February 15, 2022
Bipartisan infrastructure package offers major opportunities for large-scale deployment, public-private collaboration, says Edison’s Head of Policy
In November, Congress passed the $1.2 trillion bipartisan infrastructure package (Infrastructure Investment and Jobs Act), a landmark deal that will rebuild America’s roads and bridges, tackle the climate crisis, and advance environmental justice.
The law will invest $65 billion in clean energy transmission and technologies and more than $7 billion in the supply chain for batteries, including the production of critical minerals, sourcing materials for manufacturing, and recycling critical materials without new extraction. It will also provide an additional $1.5 billion for clean hydrogen manufacturing and the advancement of recycling RD&D, while also creating a new $750 million grant program to support advanced energy technology manufacturing projects in coal communities.
In addition, the law will allocate $21.5 billion in funding for clean energy demonstrations and research hubs focused on next generation technologies including clean hydrogen, carbon capture, direct air capture and industrial emissions reduction.
“It was a long time coming,” said Shannon Weigel, Head of Policy at Edison Energy. “It’s great that we are finally getting away from week after week of ‘Infrastructure Week’ and actually getting something passed. I feel like technology has exceeded the infrastructure itself. We have so many incredible clean technologies, but we don’t have the infrastructure to commercialize them or get them to the point where they’re getting deployed efficiently on the grid, so this will drive that. Now let’s move on to the next thing, which in my view is a little bit more impactful in the near-term for the energy industry.”
Weigel is referring to the Biden administration’s Build Back Better framework, which represents the nation’s largest effort to combat climate change.
The Build Back Better Act would target incentives to grow domestic supply chains in solar, wind, and other critical industries and would boost the competitiveness of existing industries like steel, cement, and aluminum through grants, loans, tax credits, and procurement.
“The infrastructure package is kind of on the periphery of what will get us to decarbonize the grid faster but Build Back Better represents the funding,” Weigel said. “It’s the quick mechanism and injection into the market to say, ‘Here we go–deploy.’”
The framework would also fund port electrification; facilitate the deployment of cleaner transit, buses, and trucks; and provide support grants to environmental justice communities.
“I’m very interested in the tax incentives in the Build Back Better plan,” Weigel said. “It’s great for the PTC (production tax credit) and ITC (investment tax credit) for wind and solar to get passed with the direct pay option, but I think even more impactful is the standalone energy storage ITC and the transmission ITC in the plan. Sen. Wyden’s technology-neutral tax policy is a way to get us to greater decarbonization rather than picking winners or losers in the tax space.”
In April, Senate Finance Committee Chair Ron Wyden (D-OR) introduced legislation to overhaul the federal energy tax code. The Clean Energy for America Act would consolidate current energy tax incentives into emissions-based provisions that incentivize clean electricity, clean transportation, and energy efficiency. The incentives would be available to all energy technologies as long as they meet emissions reduction goals.
Advanced technologies
Notably, the infrastructure package calls for major investments in nuclear technology, including continued funding for Advanced Reactor Demonstration Program (ARDP) projects, which are targeting deployments in the late 2020s, according to the Nuclear Energy Institute (NEI). It will also invest in a demonstration program for regional clean hydrogen hubs, at least one of which is required to demonstrate the production of clean hydrogen from nuclear energy.
“I think nuclear is part of the equation in order to move towards a net-zero economy,” Weigel said. “As ratepayers, we’ve already invested in these nuclear assets. It’s great that the federal government is providing some assistance through the Civil Nuclear Credit program, so it doesn’t impact state ratepayers as much. Having the federal government step up is important for these assets to keep running for our decarbonization.”
While the infrastructure package will invest $3.5 billion in the Weatherization Assistance Program to increase energy efficiency for low-income households and $500 million for energy efficiency and renewable energy improvements at public school facilities, among other provisions, Weigel says the energy efficiency component may have fallen short.
“I wish they had gone a little bit further on energy efficiency,” she said. “The funding that they did have in the infrastructure package just didn’t seem sufficient enough and I think energy efficiency is a huge jobmaker. It’s a way for companies to easily save money and reduce their greenhouse gas emissions, so some of the energy efficiency programs could have been enhanced a little bit more. I think they got left out for some of the shinier technologies.”
To boost economy-wide vehicle electrification, the package will invest $7.5 billion to build out a national network of EV chargers across the U.S. This will provide funding for deployment of EV chargers along highway corridors and within communities, supporting the Biden administration’s goal of building a nationwide network of 500,000 EV chargers.
“The EV infrastructure charging component in the bill is exactly what they needed to start building that out,” Weigel said. “A lot of it is public funding, so it should be interesting to see if and how the states’ departments of transportation will allocate some of those grants to private infrastructure investments and whether our clients can engage there, so we’ll be tracking that.”
While some states have been proactive around plans to allocate these funds, others have been slow movers, in part due to political hesitancy to enable certain technologies.
“When the public sector is a first mover, it is really helpful to show the private industry that they can actually get this done and this is what you need to do. There’s that public-private education and collaboration,” Weigel said. “At Edison, we’re waiting for the funding for EVs and other clean energy technologies to be dispersed to the states and looking to see how states plan to spend these funds. We’ll continue to track that and educate our clients on near-term funding opportunities for their clean energy projects.”
