The Fuse

Manchin Threatens Progress on Climate Crisis

by Nick Cunningham | December 20, 2021

The outlook for progress on tackling the climate crisis over the coming decade took a major hit on Sunday when West Virginia Senator Joe Manchin (D) announced his opposition to the Build Back Better Act.

There is a long list of policies and actions that governments at the state, local, and federal level can take to slash greenhouse gas emissions. But the size and scale of the climate policies contained in the Build Back Better Act makes it indispensable to any scenario in which the U.S. gets on track with a sustainable pathway. The U.S. and the world cannot afford another major legislative failure on climate change.

Build Back Better

The Biden administration has taken a series of measures this year to address climate change, from EPA regulations on methane from oil and gas wells, to the just-announced final rule that will beef up fuel economy standards for cars and trucks.

The Biden administration has taken a series of measures this year to address climate change, from EPA regulations on methane from oil and gas wells, to the just-announced final rule that will beef up fuel economy standards for cars and trucks.

While these moves are significant, the bulk of the Biden administration’s climate legacy – and the heavy lifting in terms of making enormous strides in bringing down emissions – is tied up in the Build Back Better Act (BBB), the sweeping social safety net package under consideration in Congress.

The bill contains over $550 billion in funding for a range of policies and programs across multiple sectors. For instance, roughly $300 billion would go to tax incentives for solar, wind, transmission lines, electric vehicles, and other forms of clean energy. Importantly, many of these incentives would be delivered as direct-pay subsidies, rather than the recent historical practice of offering refundable tax credits that can only be tapped at a later date and only by companies with taxable income.

The tax credits for EVs would amount to $7,500 for any model car, with the sales caps lifted for automakers. An extra $4,500 credit would go to union-made vehicles. Again, one policy improvement in BBB compared to past incentives is that a potential buyer of an EV would be able to receive the benefit upfront, rather than filing for it in their tax returns the following year.

BBB would also deliver incentives to consumers for building electrification. Consumers could receive thousands of dollars for converting their homes from gas or oil heating to an electric heat pump, which comes equipped with both heating and air conditioning needs.

A fee on methane emissions is also included, which would tax oil and gas companies that release methane into the atmosphere at their facilities.

Funding would also go into a newly created Climate Conservation Corps, a revival of a New Deal-era concept, which would employ young Americans to carry out a variety of climate-related programs, such as wildfire mitigation and coastal restoration.

Taken together, the array of investments contained in BBB could get the U.S. almost to its 2030 emissions reduction goal of 50-52 percent below 2005 levels, according to an analysis by Rhodium Group. Other actions taken by the executive branch would still be needed, including a variety of regulations on appliances and the energy sector, but BBB is vital. Without it, the U.S. will be far off track.

Taken together, the array of investments contained in BBB could get the U.S. almost to its 2030 emissions reduction goal of 50-52 percent below 2005 levels, according to an analysis by Rhodium Group.

Possible pathways to slimmer BBB?

Sen. Manchin blew up the package on Sunday when he withdrew his support. The last few days has destroyed trust between Manchin in the White House, and Manchin and the rest of his party in Congress. But that does not mean that BBB is entirely dead.

There are differing interpretations of how we go to this point, but there is also some hope that a reformulated package could bring Manchin back on board.

There are differing interpretations of how we go to this point, but there is also some hope that a reformulated package could bring Manchin back on board.

Machin reportedly gave the White House a proposed framework last week in private that was more to his liking, which included pre-K, climate funding and subsidies for healthcare, but excluded the child tax credit. Manchin, who earns millions of dollars from his waste coal business, has objected to some of the climate and energy provisions, including the methane fee and the extra subsidy for union-made vehicles. Still, his latest proposal made in private to the White House included the bulk of the $550 billion in climate and energy funding.

Hours after Manchin announced his opposition to BBB on Sunday, Senator Ron Wyden (D-OR), who chairs the Senate Finance Committee, promoted a new framework that slims down BBB to a handful of key categories: the child tax credit, health subsidies, drug pricing reform, and the climate program. The framework is not all that different from the proposal Manchin sent the White House in private, save for the child tax credit, which appears to be a big sticking point. Still, there are several big programs on the table that appear to be obvious outlines of a potential new compromise.

There are other reasons why Sen. Manchin may still want a deal. Without BBB, the net result is a huge blow to the U.S. economy. Goldman Sachs downgraded its economic growth forecast for 2022 from 3 percent to 2 percent following Manchin’s announcement. Manchin’s main articulated concerns about BBB are its overall impact on the economy, and a wide range of economists say that BBB would be good for the economy and not problematic for inflation. The latest downward revisions from Goldman Sachs undercuts Manchin’s stated position.

Manchin’s main articulated concerns about BBB are its overall impact on the economy, and a wide range of economists say that BBB would be good for the economy and not problematic for inflation.

Closer to home, the legislation also contains funding for investing for clean manufacturing, notably with incentives for projects in former coalfield. Also, BBB extends a fee paid by coal companies that funds coal workers that suffer from Black Lung disease. Compensation is set to drop beginning in January without BBB, which has caught the attention of coal workers – constituents whose interests Manchin claims to represent.

“We urge Senator Manchin to revisit his opposition to this legislation and work with his colleagues to pass something that will help keep coal miners working, and have a meaningful impact on our members, their families, and their communities,” United Mine Workers of America (UMWA) International President Cecil E. Roberts said in a statement on Monday.

According to Politico, President Biden and Sen. Manchin reportedly spoke by phone Sunday night, and the sense is that BBB negotiations will resume in January.

Progress on the climate crisis hangs in the balance.

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