The climate and tax deal announced by Senate Democrats on Wednesday would pump hundreds of billions of dollars into programs designed to speed the country's transition away from an economy based mostly on fossil fuels.
Democrats in Congress spent more than a year laboring to pass the Inflation Reduction Act of 2022, a far cry from the multi-trillion dollar domestic policy and tax proposal that President Biden sought.
A compromise between Democratic Senator Joe Manchin III of West Virginia and Senate Majority Leader Chuck Schumer of New York resulted in a smaller package.
Democrats hope to get past Republican opposition in the Senate as early as next week.
Billions of dollars in tax credits would be given to companies that build new sources of emissions-free electricity, such as wind turbine, solar panels, battery storage, and advanced nuclear reactor. Congress used to offer short-term credits for wind and solar that expired after a couple of years. The credits in the new bill will last for at least a decade and give companies more confidence.
The bill expands a tax credit for companies that capture and bury carbon dioxide from natural gas power plants or other industrial facilities before the gas escapes into the atmosphere and warms the planet. Tax breaks for nuclear plants would be provided. Emissions tend to rise when a reactor closes because they tend to be replaced by fossil fuels. Grants and tax credits would be provided for the reduction of carbon dioxide emissions.
The deal extends a popular consumer tax credit of up to $7,500 for the purchase of new electric vehicles and offers for the first time a credit of $4,000 for used electric vehicles
Only people who make $150,000 a year or less, or $300,000 for joint filers, are eligible for the new car credit. The program would last until the year 2032. New pickup trucks, SUVs, and vans would be eligible for the credits. The bill provides funding for zero-emissions school buses, heavy duty trucks, public transit buses and other commercial vehicles.
The bill will invest $9 billion in rebates for Americans to buy energy efficient and electric appliances in their homes. It also includes a decade of consumer tax credits that would lower the cost of various technologies.
$60 billion is set aside for clean energy manufacturing in the U.S., including $30 billion in production tax credits for solar panels, wind turbine batteries and critical minerals processing, and $10 billion in investment tax credits to build manufacturing facilities that make electric vehicles and renewable energy technologies.
The provisions are meant to stop the migration of clean-energy manufacturing to China. $500 million would be invested through the defense production act for heat pumps.
The bill would create a green bank to deploy clean energy projects in disadvantaged communities.
Excess methane leaking from oil and gas wells would be charged by the bill. When it comes to heating the atmosphere, methane is more potent than carbon dioxide because it takes more time for it to evaporate. Polluters would have to pay a penalty of $900 per metric ton of methane emissions if they exceed federal limits.
The bill invests over $60 billion to support low-income communities and communities of color that are disproportionately affected by the effects of climate change. Grants for zero-emissions technology and vehicles, as well as money to mitigate the negative effects of highways, bus depots and other transportation facilities, are included.
An additional $20 billion would be set aside for programs to cut emissions that come from cows and other livestock. The United States emits about 11 percent of the greenhouse gases that are generated by agriculture. Grants would be given to support forest preservation, the development of fire-resilient forests, and increased urban tree planting.
Brad Plumer made a report.
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