tax credits for renewables and electric vehicles that will make it easier for everyday Pennsylvanians and Americans to choose clean energy in our everyday lives.”
The deal, now dubbed the Inflation Reduction Act of 2022, contains $369 billion for “climate change and energy security,” according to a one-page summary released by Senate Democrats.
Among the spending and tax incentives are $30 billion in production tax credits for solar panels, wind turbines, batteries and critical minerals; $10 billion in tax breaks for the construction of renewable energy facilities; upwards of $1 billion for government regulators to speed up the environmental permitting process for energy projects; and upwards of a $1 billion for oil and gas producers to cut methane emissions.
“Some would prefer those [fossil fuel items] aren’t in the mix, but overall the benefits far outweigh the negatives. It’s the largest investment in clean energy in our nation’s history,” Mr. Masur said.
Mr. Manchin, Senate Energy & Natural Resources Committee chair, has long opposed environmental review requirements that “put up barriers” to the construction of pipelines and other infrastructure.
As part of his agreement with Mr. Schumer, Democratic leadership promised that permitting reform legislation — separate from the budget reconciliation vehicle -— will be advanced before the end of the fiscal year, Mr. Manchin’s office confirmed Thursday.
“Manchin has been clear that a climate deal was possible but that it had to be one that was more balanced than heavily leaning toward green energy,” said Frank Maisano, who monitors energy policy for the Washington-based Bracewell Policy Resolution Group. “And that’s finally where the negotiations have gotten to.”
Mr. Machin’s pivotal vote in the 50-50 Senate allowed him to force negotiations for roughly a year on President Joe Biden’s spending package. The climate deal is smaller than the originally proposed $555 billion.
Democrats said Wednesday their overarching budget proposal would raise $739 billion over the decade in new revenue. That included $313 billion from a 15% corporate minimum tax and $288 billion the government would save as a result of prescription drug pricing reform. Other revenue would include $124 billion from beefing up IRS tax enforcement and $14 billion from taxing some “carried interest” profits earned by partners in entities like private equity or hedge funds.
In addition to climate spending, the plan directs $64 billion to health care.
The overall proposal is far more modest that the $3.5 trillion package Mr. Biden asked Democrats to push through Congress last year, and the pared-down roughly $2 trillion version that the House approved last November after Mr. Manchin insisted on shrinking it. Many priorities, including child care and education subsidies, have been dropped.
However, Mr. Biden praised the effort Thursday: “Let me be clear: this bill would be the most significant legislation in history to tackle the climate crisis.”
“This bill is far from perfect. It’s a compromise. But it’s often how progress is made,” he said.
The Associated Press contributed. Ashley Murray: amurray@post-gazette.com
First Published: July 28, 2022, 9:40 p.m.
Updated: July 29, 2022, 9:54 a.m.