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Clean Energy Funding Finds Its Way Into Congressional Spending Bill

December 22, 2020


A wide array of research and development funding for renewables, grid, nuclear and carbon capture could make it into the law.

Advocates of clean energy may get a last-minute present from Congress this year in the form of a bipartisan package of programs to boost funding for renewable energy, energy storage, electric vehicles, carbon capture and other low-carbon and electric technologies.

These are some of the programs included in an energy package now being considered for inclusion in the omnibus spending bill Congress is set to vote on by Friday. The draft legislative language, first reported to be part of the spending bill on Monday, pulls from several energy bills that lawmakers were unable to pass earlier in 2020.

The agreement falls short of the climate and energy provisions many advocates would like to see Congress agree to in order to bolster a more extensive build-out of renewables. Still, it could provide momentum for President-elect Joe Biden’s goals for setting the country on a path to decarbonization.

“This bill is a significant step forward. It lays a foundation for the Biden administration’s agenda,” said Dan Lashof, U.S. director at the World Resources Institute. “It clearly doesn’t come close to solving the climate crisis. But in a crisis, you have to grab every opportunity to make progress.”

Extensions of tax credits for solar and wind are not currently included, though they could later become part of spending bill negotiations. Lawmakers are still in the midst of negotiating a deal on COVID-19 relief.

Many of the programs in the current agreement are pulled from a 555-page Senate energy bill introduced this spring by Senator Lisa Murkowski (R-Alaska) and Senator Joe Manchin (D-West Virginia), as well as an accompanying energy bill passed by the House this spring. While those bills do not call for mandating reductions of carbon emissions, they do feature hundreds of millions of dollars over the next five years to fund research and development of a broad spectrum of energy technologies.

R&D funding is a help to the industry, according to advocates, but does not provide as significant a boost as do incentives like tax credits.

“Even the most productive federal R&D can take years before translating into a commercial product,” said Bill Parsons, chief operating officer at the American Council on Renewable Energy. “With the climate clock ticking and 13 percent of clean energy workers out of work due to COVID-19, what the renewable sector needs most right now is a delay in the phase-down of existing credits and temporary refundability for those credits.”

Funding for solar, wind, storage, grid, nuclear, carbon capture and efficiency

The draft bill under consideration, according to the current language, would boost annual spending targets for both solar and wind R&D compared to the previous Senate bill. On the solar front, it would include $300 million per year through 2025 for Department of Energy programs to improve solar PV energy efficiency and cost-effectiveness, boost manufacturing and recycling of solar panels, and fund programs to integrate solar power into the grid.

The draft bill would also direct $130 million per year through 2025 for wind power R&D at DOE, including new materials and designs for onshore and offshore wind turbines and improvements in efficiency and cost-effectiveness of their manufacture and deployment. Technologies to integrate wind power at the transmission-grid scale are on the list of research areas, as are distributed wind technologies for microgrids.

Energy storage is also targeted through the inclusion of the Better Energy Storage Technology bill from 2019. The draft language would direct $100 million per year through 2025 to a newly created Energy Storage System Research, Development, and Deployment Program at DOE, aimed at R&D to improve technologies ranging from distributed batteries and control systems for their grid integration, long-duration storage technologies such as pumped hydro and compressed-air energy storage.

Another $71 million per year through 2025 would go to grants for energy storage pilots and demonstrations, and $30 million per year through 2025 would be directed specifically at long-duration energy storage pilot grants.

Nuclear power technologies would receive hundreds of millions of dollars through 2025, including $55 million per year through 2025 for nuclear energy research and development, and demonstration and commercial application programs to fund the development of next-generation reactor technologies. This funding could support DOE’s commitments to boost the deployment of small modular reactor technologies by the end of the decade.

Carbon-capture technologies will also receive billions of dollars over the next five years under the draft legislation, ranging from R&D to “transformational technology” projects to reduce emissions at fossil-fuel-fired power plants to novel technologies for direct air capture of carbon dioxide.

While carbon capture and storage has come under fire from some environmental groups that see it as a move to extend the lifespan of fossil fuel power plants, advocates note that many industrial sectors face major challenges in decarbonizing existing processes.

“Even if you believe we can completely eliminate the use of fossil fuels quickly, we’re still going to need carbon capture and storage for industrial sources, such as cement kilns, and for direct air capture to remove carbon from the atmosphere,” said WRI’s Lashof.

Policies laid out in the Clean Industrial Technology Act, a bill from Sen. Sheldon Whitehouse (D-Rhode Island) that is included in the draft legislation, will also direct funds toward R&D into decarbonization strategies for steel, cement and other industrial sectors.

Energy efficiency programs would also get a boost through funding for building weatherization and energy efficiency improvements in federal buildings, public schools and data centers, and incentives for combined heat and power.

Most significantly on the climate front: A bipartisan agreement to phase down the use of hydrofluorocarbons, a powerful greenhouse gas, is likely to be included in the omnibus bill, the World Resources Institute reported. The hydrofluorocarbon issue derailed negotiations on the Senate energy bill this spring, but Congress reached an agreement on how to proceed earlier this year.

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