Climate Benefits the Bipartisan Infrastructure Deal Leaves Out

On June 24, 2021, President Biden and a group of bipartisan senators announced a $1.2 trillion Bipartisan Infrastructure Framework (with $579 billion in new spending). While the proposal includes some investments in climate priorities, it cuts key climate action provisions that would benefit the economy, jobs and public health.

Biden’s original American Jobs Plan, including the Made in America Tax Plan, introduced in March 2021, called for more than $2 trillion in infrastructure spending to build American industry, create quality jobs, and deliver climate action while investing in disadvantaged communities. Our previous analysis discussed how climate, clean energy and environmental justice were at the heart of the American Jobs Plan package.

But initial analysis of the bipartisan plan suggests that it may cut as much as a trillion dollars in environmental, climate and clean energy spending and tax incentives from the American Jobs Plan.

Scrapping these key elements would not only make it impossible for the U.S. to meet its commitment to reduce greenhouse gas emissions 50% by 2030, it would miss enormous opportunities for cleaner air, quality jobs and resilient communities. A recent poll found that a majority of American voters would be disappointed if climate-friendly investments were left out of the final infrastructure package.

On the congressional side, Speaker Pelosi and Leader Schumer have been clear that alongside the bipartisan proposal they remain committed to the comprehensive agenda laid out in the American Jobs Plan, including the environmental, climate and energy spending absent from the bipartisan framework.

As the bipartisan framework is translated into legislative text in July 2021, Congress should also draft and pass a budget reconciliation* bill or other legislative vehicles that includes all the missing provisions from the American Jobs Plan. As the bipartisan bill is considered throughout the summer, committees can prepare and report their components of a reconciliation bill, and both kinds of legislation can be passed in tandem.  

Notes on the graphic:

• Does not account for components of the American Jobs Plan that may be passed through other legislative vehicles like the U.S. Innovation and Competition Act.

• Is based on the detailed American Job Plan and Made in America Tax Plan numbers as reported in the President’s Fiscal Year 2022 budget.       

• About half of the building and housing investments are not specifically climate or energy efficiency related, but these investments have been included in the above data as the Biden administration has made it clear that these principles would be integrated throughout their building investments.

Here’s a look at some of the American Jobs Plan investments missing from the bipartisan framework that could be included in reconciliation, and the specific economic, climate and quality-of-life benefits they could provide:

1. Electrifying Transportation

The bipartisan framework proposes a combined total of only $15 billion for both electric vehicle (EV) charging infrastructure and electrifying transit and school buses. While an important acknowledgement of the need for EVs, these investment levels are a far cry from the scale of federal investment required and the more than $180 billion in spending and tax credits the American Jobs Plan originally proposed. It leaves out some promising ideas from the American Jobs Plan that could help rapidly scale vehicle electrification, like funding for federal fleet electrification, or tax incentives for consumers to purchase EVs and for businesses to purchase heavy- and medium-duty zero-emission vehicles.

Investments proposed in the American Jobs Plan would spur growth in the EV manufacturing industry and make it possible for EVs to become the norm. People are ready — there were 100,000 pre-orders of Ford’s all-electric F-150 within three weeks of its announcement. But substantial federal investment is needed, particularly for public EV charging infrastructure for all.

EVs will be a win for the economy and family budgets. The cost of fueling an EV with electricity is currently less than half as much as the cost of the gasoline equivalent. Even when gas prices have dipped in the past, EV charging has still been cheaper.

EVs are also cheaper to maintain and repair. This more than makes up for EVs’ slightly higher purchase prices, which are plummeting. Studies have also found that the transition to electric vehicles will lead to net job gains in the overall economy.

Transitioning to EVs would also take polluting vehicles off the road.

In the U.S., transportation is a leading source of harmful air pollution, which can impact health outcomes and is a disproportionate burden for low-income communities and communities of color. For example, nearly all of America’s school buses are fueled by diesel and produce diesel exhaust, a known carcinogen. A large-scale investment in electric school buses, like the $20 billion proposed in the American Jobs Plan, could help protect children from diesel exhaust.

Significant investments are needed to clean up the transportation we use every day to get to work, send our children to school, and deliver our goods to businesses and households.

2. Affordable, Modernized, Sustainable Buildings and Housing          

Commercial and residential buildings represented 13% of greenhouse gas emissions in the U.S. in 2019. But one category of spending notably absent from the bipartisan framework is investments in energy efficiency and retrofitting or modernizing buildings, including schools, hospitals and homes.

This $0 for energy efficiency and buildings compares to $370 billion in the American Jobs Plan. Legislation that could be included in, or passed along with, the bipartisan infrastructure package — specifically the Energy Infrastructure Act that is assumed to be the Energy and Natural Resources Committee’s contribution to the bipartisan package — could advance some spending in this space. But the reality remains that the bipartisan proposal includes no funding for this critical part of the country’s built infrastructure.

The level of federal investment called for in the American Jobs Plan would play a catalytic role in lowering the energy consumption of buildings, creating energy-efficient housing, and decarbonizing heating — while creating jobs and lowering the energy burden of consumers. Energy-efficient buildings are safer because they stay cooler in extreme heat (like we are seeing throughout the West) and warmer in extreme cold (like Texas experienced in February 2021).

The energy savings from these emissions-reducing changes can also lower electricity bills for residents, school districts and businesses.

The average household in the U.S. could save $200 to $400 on energy bills with better energy efficiency. This is particularly important for the 30.6 million people spending a high portion of their income (more than 6%) on energy bills, including low-income, Black, Hispanic and Native American households, which face dramatically higher energy burdens than the average household.

Whole communities can realize these benefits through investments in buildings that provide a public service, like schools. Schools are the second-largest form of public infrastructure, and they currently produce emissions equivalent to the annual emissions of over 9 million cars. Modernizing school buildings could save desperately needed funds, reduce emissions, increase community resilience and bring the benefits of climate-smart infrastructure directly to the next generation.

Equally important, investments in modernization and efficiency can also play a role in making our homes, schools and businesses healthier and safer.

Finally, investing in building efficiency retrofits also creates local jobs – assessments of the Obama administration’s investments in the State Energy Program and Weatherization Assistance Program found strong employment benefits in addition to emissions reductions and energy bill savings.

3. Clean Energy Investments    

While the U.S. saw record-breaking clean energy deployment last year, reaching net-zero emissions by mid-century to prevent the most severe climate change impacts will require at least doubling the country’s annual level of renewables deployment.

The bipartisan framework starts to address this need by investing $73 billion in grid infrastructure and transmission systems. These critical investments will help expand clean energy deployment, increase the resilience of the grid to extreme weather and wildfires, and create a new Grid Development Authority at the U.S. Department of Energy.

It also creates an Infrastructure Financing Authority, which would provide $20 billion in infrastructure financing for clean energy and transportation projects, as well as $21 billion for environmental remediation, which could be used to clean up abandoned oil and gas wells, a critical source of methane emissions which have the climate impact  of 2.1 million passenger vehicles annually. However, while the bipartisan framework includes $114 billion in these energy sector investments, it leaves out any specific investments in renewable energy deployment.

The American Jobs Plan, on the other hand, proposed more than $390 billion in clean power and transmission infrastructure. That includes a more than $95 billion investment in reenergizing American power infrastructure, along with a clean electricity standard and almost $250 billion in clean energy deployment tax incentives as part of the Made in America Tax Plan.  It also includes removing fossil fuel subsidies as a possible financing source, something left out of the bipartisan plan.

Tax incentives and a clean electricity standard are two key policies for cleaning up the grid that shouldn’t be left on the table. Expanding, reforming and extending existing tax credits — like the energy investment tax credit and renewable energy production tax credit — can play an important role in meeting clean energy goals and spurring the next generation of clean energy technologies (including long duration storage, hydrogen, CCS and others).

In addition, one of the most efficient and effective ways to ensure clean energy deployment is adoption of a clean electricity standard that requires a certain level of electricity to be generated from carbon-free sources. The American Jobs Plan proposed an Energy Efficiency and Clean Electricity Standard, meant to contribute to the goal of 100% carbon-pollution free power by 2035.

The lack of direct investment in clean-generating technologies could leave some areas of the country out of the economic investment benefits of these industries. The grid remains heavily carbon-intensive in many regions of the U.S. In these areas, ratepayers remain saddled with higher bills from uneconomic coal plants, frontline communities and communities of color breathe dirtier air and suffer resulting health impacts, and residents do not have access to jobs in the fast-growing wind and solar industries.

Transitioning to clean energy improves air quality and health outcomes, particularly in frontline communities substantial source of air pollutants. One recent study found that achieving an 80% clean electricity system by 2030 would prevent 93,000 premature deaths and avoid $1.7 trillion in health and climate damages by 2050 compared to business-as-usual

Shifting to clean power also makes economic sense. Building new onshore wind energy is already cheaper per megawatt-hour than building gas-fired power plants. Solar PV is basically at cost parity with gas and is continuing to fall in price. Plus, investing in renewable energy generally creates more jobs than equivalent investments in fossil fuel production.

Building a reliable and resilient grid is critical to both mitigating climate change and adapting to the wildfires, storms and increasingly severe weather it brings. While the bipartisan framework investments in transmission and grid resiliency are laudable, direct investments in clean energy are also needed.

4. Next Generation Industries, Advanced Manufacturing and RD&D

The bipartisan framework, as reported by the Biden administration, does not explicitly include investments in industrial decarbonization; advanced manufacturing; or research, development and demonstration (RD&D). It is possible that some spending in these areas may be included in the bipartisan infrastructure package, but it will likely not be at the scale of the American Jobs Plan.

The American Jobs Plan includes investments that would establish 10 carbon capture demonstrations on steel, cement and chemical plants; expand the 45Q carbon sequestration credit, and bolster research into emerging technologies and climate science and innovation. These kinds of investments can jumpstart emissions reductions in hard-to-abate sectors while also producing environmental and economic benefits.

Carbon capture and storage (CCS) technologies will be necessary to decarbonize the industrial sector, but are not being deployed fast enough to do that by midcentury.

Unlike fossil-based energy that can be substituted by renewables, industrial products generally cannot be substituted with lower-carbon alternatives. CCS technologies are one of the key means to reduce the emissions of vital industries, and widespread CCS deployment has the potential to catalyze tens of billions of dollars in new investment across almost every state in the nation, driven by an investment of $12-15 billion in industrial carbon capture facilities through 2035.

Enhancements to the section 45Q tax credit could ultimately result in the deployment of as much as 110 million metric tons of additional industrial carbon capture capacity, reducing emissions by up to 76 million tons in 2035. That’s equivalent to the annual emissions of more than 17 typical coal-fired power plants or more than 12 million homes’ electricity use per year.

Other legislation that is moving in the Senate, if included in the bipartisan package, could provide funding in some of these areas, but their potential remains to be determined. The Energy Infrastructure Act put forward by Senator Manchin is widely seen as the Energy and Natural Resources Committee’s contribution to the bipartisan agreement, though its components were not all referenced in the administration’s fact sheet on the framework. This legislation includes provisions for carbon capture projects, transport infrastructure, storage, and utilization for captured carbon dioxide, as well as funding for technical assistance to advance smart manufacturing for small and medium manufacturers. The Innovation and Competitiveness Act, which recently passed the Senate with bipartisan support and could be included as well, focuses on strengthening RD&D and commercialization of advanced manufacturing. These investments would add to what is included in the current bipartisan package, but do not add up to the commitment in the American Jobs Plan.

Realizing the Full Potential of Climate-Smart Infrastructure Investments for Americans 

Federal action to address the climate crisis is urgently needed. Implementing the people-first approach of the American Jobs Plan is a necessary and foundational step.

Congress and the Biden administration must act now to enact the climate provisions of the American Jobs Plan through legislation, in addition to and going beyond the bipartisan infrastructure framework.

This is a first-in-a-decade — and quite possibly the last-in-this-decade — opportunity to deliver key economic and quality-of-life benefits from climate action. The economic, human and climate benefits of strong action are too great. The American people cannot afford to leave anything on the table.