Why the climate bill's Senate passage matters

Congress is poised to pass the most important climate bill in U.S. history, the first step in a years-long effort to transform the measure into a massive, real-world expansion of clean energy.

The big picture: If the House approves the Senate-passed bill unchanged, sending it to President Biden's desk, it has a plausible chance of slashing domestic emissions and resetting the dynamic in global climate talks.

Catch up fast: The Senate yesterday approved Democrats' energy, tax and health care plan on a party-line vote.

• That means the bill just cleared its biggest hurdle — the same chamber where the last sweeping climate bill imploded in 2010.
• The measure is expected to pass the House and head for Biden's desk within days.
• It would invest roughly $370 billion in renewables, electric vehicles, hydrogen, clean energy equipment manufacturing, home efficiency and other climate programs.

A few takeaways...

U.S. emissions may fall a lot. Energy analysts who favor strong climate action say the plan should bring the U.S. within shouting distance of Biden's pledge under the Paris agreement: cutting domestic greenhouse gas emissions in half compared to 2005 levels by 2030.

It could change the tenor of global climate talks. The likely enactment of legislation to back up America's commitments would boost U.S. credibility to convince other countries to take actions of their own.

But it's not the be-all, end-all. The U.S. will still come up short of the 2030 Paris pledge without complementary executive, state and local policies, per analyses by the Rhodium Group, the Princeton-led REPEAT Project and others.

• And more will be needed to put the country on a path to net-zero emissions by 2050, a key benchmark for limiting warming.

U.S. climate policy strongly favors carrots over sticks. The biggest climate provisions are major new or wider tax incentives for renewables developers, clean energy equipment makers, homeowners and more.

• The separate bipartisan infrastructure law is also a cash infusion for programs on EV charging, transmission, and demonstrating emerging technologies.
• Meanwhile, a clean power mandate for utilities couldn't get past Sen. Joe Manchin (D-W.Va.), carbon pricing proposals have little traction, and a recent Supreme Court ruling will likely limit the breadth of executive regulations.
• However, the Biden administration is also looking to implement new regulations in areas like vehicle efficiency standards.

It's a complicated moment for activists. The bill mandates new oil-and-gas drilling auctions on federal lands and waters, despite Biden's campaign pledge to thwart new fossil fuel development in those areas.

• That's giving activists heartache, even as most major environmental groups are supporting the overall bill as a pivotal moment in the U.S. fight against global warming.

It's complicated for the oil industry, too. Giants BP and Shell support the bill. But industry lobbying groups — the American Petroleum Institute and the American Exploration & Production Council — have criticized the corporate tax policies as a brake on investment.

The electric car incentives could be undermined. There would be expanded tax subsidies for buying EVs, but the bill would also require automakers to source battery components and raw materials domestically, or from countries that have free-trade deals with the U.S.

• A key auto industry trade group said those sourcing rules will prevent use of the consumer incentives because so few cars will be eligible.

It's an acid test for carbon capture. If the sector — which has faced years of slow growth and setbacks — can't gain momentum with the expanded subsidies, it's not clear when it ever will.