Clean Tech Quarterly Update: Winter 2021 – Energy and Natural Resources


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Clean Tech Quarterly Update: Winter 2021


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This edition of Holland & Knight’s Clean Tech Quarterly
Update highlights the biggest clean tech updates and
government-related developments from the past few months, and
summarizes what these changes may mean for clean technology and
investors in the coming quarter and year.

Building on last year’s congressional accomplishments, clean
energy initiatives and legislation are advancing and expanding
significantly with unprecedented momentum, direction and clout with
the opening of the Biden-Harris Administration and 117th Congress.
Indeed, COVID-19 rescue and relief will likely continue as the
primary focus of the administration and Congress over the course of
2021. Nevertheless, Democrats, including President Joe Biden, hold
that COVID-19 recovery in itself is a unique opportunity to meld
climate action with a focus on economic revitalization and are
expected to leverage funding to deploy clean technology in order to
drive emissions to net zero in the coming decades.

Against the backdrop of the evolving political climate and the
implications for energy innovation, drivers include increasing
corporate net zero carbon commitments, national security concerns,
a need for technology and innovation, market participation,
education and competition from foreign governments, all of which
are only increasing during the Biden Administration.

Key developments from throughout the federal government:

White House

  • President Biden opened his
    administration with a number of executive directives and
    legislative proposals to address the pandemic response, and to
    change the course on environmental, social justice and immigration
    policies.

  • President Biden signed three Executive Orders (EOs) on Jan.
    27, 2021, to launch a “whole of government” approach to
    align federal policy with climate change, building upon three prior
    EOs that he signed on Day One of his presidency. Notably, the
    president’s directive to transition the federal fleet to clean
    and zero-emission vehicles
    thrusts federal sustainability back
    into the limelight and signals his intention to “green”
    the federal government and position it as a market leader in the
    low-carbon economic transition to bring net emissions to zero.

  • By leveraging federal regulations and
    purchasing power in issuing the federal procurement EO, the
    president took a first step to reorient federal energy purchases
    around clean power resources and federal procurement of renewables,
    batteries and electric vehicles. The order requires agencies to
    comply with the Buy American requirements in making
    procurement decisions, consistent with President Biden’s EO of
    Jan. 25, 2021, titled “Ensuring the Future is Made in All of
    America by All of America’s Workers.”

  • President Biden also signed an EO on America’s Supply Chains, mandating a
    100-day review of the global supply chains used by key industries.
    The review will address vulnerabilities of supply chains of four
    key products: large-capacity batteries, pharmaceuticals, critical
    minerals and semiconductors. The review will also seek to determine
    whether U.S. firms in these sectors are too reliant on foreign
    suppliers, particularly those in China, as well as other
    vulnerabilities, such as extreme weather and environmental
    factors.

  • The president said that the solution
    to supply chain issues will be to increase domestic production in
    certain industries as well as work with allies to prevent future
    shortages. The review called for under the EO could potentially
    lead to financial incentives, tariffs or changes in procurement
    options. If the risks are dire, the Biden Administration could use
    the Defense Production Act (DPA) to force companies to produce
    certain goods domestically or expand federal agencies’ existing
    DPA authorities. The president might also work with Congress to
    fashion incentives and worker training programs to get suppliers to
    relocate to the U.S. or its allies.

  • Key Takeaway:
    Through the use of Executive Orders, President Biden has laid out
    an aggressive agenda for tackling complex challenges that previous
    administrations have been unsuccessful in resolving or did not make
    a priority to resolve. All of these actions require the leadership
    and focus of a cadre of political appointees and federal career
    staff in the White House and agencies that are still getting their
    footing. In addition, congressional support is needed to fund the
    initiatives required to achieve the ambitious goals of the
    EOs.

U.S. Department of Energy (DOE)

  • Congressional support for clean
    energy research and development (R&D) remains strong, as evidenced by increasing budgets for most of
    the relevant programs at DOE – meaning that billions of
    dollars will continue to be available through grants, cooperative
    agreements, loan procurements and other types of federal support.
    In total, energy programs at DOE will receive nearly $40 billion in
    funding, an increase of more than $1 billion above the Fiscal Year
    (FY) 2020 enacted level.

  • Increases in authorized funding for
    the programs such as the Office of Technology transitions (OTT), established by the Energy Act of 2020, can
    improve the commercial impact of DOE’s research investments by
    focusing on tech transfer and commercializing energy and climate
    innovations that advance the agency’s mission and the Biden
    Administration’s agenda. (President Biden’s budget request
    to Congress is expected in late March or early April.)

  • On Feb. 11, 2021, DOE’s Advanced
    Research Projects Agency-Energy (ARPA-E) program issued a $100 million open solicitation to
    validate disruptive clean energy technologies that could address
    climate issues. This funding is available through ARPA-E’s OPEN
    2021 funding opportunity, which occurs once every three years. The
    program is expected to be highly competitive, and historically the
    majority of awards go to universities and national labs, but
    private sector awards are also given. Concept papers are due to DOE
    by April 6, 2021.

  • On Feb. 25, the U.S. Senate voted
    64-35 to confirm former Michigan Gov. Jennifer Granholm as
    Secretary of Energy, with all Democrats voting in favor along with
    14 Republicans. Deputy Secretary of Energy Nominee David Turk also
    received his confirmation hearing before the Senate Energy and
    Natural Resources Committee on March 4, and his nomination is
    expected to process favorably through committee and floor
    consideration.

  • Secretary Granholm announced on March
    3 that clean energy entrepreneur Jigar Shah will lead the DOE’s
    Loan Programs Office (LPO) to support the deployment of innovative
    energy and automotive technologies. Choosing Shah to lead LPO
    suggests a reinvigoration of the office and an aggressive use of
    its money, as he has made his living investing capital into clean
    energy and is a well-known climate hawk. The LPO program currently
    has $40 billion in unspent funds that the agency can use to push
    its clean energy agenda. Secretary Granholm said the loans, which
    under former President Barack Obama had been used to fund clean
    energy startups, would now be turned to focus on speeding the
    deployment of clean energy sources to meet Biden’s goal of
    eliminating carbon emissions from the power sector by 2035.

  • Secretary Granholm has also launched
    a new Office of Energy Jobs to coordinate government efforts to
    help fossil fuel industry workers who have lost their jobs find new
    work in the clean energy industry.

  • Key Takeaway: As DOE
    continues to execute on familiar program plans awarding funds to
    energy research and development, priorities are beginning to shift
    as the focus is placed on deployment, jobs and achieving net-zero
    emissions. Funding opportunities are already becoming more
    competitive for applicants, and industry experts continue to
    observe and weigh in (where possible) on how the Biden
    Administration – and specifically Secretary Granholm –
    can use existing DOE tools to deliver on their energy and climate
    objectives.

Congress

  • Democrats have assumed practical
    control of the Senate for the first time in six years after
    victories in Georgia’s dual Senate runoffs. The 50-50 split in
    the Senate allows Democrats the technical majority, as Vice
    President Kamala Harris has a tiebreaking vote.

  • Despite the slim majority, lawmakers
    can use a tool known as budget reconciliation to pass some of their
    legislative priorities. Created by the Congressional Budget Act of
    1974, budget reconciliation is a mechanism by which Congress can
    use expedited procedures to consider spending, revenue and
    debt-limit laws as set by an annual budget resolution. Importantly,
    the process allows the Senate to enact legislation with a simple
    majority vote, though it also limits the scope to provisions that
    directly affect federal spending, revenues and debt.

  • President Biden and Congress spent
    most of February on crafting the $1.9 trillion American Rescue Plan
    Act (H.R. 1319), which was passed by Congress on
    March 10 and signed into law by President Biden on March 11. The
    50-50 party split in the Senate necessitated the passage of
    COVID-19 rescue and relief through budget reconciliation to avoid
    the need for a bipartisan vote. For an in-depth overview of key
    provisions, see Holland & Knight’s alert, “American Rescue Plan Act of 2021:
    Summary
    ,” March 10, 2021.)

  • Long-awaited progress on a
    comprehensive infrastructure bill is expected in the coming months,
    with Senate Majority Leader Chuck Schumer (D-N.Y.) having announced
    on Feb. 24 that he plans to pivot the Senate’s focus to
    infrastructure after passage of the American Rescue Plan.

  • The Biden Administration is currently
    assembling an infrastructure package to align with the “Build
    Back Better” plan released during President Biden’s
    campaign. The plan is expected to include, among other items,
    installing up to 500,000 electric vehicle charging stations, new
    funding for road and bridge repair and construction, workforce
    training, transportation infrastructure for underserved
    communities, transportation electrification projects and resources
    for communities transitioning away from fossil fuels.

  • Meanwhile, in Congress, both chambers
    have begun the legislative process to draft infrastructure
    legislation. The House is out in front, having released several key
    pieces of legislation, notably the CLEAN Future Act and LIFT
    America Act, that will form the basis for a comprehensive
    legislative package in the coming months. The Senate Environment
    and Public Works Committee is expected to engage in a more
    deliberative process and kicked off a series of hearings on
    infrastructure on Feb. 24.

  • The CLEAN Future Act has far-reaching
    implications for many sectors of the economy. The bill intends to
    create a pathway for the U.S. to achieve a national, economy-wide
    target for net-zero emissions by 2050 through provisions impacting
    the power, building and automotive sectors as well as ports,
    manufacturing, oil and gas extraction, waste management and
    recycling. It features robust incentives for renewable energy as
    well as increased regulation of non-renewable energy and other
    emitting industries. Notably, the CLEAN Future Act defines
    “reasonable prospect of repayment” for the Title
    17 loan program
    (Title V, Subtitle A, Section 503) and
    institutes reforms to the Advanced Technology Vehicle Manufacturing (ATVM)
    Loan Program
    that also define “reasonable prospect of
    repayment” (Title IV, Subtitle E, Section 442).

  • The LIFT America Act aims to
    modernize the nation’s infrastructure, combat climate change,
    protect public health and the environment, and help rebuild the
    economy. The legislation authorizes up to $312 billion in spending
    across several federal agencies and was sponsored by all 32
    Democrats on the House Energy and Commerce Committee.

  • Tax proposals are also under
    consideration as part of the infrastructure package. Several key
    tax proposals were released by Democrats in February.

    • On Feb. 5, Democrats on the House
      Ways and Means Committee reintroduced a comprehensive climate tax
      bill, H.R. 848, the Growing Renewable Energy and
      Efficiency Now (GREEN) Act, which included a title focused on
      electric vehicles. The bill is expected to form the basis for the
      tax title under any climate-focused infrastructure package. Under
      this legislation, electric vehicle manufacturers would see the cap
      for tax credits for plug-in vehicles lifted to 600,000 from the
      current 200,000 cap, though the credit would drop by $500 after the
      first 200,000. It also offers a credit to buyers of used electric
      vehicles and for manufacturers of electric buses and heavy-duty
      vehicles through 2026. Other components focus on the renewable
      energy sector.

    • On March 1, Sens. Joe Manchin
      (D-W.Va.) and Debbie Stabenow (D-Mich.) together with Sen. Steve
      Daines (R-Mont.) released a bill focused on clean energy
      manufacturing, the American Jobs in Energy Manufacturing Act. The
      bill aims to invest $8 billion in manufacturing and other
      industrial processes to retool, expand or build new facilities that
      produce a wide range of products, including advanced light-,
      medium- and heavy-duty vehicles, components and related
      infrastructure. The bill will expand upon the successful Section
      48C Advanced Energy Manufacturing Tax Credit, which contributed to
      building U.S. clean energy manufacturing facilities.

  • Key Takeaway: As
    lawmakers turn to a large stimulus measure with a focus on climate
    and infrastructure, expect measures designed to fulfill President
    Biden’s pledge to promote the use of clean energy by spending
    on renewable power programs. Climate and energy legislation with
    bipartisan backing still has the best shot at passage with thin
    Democratic majorities in the House and Senate. Should Democrats
    elect to utilize budget reconciliation, the process likely would
    limit the scope of what could be included in the next big
    legislative package, as provisions of a reconciliation bill must
    adhere to strict revenue-related rules.

Originally Published by Holland & Knight, March
2021

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