Top House Democrats’ plan to eliminate carbon emissions from the power sector by 2035 includes a provision that would delay requirements to purchase more clean electricity if compliance costs become too high.
The provision, which has been called a “decelerator,” is tucked into the clean electricity standard top Democrats on the House Energy and Commerce Committee proposed in sweeping climate legislation last month. It could serve as an olive branch to the utility industry, which has raised concerns companies wouldn’t be able to meet a 2035 timeline.
The provision is also an acknowledgment of the immense transformation the power sector would need to undergo to transition from around 60% fossil fuels as of last year, according to Energy Information Administration data, to 100% carbon-free power in roughly 15 years.
“There’s an understanding of how ambitious that target date is implicit in it, and there are mechanisms to mitigate that that are part of the bill,” said Conrad Schneider, advocacy director for the Clean Air Task Force.
A clean electricity standard sets targets for utilities to purchase a certain amount of low-carbon power, ratcheting up those targets each year until utilities are buying carbon-free power by a certain date. In their bill, House Energy and Commerce Democrats set a target for 100% carbon-free power by 2035 to match President Joe Biden’s climate goals, a change from their 2020 proposal that had aimed for 2050.
House Democrats’ clean electricity standard functions similarly to an emissions trading system, in which utilities earn credits for the clean electricity they produce. Power companies must earn enough credits to satisfy increasing requirements to provide clean power, or they can choose to pay alternative compliance payments if they don’t have enough to meet the requirements.
The “decelerator” provision is triggered if a power company is paying alternative compliance payments to cover more than 10% of the clean energy credits they should be earning for two years in a row — in other words, struggling to reach the level of clean electricity it should be purchasing to meet the requirements.
Officials could then defer increasing the clean power requirements for that company for one year, according to the bill text. That relief is only available in the later years of the policy, beginning in 2031.
Many utilities say they’ve outlined plans to reach at least an 80% carbon emissions reduction with existing technology. Companies are concerned, however, that they could run into hurdles eliminating carbon entirely from their systems without progress to bring the costs down for technologies such as advanced nuclear reactors and carbon capture.
“Meeting any target is going to require substantial investments in research, development, demonstration, and deployment, so the top priority is scaling up these efforts,” said Brian Reil, a spokesman for the utility lobby Edison Electric Institute, recently.
The scale of the transformation of the electricity grid infrastructure adds another layer of uncertainty.
“To meet these targets, you’re talking about more than doubling the amount of clean electricity that we already have in the next decade and then doubling that again in the following decade,” said Lindsey Walter, deputy climate and energy director for the center-left think tank Third Way.
“On the transmission front, you’re talking about everything that we’ve built in the past 150 years, rebuilding that again in the next 15 years or so and then again in the next 15 years or so,” Walter added. “There’s a huge build-out challenge here.”
Biden proposed a clean electricity standard in his more than $2 trillion infrastructure plan unveiled on Wednesday in Pittsburgh. That plan would make massive investments to curb climate change, including funding to electrify transportation and build up U.S. capacity to manufacture clean energy technology such as electric car batteries.
Biden’s team hasn’t put forward many specifics on its clean electricity standard proposal, and an administration official has said Biden intends to work with Congress on the policy.
Leah Stokes, an assistant professor of environmental politics at the University of California, Santa Barbara, said a “decelerator” provision likely wouldn’t be applicable for any clean electricity standard attached to Biden’s infrastructure package because that legislation is likely to advance through technical legislative rules known as budget reconciliation.
Those rules require only a majority vote, bypassing the 60-vote filibuster, and qualifying spending legislation could only cover a 10-year period, stopping short of the 2035 target date utilities are worried about.
Stokes also noted that Biden’s plans would invest enormously in technologies to help clean up the grid, including a 10-year extension of wind and solar tax credits, expanded to cover energy storage and made available as direct cash payments to make the credits more accessible to developers and utilities.
“It’s really dishonest to continue to go on about cost when the fact is the federal government is signaling” it plans to spend hundreds of billions of dollars to support the power sector’s transformation, Stokes said. “This isn’t about some kind of unfunded mandate for the industry.”