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

United States:

Clean Tech Quarterly Update: Winter 2021

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

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

POPULAR ARTICLES ON: Energy and Natural Resources from United States