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The trimmed down Senate Democratic budget reconciliation package contains incentives to ramp up wind, solar, geothermal and other clean energy industries as well as battery development and production to store that energy. Missing from the package was funding to upgrade transmission lines to carry clean energy from its source to nationwide.

Manchin Agrees to Ambitious Climate Change Provisions

You might call it Build Back Better Light or Build Back Better Again. Whatever you call it, Senate Democrats say they have an agreement to fund climate action, lower drug prices, extend Affordable Care Act benefits and cut the federal deficit.

President Biden’s Build Back Better has been buried more than once since he proposed it. Earlier excavations failed to pull the $1.7 trillion initiative from its political grave. The revival of the plan this week came as a political shock.

West Virginia Democratic Senator Joe Manchin reversed course and endorsed a package with ambitious provisions to ramp up wind, solar, geothermal, battery and other clean energy industries over the next decade. Companies would be incentivized to capture carbon emissions and bury them. Car buyers with modest incomes would receive a $7,500 tax credit to purchase a new electric vehicle. After asserting the original Build Back Better plan would spur inflation, Manchin said the new plan would combat inflation.

Despite heavily scaled back provisions, Biden hailed the surprise agreement, “This is the action the American people have been waiting for.”

Before Manchin changed his mind, Senate Democrats were planning to settle for a budget reconciliation package that centered on healthcare provisions, also a shadow of what was in Biden’s original proposal. But the new deal contains something else of significance to the Biden administration – a 15 percent corporate minimum tax, which Treasury Secretary Janet Yellen negotiated and nearly 140 other nations have agreed to implement.

The climate provisions and corporate minimum tax are huge global face-saving measures for Biden. “You can’t preach temperance from a bar stool,” said Massachusetts Democratic Senator Ed Markey, “and you can’t ask China, India, Brazil or other countries to cut emissions if we’re not doing it ourselves in a significant way.”

Senate Republicans immediately condemned the agreement. Senate Minority Leader Mitch McConnell predicted it would lead to job cuts and fuel a recession. Wyoming Republican Senator John Barrasso, said. “If we want to reduce inflation, lower energy costs, and cut the deficit, the recipe is clear. Congress should cut spending and unleash American oil and natural gas production.” The plan endorsed by Manchin does include a provision to set aside $300 billion in added tax revenues to reduce the federal deficit.

In a similar vein to the CHIPS Act that passed the Senate this week, the new Build Back Better plan includes $30 million in incentives for companies that invest in domestic production of solar panels, wind turbines and batteries, which has gravitated to China and other Asian countries. A South Korean company has $171 million solar panel factory underway in Georgia.

Under the plan, US tax credits for wind and solar power, which now expire in one or two years, would extend for up to 10 years. The plan authorizes $60 billion to deal with disproportionate climate efforts on low-income and minority communities, $27 billion for green banking services and $20 billion to cut agricultural emission.

You can’t preach temperance from a bar stool and you can’t ask China, India, Brazil or other countries to cut emissions if we’re not doing it ourselves in a significant way.

Clean energy advocates expressed elation at the deal, despite its trimmed-down provisions. The one missing element they cited was the lack of investment to upgrade interstate power lines so solar and wind power can be transmitted to cities faraway from they are generated.

Manchin’s fingerprints can be seen in a less ballyhooed provision that mandates new lease sales for oil drilling in the Gulf of Mexico, something Biden campaigned to halt. Manchin also secured agreement with Biden and House Speaker Nancy Pelosi to move separate legislation dealing with energy infrastructure permitting, including natural gas pipelines.

Colorado Democratic Senator John Hickenlooper is being credited for keeping the climate provisions of the deal alive. They say Hickenlooper, who earlier in his career was a geologist for an oil and gas company, never gave up on talks with Manchin. “We don’t have a satisfactory alternative,” Hickenlooper said. “He never told me he was done, and I said as long as Joe Manchin is at the table, I’m at the table.”

Moving legislation in the Senate is never easy. Democrats can approve a budget reconciliation package with a simple majority. All 50 members of the Democratic caucus must vote in favor so Vice President Kamala Harris can case the 51st vote. Manchin’s sign-off removes the most visible barrier to that end, but Arizona Democratic Senator Kyrsten Sinema still hasn’t said whether she will vote for the plan. Stay tuned for the long-running Build Back Better saga.

Three Democratic senators, including Manchin, have tested positive for COVID, adding another complication for Senate passage before the August recess.