(Reuters) – House of Representatives Democrats unveiled details on Thursday of a proposed $150 billion payment program aimed at wringing greenhouse gas emissions out of the electricity sector, a cornerstone of the Biden administration’s plan to address climate change.
The system would reward utilities that increase their production of power from low-emissions sources like solar, wind and hydro, and penalize those that do not, according to a document released by the House Committee on Energy and Commerce outlining key provisions to be included in a $3.5 trillion budget reconciliation bill.
Democrats are using the budget bill as a vehicle for their most ambitious measures to fight climate change because it only requires a simple majority to pass, different from the Senate’s rule requiring 60 votes for other types of legislation. The chamber is evenly split between the two parties, with Democratic Vice President Kamala Harris casting the tie-breaking vote.
Even so, the measure faces resistance from moderate Democrats like Senator Joe Manchin from the coal-producing state of West Virginia, who is concerned with some of the climate provisions in the bill and the $3.5 trillion price tag.
Under the so-called Clean Electricity Performance Program, which would run from 2023 to 2030, utilities would receive payments from the Energy Department if they increase clean energy supplies by 4% annually, according to the document.
The $150-per-megawatt-hour grant would apply to all clean power produced by an eligible utility above 1.5% of the previous year’s clean electricity supply.
Electricity is considered clean if it generates no more than 0.1 metric ton of carbon dioxide equivalent per MWh, according to the document, a threshold that effectively rules out power generated from natural gas.
If a supplier fails to meet the 4% targeted increase, it will owe $40 per MWh for any shortfall.
The power sector is responsible for about a quarter of U.S. greenhouse gas emissions, second only to transport, according to the U.S. Environmental Protection Agency.
President Joe Biden has vowed to decarbonize the power sector by 2035, and the entire U.S. economy by 2050.
The committee also outlined proposals that would pour billions of dollars into accelerating the deployment of electric vehicles, modernizing the electric grid and investing in communities on the frontlines of climate change impact and air and water pollution.
For example, the bill would offer $13.5 billion to boost an electric vehicle charging network and $9 billion to assist states to modernize the electric transmission system.
(Reporting by Nichola Groom and Valerie Volcovici; Editing by Peter Cooney)
