Schumer-Manchin Deal Makes Industry And Environmentalists Happy

Schumer-Manchin Deal Makes Industry And Environmentalists Happy
Senator Joe Manchin gave his support to the Inflation Reduction Act of 2022 which will provide $369 billion in energy and climate investments.

U.S. Senate Majority Leader Chuck Schumer was able to secure support from Senator Joe Manchin for the Inflation Reduction Act of 2022 which will provide $369 billion in energy and climate investments.

The Act will promote zero and low carbon energy and support domestic production of offshore oil and gas as well as inject an additional $100 billion into healthcare. The legislation will assist with investing $369.75 billion in energy security and climate change programs over the next ten years. It is worth noting that President Biden’s initial plan called for ‘$500 billion-plus.’

When broken down, the Inflation Reduction Act of 2022 will provide $40 billion in clean manufacturing credits, $30 billion in clean electricity grants and loans, $30 billion for clean energy tech, $30 billion in clean agriculture funding, and $20 billion for clean vehicle manufacturing. The largest cut will go to other energy and climate tax credits and spending – $235 billion.

The bill will, in its current state, reduce carbon emissions by around 40 percent by 2030. Not quite President Biden’s target of cutting U.S. emissions by at least 50 to 52 percent below 2005 levels by 2030 – but close enough for now.

As for the $100 billion for healthcare, $65 billion will be the extension of expanded Affordable Care Act subsidies while $35 billion will go to prescription drug and vaccine coverage.

To go back to the new and extended credits – they will incentivize solar, wind, hydropower, and other sources of renewable energy. Private firms and publicly owned utilities could get tax subsidies for the production of renewable energy and for manufacturing a specific part essential to a renewable project, such as wind turbines or solar panels. This could make new green energy production cheaper for utilities to build than fossil fuel plants are.

Manchin’s vote though did not come without a ‘price’ – sort of. Namely, the Democratic leadership agreed to mandate new oil and gas leasing in the Gulf of Mexico and off Alaska, the two areas the industry is targeting the most. According to the Senator, new drilling in those areas is crucial for U.S. energy independence – but, in fairness, he is not alone in this.

“The Inflation Reduction Act of 2022 addresses our nation’s energy and climate crisis by adopting commonsense solutions through strategic and historic investments that allow us to decarbonize while ensuring American energy is affordable, reliable, clean, and secure. The need to balance all these critical energy priorities is no longer open to debate given the energy threats we face,” Manchin said.

He claimed that he supported a plan that would advance realistic energy and climate policy that ‘lowers prices today and strategically invests in the long game.’

“[…] it is vital we do not undermine our superpower status by removing dependable and affordable fossil fuel energy before new technologies are ready to reliably carry the load. The Inflation Reduction Act of 2022 invests in the technologies needed for all fuel types – from hydrogen, nuclear, renewables, fossil fuels, and energy storage – to be produced and used in the cleanest way possible. It is truly all of the above, which means this bill does not arbitrarily shut off our abundant fossil fuels,” Manchin added.

The Senator was clear in his statement that he would not vote to support policies that make the United States ‘more dependent on foreign energy and supply chains or risk moving the country closer to the unstable and vulnerable European model of energy’ which is currently visible.

He also recognized that the U.S. needs to achieve both its energy and climate goals and that the path towards that is to reform what he called a ‘broken’ permitting process.

“President Biden, Leader Schumer, and Speaker Pelosi have committed to advancing a suite of commonsense permitting reforms this fall that will ensure all energy infrastructure, from the transmission to pipelines and export facilities, can be efficiently and responsibly built to deliver energy safely around the country and to our allies,” Manchin stated. “I support the Inflation Reduction Act of 2022 because it provides a responsible path forward that is laser-focused on solving our nation’s major economic, energy, and climate problems.”

The Act does not only include government investments, but it also expects a lot back. Nearly $800 billion back. It includes a 15 percent corporate minimum tax which hopefully would result in $315 billion of revenues for the government. Another $125 billion should come from IRS tax enforcement funding. Closure of the carried interest loophole and methane and superfund fees will add $15 billion to the budget.

As for savings, the addition to the Affordable Care Act would save the government $320 billion - $120 billion via the repeal of the Trump-era rebate rule, and $100 billion each for the drug price inflation cap and negotiation of certain drug prices.

An Energy And Climate Deal Grounded In Reality

In a reaction to Manchin giving his support to the Inflation Reduction Act of 2022, National Ocean Industries Association (NOIA) President Erik Milito said: "Senator Manchin and Senate Majority Leader Chuck Schumer have negotiated an energy and climate deal grounded in reality: a package that promotes zero and low carbon energy and supports domestic production of offshore oil and natural gas."

"We are still reviewing the language, but it appears to offer a serious path forward lifting offshore energy of all types, to the betterment of our nation."

"We need to look no further than the U.S. Gulf of Mexico and our offshore areas to achieve the policy goals critical to our nation’s sustained success. There is a proven bipartisan spirit of collaboration to advance energy policy that offers affordable, reliable, and environmentally responsible energy here at home, while also widening the pathway for the deployment of low and zero-carbon technologies and energy sources."

"This legislation recognizes the U.S. Gulf of Mexico region is a premier oil-producing region. It is world-class, high-tech, and is an economic anchor for countless communities along the Gulf Coast and beyond. The Gulf of Mexico anchors our national security – and that of our allies. The Gulf of Mexico is characterized by low carbon emissions and is consistently solving, scaling, and deploying new solutions to further improve emissions performance. In other words, a stronger Gulf of Mexico means a stronger America.”

A Sigh Of Relief

Even though Manchin did trade his support for more oil and gas drilling and permitting and NOIA being excited over potential drilling in the Gulf of Mexico, the voice of the clean power industry in the U.S., American Clean Power (ACP), was also pleased.

The ACP released a statement by its CEO Heather Zichal. She claimed that the entire clean energy industry just breathed an enormous sigh of relief as it was the 11th-hour reprieve for climate action and clean energy jobs as well as the biggest legislative moment for climate and energy policy in the USA.

“Congress now is inches away from passing a $369.75 billion investment in energy security and climate change programs over the next ten years – the biggest climate and clean energy investment in American history. Passing this bill sends a message to the world that America is leading on climate and sends a message at home that we will create more great jobs for Americans in this industry."

“This deal includes long-term clean energy tax credits that will translate into the rapid deployment of affordable, reliable clean energy, thousands of new domestic jobs, and promote domestic clean energy that bolsters our national security."

“We will do everything we can to get this across the finish line. We applaud the hard work and negotiations of Leader Schumer and Senator Manchin to arrive at this pivot point for our country and future generations,” Zichal said.

The BlueGreen Alliance, which unites labor unions and environmental organizations to solve today’s environmental challenges, was also happy with Manchin’s decision. Executive Director of the Alliance Jason Walsh said: “We are happy to see that Sen. Manchin has kept his word to continue negotiating in good faith.

"While we eagerly await the details, we welcome the news that the Senate will move forward with a budget reconciliation deal focused on creating good union jobs, addressing climate change, building clean energy supply chains, reducing energy and health care costs for consumers, and tackling inflation."

"Sen. Manchin, Majority Leader Schumer, and Senate Democrats have worked hard to reach this deal. We thank them and look forward to learning more about the details of the bill in the coming days.”

To contact the author, email bojan.lepic@rigzone.com


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