Jan 5, 2021 - Energy & Environment

The bear case for big energy and climate deals

a teeter totter of the earth and capitol

Illustration: Aïda Amer/Axios

Anyone thinking that the immediate past is a prologue for Capitol Hill dealmaking could be in for rough years ahead.

Catch up fast: In late December, Congress passed and President Trump signed legislation to cut a major greenhouse gas, extend clean energy tax incentives and bolster Energy Department tech deployment programs.

Why it matters: That bill was a big deal. But, looking ahead, today brings the runoff elections in Georgia.

  • Unless Democrats beat the odds and win both contests, that means at least two years of a Democratic White House and GOP-led Senate — not the deal-friendly landscape seen in the Obama years.
  • If Democrats do win, they'll govern with the thinnest possible margin.
  • And parts of President-elect Biden's agenda need Congress — notably huge increases in clean energy infrastructure spending — even as he plans aggressive executive moves.

What we're watching: With the caveat that journalists have a not-awesome track record on gaming out the future, the bear case on more big deals looks something like this...

1. December's deal was its own animal. The year-end bill phases down hydrofluorocarbons, the powerful planet-warming gases used in air conditioning and refrigeration.

  • But that's far less politically volatile terrain than mandates to cut carbon emissions from fossil fuels, which face lots of GOP resistance, as the Washington Examiner points out.
  • And the HFC phasedown was not even especially controversial, enjoying buy-in from powerful manufacturers.

2. Big spending plans could struggle for traction, even though the need for more COVID-19 relief could provide a vehicle.

  • Biden wants to spend $2 trillion over four years on climate-friendly initiatives.
  • But as a number of analysts and reporters have pointed out, once Biden is in power, Republicans may revive their fallow deficit concerns.

3. The whole December thing was kind of weird. The deal hitched a ride on a COVID-19 relief and government funding package during a lame-duck session, ahead of a change in White House control, and while party control of the Senate was unknown.

4. Trump will cast a shadow. Yes, he rejects climate science but wound up signing not one but two bills during his only term that bolstered CO2 capture and storage credits (the first was in 2018).

  • But that said, we're seeing right now that a number of Republicans don't want to run afoul of Trump's base, so if he snipes at a potential deal from the sidelines, well, that matters.

5. The left is feeling restive too. The year-end deal bolstered tech that Republicans and some Democrats like that nonetheless make progressives queasy, like CO2 capture and nuclear.

  • That could make dealmaking tougher in the thinly divided House.
  • Related: the Congressional Progressive Caucus has reorganized itself as it looks to operate with more unity.

Yes, but: Is there room for some things to move, maybe in a piecemeal fashion? Yeah, probably.

The big picture: If Democrats somehow win both runoffs, they could pass some measures without needing a supermajority via the budget reconciliation process.

  • But even if control is divided, at some point the idea of an infrastructure package could stop being a running gag, which could allow an opening around areas like mass transit and EV charging.

What they're saying: Josh Barro's latest Business Insider column argues GOP infighting over Trump's baseless election theft claims could bode well for Biden (though it doesn't address energy specifically).

  • "When your opposition is weak and divided is the best time to split them and make deals," he writes.
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