Plan includes $100 billion for power infrastructure
Heavy EV, electrification focus seen at expense of oil, gas
President Joe Biden’s $2 trillion infrastructure and energy plan would dramatically reshape the nation’s energy landscape by offering new tax incentives for clean energy, electric transmission projects, and carbon capture and storage technology.
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Industry experts cautioned that the huge proposal, which Biden envisions financing largely through major changes to the corporate tax code, will likely need to win unanimous Democratic support in the narrowly divided US Senate. Unveiled March 31 as the American Jobs Plan, it will also need to overcome opposition from the US oil and gas sector, which stands to lose under the plan’s heavy emphasis on electric vehicles and charging infrastructure, analysts said.
Some former government officials also questioned the wisdom of creating new government offices to implement the plan instead of harnessing existing federal authorities.
But clean energy advocates and industry analysts agreed that the plan’s clean energy provisions, including a federal energy efficiency and clean electricity standard, could spur hundreds of billions of dollars in additional private sector investments.
Targeted tax credits
The American Council on Renewable Energy praised Biden’s proposal for a 10-year extension of the investment and production tax credits for clean energy technologies such as wind and solar, and for creation of a new standalone credit for energy storage resources. The plan also aims to make those credits refundable, meaning entities without any tax liability could claim them through a process known as “direct-pay.”
“The direct pay option for renewable generation credits will go a long way toward accelerating the deployment needed to decarbonize the power sector by 2035, and new incentives for transmission and energy storage will be key to securing a more reliable, efficient and cleaner electric power grid,” Gregory Wetstone, the council’s president and CEO, said in a statement.
With the US electric grid largely siloed into three systems – a Western Interconnection, Eastern Interconnection, and the Texas grid – calls for more interregional transmission infrastructure have also grown increasingly urgent as variable renewable energy penetration continues to grow.
Biden’s plan, which includes $100 billion for power infrastructure, provides a “targeted” investment tax credit for high-voltage transmission needed to move renewable energy from remote locations to population centers.
The plan would also establish a new Grid Deployment Authority within the Department of Energy empowered to leverage existing rights-of-way along roads and railways, potentially allowing transmission projects to overcome local opposition.
David Hill, a former lawyer for DOE and NRG Energy, praised the transmission-focused tax credit but suggested the creation of an entirely new DOE office may cost valuable time.
“The key here will be making sure that the authority can actually do something and that it’s not just going to be another administrative stumbling block,” Hill said in an interview.
Hill noted that DOE already has broad authority under the Energy Policy Act of 2005 to identify national interest electric transmission corridors. A 2009 ruling by a divided federal appeals court created legal uncertainty over the extent of that authority, but Hill argued years of federal inaction on transmission point to a question of “political will” more than anything else.
Oil, gas seen as early losers
Biden’s plan also calls for $621 billion in spending on transportation infrastructure and resilience, including a $174 billion investment to “win” the electric vehicle market. That effort would hand EV makers and electricity providers a win at the expense of a US oil and gas industry that has struggled to build new pipeline infrastructure in recent years.
“To me, the big winner would be electric vehicles, and the big loser would be oil consumption for transportation purposes,” Seth Schwartz, president of Energy Ventures Analysis, said in an interview.
That push for EVs along with provisions to enable the manufacture of electric heat pumps for residential…