Policy & Regulation

U.S. House passes Build Back Better bill. What’s in it for renewable energy?

U.S. House passes Build Back Better bill. What’s in it for renewable energy?
(Sander Weeteling/Unsplash)

The U.S. House passed President Bident's Build Back Better agenda on Friday -- a $1.75 trillion budget deal that features historic investments in climate change mitigation and renewable energy. The Senate must now take up the bill with moderate Democrats expressing objections to several key provisions.

The White House released a framework of the bill last month. In total, the latest 'Build Back Better' budget reconciliation framework stands at $1.75 trillion, with $555 billion for the climate and clean energy -- the largest investment ever by Congress.

"This framework also makes the most significant investment to deal with the climate crisis ever, ever happened — beyond any other advanced nation in the world," President Biden said in remarks about the framework. "Tax credits to help people do things like weatherize their homes so they use less energy, install solar panels and develop clean energy products, and help businesses produce more clean energy.

"And when paired with the Bipartisan Infrastructure Bill, we will truly transform this nation."

Congress has already approved the $1.2 trillion bipartisan infrastructure bill, which includes billions of dollars for renewable energy projects and research.

Gregory Wetstone, president and CEO of the American Council on Renewable Energy, called the Build Back Better Act's passage a "critical milestone" for the energy transition and efforts to combat climate change.

"The legislation finally moves the country beyond years of on-again, off-again renewable tax credits and establishes a stable, predictable, and long-term clean energy tax platform that will spur critically important investment in renewable power, energy storage, and advanced grid technologies," Wetstone said in a statement. "This is America’s last best chance to take timely action to address the global climate crisis, and it is imperative we rapidly accelerate the renewable energy transition. ACORE remains committed to working with policymakers in both chambers to ensure the final legislation will successfully deliver on the Biden administration’s scientifically driven climate objectives.”

What's in the Build Back Better plan for renewables?

While the Clean Electricity Performance Program, a carrot-and-stick mechanism designed to accelerate utility efforts to decarbonize the grid, was removed from the Build Back Better plan during negotiations with moderate Democrats, it appears that many of the clean energy programs initially proposed remain in the bill.

The White House indicated that the latest version of the budget bill restores the production tax credit (PTC) and investment tax credit (ITC) to their full values, and taxpayers are eligible for direct pay instead of tax equity offsets. The bill will further incentive production that takes place in the U.S.

Abigail Ross Hopper, CEO of the Solar Energy Industries Association, called the Build Back Better plan the "most ambitious and transformational" clean energy plan ever put forward by Congress.

"Solar is a job-creator, and the long-term tax incentives for solar, storage, and domestic manufacturing will put us on a path to decarbonize the electric grid, reach the President’s 2035 clean energy target, and create hundreds of thousands of quality career opportunities in every community," Hopper said.

The Residential Renewables for All campaign cheered the survival of the direct pay (25D tax credit) in the bill.

“Washington now has an opportunity to ensure that middle- and low-income families — no matter where they live or how much they earn — can power their homes with clean, affordable energy sources," the group said.

The Build Back Better plan also creates a new ITC for standalone energy storage. In September, a coalition of more than 50 environmental, renewable energy, and transportation groups called on Congress to include long-term clean energy incentives in the budget reconciliation package.

The cost of an electric vehicle made in the U.S., using domestically-sourced materials, will be cut $12,500, the White House said.

"The investment tax credit for stand-alone energy storage is critical to accelerating the pace of storage deployment on the electric grid," said Jason Burwen, interim CEO of the US Energy Storage Association. "Combined with new manufacturing incentives available for batteries and federal procurement of next-generation long-duration storage, the Build Back Better Framework will supercharge efforts to rapidly transition to clean energy while building a robust energy storage supply chain here at home."

The White House said the Build Back Better plan will cut greenhouse gas emissions by "well over" one gigaton in 2030, and put the country in line with reducing emissions by 50-52% below 2005 levels in the same year.

Gregory Wetstone, President and CEO of the American Council on Renewable Energy, called the Build Back Better plan "our best chance to address the climate crisis."

"The provisions in the framework represent an unprecedented national commitment to accelerating the clean energy transition and credibly addressing the climate challenge," Wetstone said. "To the degree we have concerns, they relate to potential unintended consequences around last-minute additions to otherwise unrelated pieces of the legislation that may work at cross-purposes with the mission-critical climate objectives at the heart of this bill. The time to act is now, and we are committed to working with Congress on the final contours of the reconciliation package in order to deliver the scientifically driven climate response the American people want and deserve.”

Biden will hope to have secured support for the bipartisan infrastructure bill and the budget reconciliation package, with all of their investments in climate change and clean energy, before attending the United Nations COP26 climate summit, which begins next week.

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