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Is President Biden’s Climate Agenda Toast? Say It Isn’t So, Joe

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Joel Stronberg's picture
President The JBS Group

Stronberg is a senior executive and attorney with over 40 years of experience in federal and state energy, environmental and sustainability issues. He is the founder and principal of The JBS...

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  • Dec 23, 2021
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                                                   “We were close,” Senator Tina Smith (D-MN)

Introduction

There’s a jolly old soul in West Virginia who’s laughing his a** off today. Who is this laugh-master? Why it’s Old King Coal, of course; and, he just got off the phone with Senator Joe Manchin (D-WV).

On the call, West Virginia’s senior Senator told the old man he would be announcing his opposition to President Biden’s Build Back Better Act (BBB), otherwise known as budget reconciliation. To add icing to the cake, Manchin thought he would do it a few days before Christmas on FOX Sunday News but only after sending an intern over to the White House less than 30 minutes before he was to go on informing the President of his decision.

The news ripped through Capitol City, registering 11 out of 10 on the political Richter scale. Although it ain’t over ‘til it’s over, the Democratic politics of it all do nothing even to hint at the Democrats’ capacity to keep their majorities in Congress. Could this be the reason 22 House Democrats have announced their retirements?

 
Manchin’s opposition to the bill will profoundly impact US climate policy—possibly for the next decade. Why that long? Because to make that happen, the Democrats would have to take back their rule of the federal government by the end of 2026 at the very latest.

Consider that nothing less than sweeping legislation—more sweeping than Biden’s BBB would be needed to make up for the lost time. Four years from now, will the 119th Congress be the place for that to happen? Or, will there be Manchin and other Manchin’s yet to get over?

Assume now that it’s December 2025, and the 119th Congress and the president have finally written and signed into law that hoped for sweeping legislation. It’s now on to the executive branch, where all the needed policies, programs, and regulations must be drafted and finalized as required by the Administrative Procedures Act.

Theoretically, the required legislative and executive actions could be accomplished within four years. However, based on decades of judicial history, no rule will become final until a long line of litigation is concluded. Litigation largely filed by red states claiming the federal government has no right to regulate the major causes of Earth’s warming, e.g., greenhouse gases like CO2 and methane.

It could take an additional one to five years for the courts to finally act on all the challenges. As reference points, it’s been 11 years since the Obama administration began to do the paperwork on its Clean Power Plan (CPP). The Plan never went into effect and is still being litigated.

The US Supreme Court has recently agreed to hear four cases that could overturn Massachusetts vs. EPA that gave the federal government the authority to regulate greenhouse gas emissions. The lead case is West Virginia v. EPA.

So, where are we, and is there any chance of Manchin returning to the bargaining table? To answer the second part of that question—yes, I think there is a chance that President Biden can coax the Senator back into productive discussions.

How cooperative Manchin will be is hard to tell at the moment. In the meantime, it’s essential to understand some of the personal and political dynamics at work here.

Is that any way to treat your president or your party?

It appeared from the comments made by the White House Press Secretary, Jen Psaki, that Manchin didn’t even accord President Biden the courtesy of informing him ahead of the announcement.
If his comments on FOX and written statement indicate an end to that effort, they represent a sudden and inexplicable reversal in his position and a breach of his commitments to the President and the Senator’s colleagues in the House and Senate.

Somewhat whiningly, Manchin has defended his latest act by saying he’s spent the last five and a half months working as diligently as possible meeting with President Biden, Majority Leader Schumer, Speaker Pelosi …determine the best path forward despite my serious reservations. (Emphasis added)

The truth is something else. What Manchin has been doing for all this time is whacking away at the reconciliation act much as he had done to the infrastructure bill. President Biden’s original Build Back Better Act (BBB) proposal was for $3.5 trillion—an amount that was cut down to $1.75 to placate the coal-state Senator.

Manchin knows that he’s the most powerful Democrat in Capitol City. He’s leveraging his position to overlay what’s essentially a moderate Republican slant on social policy. That is to say, moderate Republican as it was before the rise of the Tea Party.

Manchin set his sights on dropping climate-related matters from the reconciliation package from the beginning. He started in on the most impactful provision—the proposed clean electric standard.
 
The standard would have rewarded electric utilities for increasing their use of clean energy alternatives like solar and wind while fining those that didn’t. Manchin was concerned that it would decrease coal consumption and lead to fewer jobs for West Virginians.

In one regard, Manchin is right about the long-term prospects for coal. The power sector is phasing out coal; but, it’s because of market forces. The move to clean alternatives under the legislation would happen gradually, and there would be funds for retraining miners who lose their jobs.

Manchin didn’t stop with the electric standard. He was also opposed to charging fossil fuel companies for their methane emissions. Although not as prevalent in the atmosphere, meth-ane traps 80 times more heat than CO2. In other instances, he announced his opposition to income credits for electric vehicles (EV)—especially the extra credit consumers would get for an EV made with union labor in the US.

Manchin has continued to question the need for the federal government to do anything to speed the transition to a low-carbon economy. He believes these technologies are already being picked up by industry.

             It’s not the consistency of Manchin’s opposition to the BBB that shocked
                            the White House. It’s the inconsistencies of his actions.
 
As late as Friday evening (17 December), it was being reported that all of Manchin’s issues were being worked on; for example, the matter of methane fees was being dealt with by Senator Carper (D-DE). Carper chairs the Senate Energy and Public Works Committee and negotiated an earlier compromise in the House version of the package. Before Manchin went nuclear, he said he expected to make “additional changes” now that it’s in the Senate.

In killing the bill, Manchin killed tax credits that would have gone to support carbon capture and storage (CCS). The BBB provisions in tandem with the $12 billion in direct support for the technologies gave fossil fuel companies a huge opportunity.

According to Erik Oswald, an ExxonMobil lobbyist, the payouts from the expanded credit could be so large that, if energy companies reach the scale they say they can, it could largely wipe away their corporate income tax bills.

In a statement released by his office following his FOX Sunday News interview, Manchin writes:
If enacted, the bill will also risk the reliability of our electric grid and increase our dependence on foreign supply chains. 

Manchin is wrong on the reliability issue and self-defeating on the foreign supply chain problems. He obliquely references Texas as an example of grid insecurity—presumably based on Governor Greg Abbott’s (R) misstatement about wind turbines being responsible for the state’s loss of power earlier in the year.

Grid insecurity is a problem; because of an aging and under-invested infrastructure—not due to clean energy alternatives. Moreover, the BBB would have provided $150 million to create a new Manufacturing USA Institute focusing on semiconductor manufacturing. (Cite)

The BBB was also set to include the Advanced Manufacturing Investment Credit program, a modified version of the Facilitating American-Built Semiconductors (FABS) Act. It would have provided an investment tax credit of up to 25 percent for certain “advanced manufacturing facilities” and components.

As far as anyone knew, Manchin appeared supportive of the BBB tax credit provisions, except for the EV credit and the bonus for union-made vehicles mentioned earlier. The tax credit por-tion of the reconciliation package total somewhere around $300 million and includes the ex-tension of existing credits.

Why the opposition, if his issues were being worked on?

This is the $64K question. In part, Manchin was worried about inflation and the rising federal debt. Reasons one can assume are legit.


However, Manchin’s opinion is at odds with the 17 Noble Prize-winning economists who published an open letter refuting his conclusion about the BBB’s impact on inflation. According to the 17:

…key components of this broader agenda are critical—including tax reforms that make our tax system more equitable and that enable our system to raise the additional funds required to facilitate necessary public investments and achieve our collective goals….and will enhance the ability of more Americans to participate productively in the economy, it will ease longer-term inflationary pressures. (Emphasis added)

It’s critical to remember that the reconciliation package was about much more than combatting climate change. The bill has been cast as a once-in-a-generation investment. It in-cluded programs like universal pre-kindergarten, expanded Medicare coverage for dental, vision, hearing, in-home assistance for older Americans, and extension of the $350 passed as part of the pandemic relief package.

Manchin claims he’s always said, ‘If I can’t go back home and explain it, I can’t vote for it. It’s not clear what the “it” is. The explaining he has to do, in my opinion, is about why he sees the defeat of the bill as better for West Virginia.

According to the West Virginia Center on Budget and, Policy the BBB would:

…improve economic security among households with children by extending…[the] poverty-reducing Child Tax Credit (CTC) made via the American Rescue Plan Act (ARPA). In West Virginia, the CTC reached 346,000, or 93 percent, of all children under 18….

According to the Center, the Earned Income Tax Credit (EITC) benefits 102,900 West Virginia workers.

Manchin’s list of demands was long. Most were works in progress at the time of his Sunday interview. So, why did he do what he did?

Why the opposition, if his issues were being worked on?

I don’t know why Senator Manchin did what he did. Speculation and anger abound.[i]

The two leading theories are self-interest and thin skin. There’s evidence in support of either or both.

Manchin is heavily invested in West Virginia coal. According to Open Secrets, the Senator received between $591,950 and nearly $1.5 million in 2020 from Enersystems, a coal brokerage company he founded in West Virginia, and other assorted coal and mining interests, e.g., the $80 to $250,000 in dividends from Farmington Resources. 

Interestingly, he hasn’t been overly aggressive in defense of coal and has rarely referred to the miners. He speaks of them more generically as the people of West Virginia. One reason may be that there are fewer than 11,418 in the state. In 2010 the number was 21,091.

The second theory is his feelings got hurt. Hey, I’m just the messenger here. However, I do see how that might be a possibility.

In an interview on Metro News/The Voice of West Virginia, Manchin had this to say about why he finally said no:

I’m not blaming anybody. I knew where they were, and I knew what they could and could not do
They figured, Surely to God we can move one person. Surely, we can badger and beat one person up. Surely we can get enough protesters to make that person uncomfortable enough they’ll just say, Okay, I’ll vote for anything just quit.

Guess what! I’m from West Virginia. I’m not from where they’re from where you can beat the living crap out, and people and they’ll be submissive.

Manchin has been careful not to accuse President Biden of applying these aggressive actions. I equate his leaving the President out of it with his keeping a door to future negotiations open--if just a hair.

We haven’t heard the last about drafting a smaller, more targeted BBB. What’s gone before is going to color what comes behind. Progressives are livid not only about Manchin but about having been talked into moderating their positions on climate since 2018.

Progressives feel Manchin went back on his word about supporting a reconciliation package if Congress would first vote on the infrastructure bill. Trust within the Democratic caucuses is nearly non-existent. Personal and political feelings will play a significant role in the re-negotiation of any future legislation.

This is Part 1 in a two-part series. In the next installment, I’ll be discussing where and how we go from here and what a Plan B BBB might be.

*************
[i] Bette Midler insulted everyone in West Virginia she was so angry. She’s since apologized to the people of the Mountain State—although not too much to the senator.

 
 
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Mark Silverstone's picture
Mark Silverstone on Dec 27, 2021

Thanks for the analysis Joel. In order to explain it I think the simple age-old rule applies: «Follow the money.» 

Manchin seems to have played all of the players against each other in order to maximize his take. Ironically, the people of his own state are among the biggest losers. 
He couldn’t care less.

What’s even worse is that the harm this does to the Democratic party makes it impossible for them to find one Republican vote, however unlikely that may be in any case. Climate is now the same zero sum game as health care, child care, education, taxes and voting rights.

 

Peter Farley's picture
Peter Farley on Dec 28, 2021

I suspect that the failure of BBB at this time will not greatly alter the renewable trajectory in the US. State based initiatives to lower the soft costs of behind the meter solar and storage and continued growth in utility wind and solar will push renewables well beyond coal and probably beyond gas as a fuel source for electricity generation before the end of the Biden presidency.  At the same time delays in closures of several nuclear plants will also reduce the load factors on coal plants. The question is whether coal or gas will lose market share quicker. Unless gas prices fall again it is likely that gas market will fall faster than coal, particularly as many of the areas with highest gas share also have the best renewable resources

The success of F150 Lighting and Mustang E will in some ways have a bigger psychological effect than Tesla although the numbers are smaller. Combined with continuing growth of Tesla it will transform American attitudes to transport electrification.

Initiatives such as New York's banning of gas connections to new buildings and California's solar mandate will expand slowly across the country.

Wildfires and storms continue to be drivers for renewable microgrids, home solar + storage and VPPs and consequently an increasing focus on energy efficiency, so it is unlikely that electricity consumption from central generators will increase. In Australia even though the economy has grown considerably faster than the US over the last 10 years, supply from the main grid has fallen by about 1% per year.

In the end Manchin's opposition will end up spurring a more decentralised grid with less investment in transmission and large scale storage which will probably improve reliability and lower costs for most Americans  

Mark Silverstone's picture
Mark Silverstone on Dec 28, 2021

I wish I could share your optimism that market forces, combined with initiatives by state and local governments, can accomplish what needs to be done. 
But I think some features of BBB are indispensable, especially the EV charging aspect, as well as the tax proposals and methane emissions controls.
Of course, these and other issues may get piecemeal support. And I am slightly hopeful that they may, given that they make such obvious sense.

But the entrenched interests are holding most of the cards now, including the inevitable litigation that Joel mentioned, the dysfunction of the courts, especially the

Supreme Court,  and the voter suppressiion measures enacted to deny the will of the citizenry in the upcoming elections.

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