Dec 21, 2020 - Energy & Environment

Capitol Hill deal would cut major greenhouse gas, boost energy credits

Capitol building

Photo: Samuel Corum/Getty Images

Congress is nearing passage of legislation that phases down a powerful planet-warming gas used in air conditioning and refrigeration, while also extending tax credits for renewable power and carbon capture projects.

Driving the news: Those provisions are part of the bipartisan year-end spending and COVID-19 relief deal moving through Capitol Hill this week, after a compromise on a $900 billion package was finally reached Sunday night.

Why it matters: Phasing down use of hydrofluorocarbons (HFCs), a highly potent greenhouse gas, is a big and rare bipartisan agreement on global warming.

  • It sets up the U.S. contribution to a major 2016 global deal to cut HFCs under the 1987 Montreal Protocol, even though the U.S. has not formally ratified the amendment.
  • The bill also aims to improve Energy Department R&D and demonstration programs for a suite of clean energy technologies, authorizing $35.2 billion over a decade, per E&E News.

How it works: The Montreal Protocol successfully curbed the use of substances that deplete the ozone layer, but one side effect was to boost deployment of HFCs.

  • The New York Times notes that the legislation on Capitol Hill "effectively puts the United States in compliance with the terms of the [2016] deal."
  • It "requires companies to phase down production and consumption of HFCs to about 15 percent of 2012 levels by 2036," the Times reports.

Where it stands: The various pieces of the energy tax section, per sources familiar with the text and published reports, include ...

  • A two-year extension of the investment tax credit for solar projects before phasing down.
  • Making projects that transform wasted heat into electricity at industrial plants eligible for investment tax credit.
  • A one-year extension of the production tax credit for wind projects that was about to expire, as well as incentives for offshore wind through 2025.
  • A two-year extension of credits for carbon sequestration projects.

What they're saying: "The agreement includes sweeping clean energy reforms, R&D enhancements, efficiency incentives, and extends clean energy tax credits to create hundreds of thousands of jobs across the clean economy," House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer said in a joint statement.

  • "The package also phases out superpollutant HFCs, positioning the U.S. to lead the world in avoiding up to 0.5 degree Celsius of global warming," they said.
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