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New Energy World
New Energy World embraces the whole energy industry as it connects and converges to address the decarbonisation challenge. It covers progress being made across the industry, from the dynamics under way to reduce emissions in oil and gas, through improvements to the efficiency of energy conversion and use, to cutting-edge initiatives in renewable and low carbon technologies.
Biden’s $739bn climate deal set to deliver the biggest climate investment in US history
In a surprise reversal on Wednesday 27 July 2022, US Senate Democrats announced a $739bn package addressing the climate crisis (and healthcare), which had eluded US President Joe Biden for months.
Biden hailed the congressional deal as the biggest single climate investment in US history. The deal promises to raise taxes on high earners and corporations while reducing federal debt.
In a press statement, Biden said the bill ‘would be the most significant legislation in history to tackle the climate crisis and improve energy security right away’.
Faced with escalating gas prices which are driving inflation to a 40-year high, experts felt the bill would help address the problem and urged Congress to pass it, said The Guardian. Admittedly, the bill is seen as a compromise, but a step in the right direction.
The turning point was struck in a deal between the majority leader Chuck Schumer and previously intransigent Senator Joe Manchin of West Virginia (who strongly defended provision of coal, oil and natural gas), to agreed investment of $369bn over the decade in renewable energy and tax rebates for consumers to buy new or used electric vehicles (EVs).
The deal under the Inflation Reduction Act includes $60bn for a clean energy manufacturing tax credit and $30bn for a production tax credit for wind and solar projects and battery storage, to help curb the country’s dependence on fossil fuels. The long-awaited package aims to cut US emissions 40% by 2030.
The clean energy package is potentially the biggest legislative win for the environmental movement since the Clean Air Act.
This package, if approved through the Senate’s reconciliation process and passed by both houses of Congress, would be a massive win for the Democrats ahead of the mid-term elections, reported CNN. Pundits note that it would put the US back in the picture as a leader in climate change transition alongside the European Union, ready for UN COP27 in Egypt in November. The previous US President Donald Trump had notably pulled the US out of the Paris Agreement, a move which was reversed on Biden’s election.
Biden’s bipartisan infrastructure bill passed last year was considered to be ‘an appetiser’ for climate action, with money for EV charging stations and modernising the grid. But the bill did not give much support for US consumers buying EVs or electric home heating systems. The new agreement is expected to help incentivise US consumers and businesses to go green.
However, there is a fossil fuel compromise within the deal, with a provisional mandate that the Department of Interior must lease at least 2mn acres of public land and 60mn acres of offshore waters for drilling before any could be used for renewable energy.
Tying future drilling directly to renewables was described as a ‘climate suicide pact’ by Brett Hartl, Government Affairs Director at the Center for Biological Diversity, says CNN. But even Senate climate hawks reckon it is unlikely that the drilling provision will sink the bill, given the significant investments promised in clean energy.
According to US analysts at Rhodium, without this significant level of investment in a Congressional bill, the US was roughly on track to cut emissions by only 24–35% by 2030 – far less than Biden’s goal of slashing US emissions in half by 2030.