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Unpacking fresh details from Congress’ green energy plan

Welcome to another energy source.

It’s another big week of American energy. Today, Californians decide whether to abandon Governor Gavin Newsom — and with him one of the country’s most progressive climate agendas. Also today, oil super major Chevron, still headquartered in Golden State, announces its energy conversion strategy.

Meanwhile, across the country, the details of the Democratic Party’s proposed climate and energy legislation are beginning to materialize. That is the subject of our first memo. The second is Harvard’s decision to stop investing in fossil fuels.

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The moment of success or failure of the climate in Congress

Activists have spent months urging US lawmakers to spend hundreds of billions of dollars on green energy at the moment of the climate change crisis. Congress is finally ready to take that shot.

Two key committees in the US House of Representatives, the Energy Commerce Committee and the Methods and Means Committee, have announced legislation on a budget bill that will serve as the president’s main means of green policy.

At the heart of the bill are two proposals.

  1. “Clean Power Performance Program” (CEPP) to encourage utilities to be environmentally friendly

  2. New tax cuts to drive the construction of clean energy infrastructure, from wind and solar to carbon recovery and transmission

Part 1: Clean Electrical Performance Program

This is a carrot and stick mechanism aimed at wiping out American power — and finally there are some details.

The “Clean Electricity Performance Program” is a rebranded version of the “Payment Program” we surveyed. 2 weeks ago: Pay for utilities that make enough green progress and fine for those that don’t.

Four are magic numbers. If you increase the amount of clean energy that the utility sells in a particular year by 4 percentage points, you will be rewarded (a 1.5 point increase of $ 150 per megawatt hour, with some caveats). If not, you will be punished ($ 40 / MWh, again with some caveats).

Utilities were worried about the details of this policy and we were worried a lot. Discussed a few weeks ago.

They are reassured that each provider can start with their current clean energy mix — hitting an increase in percentage points rather than a comprehensive threshold. But are carrots attractive enough to drive the green overhaul needed to reach the president’s clean energy goals? Reminder: Biden has set a goal of making the US grid 80% carbon-free by 2030.

Part 2: Tax incentives

According to Congress, the Master Plan also includes a $ 235 billion green energy tax credit over a 10-year period. Joint Committee on Taxation..

This includes a $ 25 / MWh wind, solar and geothermal project production tax credit over the next 10 years before it is phased out. There is an investment tax credit of up to 30% for solar, geothermal and battery storage, which also lasts for 10 years and then gradually declines.

Tax cuts will provide a great boost to developers and producers in terms of their ability to plan for the next decade. Similar credits have been repeatedly extended by Congress in recent years, but often at the very end, or even after they have expired.

However, the proposed bill will probably disappoint supporters of carbon capture and storage (CCS).

They wanted a bill to increase the amount offered per ton of carbon stored in such a project. Proponents of the oil industry argue that the dollar figures are not high enough to justify many new CCS projects at this time.

However, there remains an incentive of $ 50 per ton for projects that permanently store carbon and $ 35 per ton for projects that pump CO2 to improve oil flow in old wells. In context, ExxonMobil CEO Darren Woods states that the proposed Houston Ship Channel requires $ 100 per ton. CCS Mega Project..

Expect intense lobbying from the fossil fuel industry in both the House of Representatives and the Senate, where CCS is widely endorsed, to raise this price.

However, importantly, all credits do not have to be offset against unpaid taxes and are subject to “direct payment”. This simplifies the process that previously relied on complex tax equity finance. This change will please small local governments and co-operative power producers who have complained that they have been excluded from the previous scheme.

Comes with some strings

However, the conditions that accompany some suggestions will cause some complaints.

For example, to get the most out of credit, companies must meet certain employment rules. Workers doing construction and (in some cases) repairs must pay a “general wage”. A certain percentage of the work also needs to be done by the apprentice.

Full access to credit also requires companies to procure large amounts of materials (steel, iron and other products) from within the United States in some circumstances.

Given that the government focuses on employment and domestic manufacturing, these are not surprising provisions. But they would be grateful to the developers who insist that the provisions raise costs and make it difficult to meet President Biden’s goal of rapidly deploying clean energy capacities.

What now?

The Energy and Commerce, and Method and Means Commission will embark on a “markup” process in the coming days, chopping up and changing the text.

The Senate will then have that say. That’s where things get tricky.

West Virginia Senator Joe Manchin Clarified This weekend, the $ 3.5 trillion price tag on the proposed bill far exceeded what he was thinking. The law may materialize, but it’s far from the finish line.

(Miles McCormick and Justin Jacobs)

Harvard fossil fuel movement

Last week, President Larry Bakou of Harvard University Presentation All indirect investments in fossil fuels are “in spill mode and will end.”

“Given the need to decarbonize the economy and our responsibility as fiduciary security to make long-term investment decisions that support our education and research mission, we believe that. Is not [fossil fuel] Investing is wise, “Bako said Thursday.

Schools do not invest directly in fossil fuels, but about 2% of the $ 42 billion donation (the world’s largest such fund) is invested in private-equity funds that own fossil fuels.

Unity College, a private university in Maine, was the first higher education institution in the United States to sell from fossil fuels in 2012. Cornell and Brown are one of the larger universities that followed. But Harvard’s involvement is a big coup for activists.

Conachon, press coordinator at Daivest Harvard, a group of student activists, said: The school’s decision is part of “a growing awareness that the fossil fuel industry is behind history,” Chung said.

The university’s decision follows the summer of climate-related disasters, Damn IPCC ReportIt also reflects Wall Street’s growing interest in climate risks facing businesses.

Tom Sangillo, director of financial analysis at the Institute of Energy Economics, said: And financial analysis. “It’s a message to the financial sector.”

Why is the decision important?

Harvard’s move shows a sharp reversal from February Climate Behavior Report Instead of dumping assets, Harvard Management Company oversaw the fund and insisted on its involvement with companies on climate change.

It also goes against the broader trend. Universities have been at the forefront of divestment campaigns to date, including campaigns targeting apartheid in South Africa, but engagement is favored by asset managers from BlackRock to Vanguard. Activist hedge fund engine No. 1 emerged as a paragon of involvement earlier this year when it defeated ExxonMobil in a proxy fight centered on oil supermajor’s approach to climate change and energy transformation.

In any case, Harvard does not sell its assets — it does not own it directly. The liquidation of partnerships with fossil fuel-related funds will only deplete investment in these assets.

However, Harvard’s move could affect other educational institutions, which together hold more than $ 600 billion in donations.

“It’s natural to suspect that many other institutions are considering this decision … and perhaps reassess their own thoughts on a cautious investment in times of climate crisis.” Mr Chung said.

Still, Harvard may need to look inward for further developments in climate change. The school has promised not to use fossil fuels by 2050, but emissions are stagnant. After 2016.. And in 2019, Harvard Kennedy School received at least $ 1 million in donations from Shell and at least $ 250,000 from Chevron and Duke Energy.

Defendant lawyer Ted Hamilton, a graduate of Harvard University, said: (Amandachu)

Data drill

According to the Ministry of Energy, California, Florida, Texas, Washington and New York account for 60 percent of all US electric vehicle registrations.Only two states, California and New York, have zero-emission vehicles Mandate, Shows that some states were able to adopt EVs quickly without such obligations.

Meanwhile, Congress wants to give more EV incentives through an adjustment plan with tax credits of up to $ 12,500 for the transition to electric vehicles.By doing so, half of all new cars sold in the United States Electricity by 2030.. (Amandachu)

power point

  • OECD Global plan About carbon prices.

  • Germany’s Greens are likely to be part of the country’s next coalition government, with climate neutrality at the top of their agenda.Don’t miss this sharp Big read About what that means.

  • Western miners are competing for sustainable safety Nickel supply Outside of China, it is an important battery metal.

  • Norwegian centre-left was set up to regain the next power Parliamentary elections It focused on the role of the country’s oil industry.

  • The members of the Scottish National Party that govern National Energy Company In the country.

Energy Source is a twice-weekly energy newsletter from the Financial Times.It has been written and edited by Derek Blower, Miles McCormick, Justin Jacobs When Emily Goldberg..

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Unpacking fresh details from Congress’ green energy plan Source link Unpacking fresh details from Congress’ green energy plan

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