Negotiations are resuming on a reconciliation package that would contain long-term industrial policy measures to boost solar and other renewable energy sources.
June 9, 2022
Last December, Sen. Joe Manchin (D-WV) sent a shockwave through the renewable energy industry, suddenly pulling back his must-have vote to push through the Biden administration’s Build Back Better Act (BBBA), a $1.75 trillion spending plan that included a $550 billion climate package with significant incentives for the domestic manufacture of components throughout the entire solar value chain.
This week, the Biden Administration took executive action, including invoking the Defense Production Act and designating “super preference” for the federal procurement of solar goods, to lay the groundwork for a US-made solar supply chain. While industry leaders lauded the move, which coincided with a freeze of solar tariff imports for two years, the impact is expected to be minimal compared to what the BBBA could have provided.
Industry leaders and climate advocates have been calling for long-term industrial policy to create market certainty so the “solar coaster” can stabilize, and energy decarbonization can accelerate at levels needed to fend off the worst-case climate disaster scenario. Such policies would include the domestic manufacturing tax credits, and a long-term extension of the solar investment tax credit, which is planned to phase out from 26% this year to 10% by 2024 for commercial and utility-scale solar, and 0% for residential solar.
When Manchin announced he would not vote for BBBA in December, it was viewed as dead in the water. But now, sentiment among Democrats suggests there may be a deal on the way. Sen. Manchin has been meeting privately with majority leader Sen. Chuck Schumer (D-NY) to discuss what it will take to earn his vote.
“Sen. Schumer and Sen. Manchin are keeping this very close to the vest, and I actually think that’s a good sign,” Sen. Tina Smith (D-MN) told E&E News. “I’ve believed for a long time that the basic contours of an agreement have been kind of out there,” she added.
Democrats are aiming for the beginning of the August recess as a deadline, with fall midterm elections looming. “I haven’t heard anyone say, ‘Climate can be done another day,’” said Senator Ron Wyden (D-OR).
Despite this optimism, Manchin told CNN this week there is currently no deal. “The bottom line is how do we fight inflation?” He said. “That’s all. If they’re not serious about really getting our financial house in order and fighting inflation, paying down debt, then it’s all for naught.”
“It’s all in Sen. Schumer’s hands,” said Sen. Ben Cardin (D-MD) “(Schumer) informs us that there’s progress being made. There’s still a lot more to be done.”
US Secretary of Energy Jennifer M. Granholm said the infrastructure law passed last year was “the spine of the president’s clean energy and energy future agenda, but the tax credits (in the reconciliation bill) are the lungs of it,” Granholm told POLITICO’s Sustainability Summit. “They absolutely need to pass and I am feeling actually pretty bullish about it at this very moment.”
