As we outlined in a December 22 post, Congress recently approved one of the largest economic stimulus measures ever to help the economy bounce back from the pandemic-induced recession. Despite its weirdly anodyne title, the 5,593-page Consolidated Appropriations Act, 2021 (“CAA”), contains (among about 2.3 trillion other things) what some are calling the most significant federal climate change legislation in a decade. The CAA was signed by the President last night.  This post will briefly recount some of the CAA’s climate-related provisions.

Spending Allocations

The CAA aims to modernize the Department of Energy’s (“DOE”) research and development programs, which was without a significant re-tooling since 2007. It reauthorized and increased funding by $39 billion for DOE’s Fossil Energy Research and Development program, including $1 billion earmarked for energy storage technology, aimed at reducing the cost of short and long-term, seasonal, and transportation energy storage technologies, $1.5 billion for solar technology, $2.1 billion for nuclear energy, and $2 billion allocated for investments in smart grid technology.

The CAA also allocates $50 million to “estimate the economic, climate, and environmental impacts” of a carbon dioxide capture, storage, and utilization pipeline system. It calls for millions in budget increases to federal agencies, including the National Oceanic and Atmospheric Administration and NASA, to research efforts related to climate adaptation. It also allocates $450 million for research into sequestering and storing carbon dioxide emissions through direct air capture, often referred to as “carbon capture” technology.

Additionally, it includes the Water Resources Development Act of 2020, a $9.9 billion measure that will provide project and program authorizations to improve ports, harbors, and inland waterways, as well as ecosystem restoration and flood mitigation efforts, and $7.8 billion for 46 environmental projects proposed by the U.S. Army Corps of Engineers. The Department of the Interior/Bureau of Reclamation was allocated $13.7 billion and the EPA $9.24 billion. It also includes a 10-year pilot program to build 10 water infrastructure projects in economically disadvantaged communities, with a 100% federal cost share.

CAA makes revisions the Title XVII Loan Guarantee Program that will try to facilitate the use of $23.9 billion in existing loan guarantee authority for emissions-reducing projects.

Tax Incentives

The CAA extends, expands, and creates a host of tax credits related to environmental goals. It promotes wind and solar electric-generation projects through tax credits. The existing 26% Investment Tax Credit, currently available for solar projects commencing construction before the end of 2020, would be extended for two years. The amount of the credit will drop to 22% for projects that start construction before 2024, with a complete phase-out thereafter.

The CAA provides a two-year commencement deadline extension for the § 45Q tax credit program, § 48 Renewable Investment Tax Credit, and a one-year extension of the § 45 Renewable Production Tax Credit, except for offshore projects, which get a five-year extension. The § 45Q Carbon Oxide Sequestration Credit commencement deadline is extended for two years and the §25D Residential Energy Efficiency Credit deadline is extended by two years for property placed in service before 2024. CAA makes the §179D Commercial Building Energy Efficiency Deduction permanent.

Through the end of 2021, the CAA extends the underground and surface-mine coal excise tax, which funds the Black Lung Disability Trust Fund. It also extends the $0.09 per-barrel excise tax on crude oil, which funds the Oil Spill Liability Trust Fund,” through the end of 2025.

Limiting Hydrofluorocarbons and other Regulations

Division S of the CAA titled “Innovation for the Environment,” directs the EPA to phase out production and consumption of hydrofluorocarbons (HFCs), a coolant found in refrigeration, air conditioning, building insulation, and fire extinguishing systems that scientists say dramatically accelerates climate change by trapping heat in the atmosphere. This brings US policy into alignment with the objectives of the Kigali Amendment to the Montreal Protocol, which aims to reduce global HFC consumption by 80% by 2047 and could avoid up to a 0.5°C increase in global temperature by 2100.

Division S also contains a reauthorization of the Diesel Emissions Reduction Act through FY 2024. This incents industry to replace inefficient diesel engines with lower-emitting ones.

The CAA includes the text of S. 2299, the “Protecting our Infrastructure of Pipelines and Enhancing Safety (PIPES) Act of 2020,” reauthorizing the U.S. Department of Transportation’s (“DOT”) Pipeline and Hazardous Materials Safety Administration, which aims to maintain the safety and integrity of the nation’s oil and gas pipelines. In part, it accomplishes this by setting standards for methane leak detection and repair. New standards are to be updated within a year of the bill’s adoption. It also directs DOT to update current regulations for large-scale liquefied natural gas facilities and allows it to conduct pilot programs that evaluate new pipeline safety technologies.

Separately on the oil and gas front, CAA limits extraction from the area around the Chaco Culture National Historical Park in New Mexico.

Some measures are aimed at easing current regulations. For instance, the CAA includes the Utilizing Significant Emissions with Innovative Technologies (“USE IT”) Act, which aims to accelerate carbon dioxide pipeline permitting processes. It also directs the interior secretary to set targets for wind, solar, and geothermal energy generation on federal land by September 2022. The federal government is to issue permits for at least 25 gigawatts of capacity for those sources by 2025. And finally, to the consternation of our vast ornithologist audience, the CAA blocked the inclusion of the greater sage grouse under the Endangered Species Act.

Conclusion

Lindsey Griffith, federal policy director at the Clean Air Task Force, an environmental policy non-profit, was quoted as saying that the package amounted to “the most significant U.S. federal climate legislation ever.” Time will tell whether these various and far-reaching measures have their intended effect.

If you have questions concerning the Consolidated Appropriations Act, 2021 the attorneys at the Wladis Law Firm may be reached at (315) 445-1700 or by emailing your usual firm contacts. We will do our best to provide you with updates and will be available to answer questions as circumstances change.