for, | October 21, 2021

Joe Manchin Might Be a Sentient Brick of Coal, but There’s Still a Chance Democrats Will Pass a Decent Climate Plan

The planet may yet survive the West Virginia senator's red lines.

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If a brick of coal could talk, it would probably sound a lot like Joe Manchin, who lately has been telling his fellow Democrats that it’s time to give up on their boldest ideas to fight climate change.

First, the senator from West Virginia shot down the Clean Electricity Performance Program, or CEPP, an ambitious proposal designed to make power companies cut their emissions that was originally meant to be a centerpiece of the party’s global warming agenda.* Word leaked last week that, despite lengthy negotiations meant to assuage Manchin’s concerns, the concept would likely be dropped from the Democrats’ reconciliation package due to his objections. When lawmakers began to murmur about subbing in a carbon tax instead, he appeared to pour ash all over that idea as well, telling reporters it was “not on the board at all right now.” (The White House, for its part, said it hadn’t ruled the possibility out yet. At least, not officially.)

In the end, the Biden administration appears to have little choice but to cave on Manchin’s demands. As one of the party’s 50 votes in the Senate, he technically has the same power as any other Democrat to single-handedly veto the White House’s climate and social spending agenda. But as a moderate from a state practically synonymous with coal mining who has just spent months staring down the rest of his caucus, Manchin can actually lob a credible threat to walk from negotiations if he doesn’t get his way. Just on Wednesday, a thinly sourced rumor that he was planning to potentially switch parties managed to devour a whole news cycle. Manchin called it “bullshit”—but the attention it generated was nothing if not a sign of the power that Mr. Bituminous wields during these talks.

All of which raises a question that’s confounding some progressives: Can Democrats still produce a decent climate bill without crossing any of the red lines Manchin has drawn? Thankfully, the answer may be yes. It will no doubt be disappointing and less ambitious than what the ecological catastrophe we’re facing calls for. But the proposals that are still in play, particularly a massive load of tax credits for renewable energy and electric vehicles, could make unprecedented and meaningful progress toward curbing emissions. Even after the cuts Manchin has demanded, “you’d still have the single biggest action to target climate change that the government has ever done,” John Larsen, an analyst specializing in clean energy policy and markets at the Rhodium Group, told me.

Democrats are mourning the CEPP’s demise for good reasons. The program was designed to green the electricity sector by paying bonuses to utilities if they reduced their emissions by a certain amount each year, and levying fines against them if they missed the targets. This carrot-and-stick scheme was seen by many as absolutely essential to meeting the Biden administration’s goal of reducing America’s carbon footprint 50 percent from 2005 levels by 2030. As one progressive environmental expert who has been advising Democrats told the New York Times: “This is absolutely the most important climate policy in the package. We fundamentally need it to meet our climate goals. That’s just the reality. And now we can’t. So this is pretty sad.”

But while the CEPP was deeply important to Democratic plans, it is not actually the biggest source of emissions reductions in the party’s agenda. That would be the tax credits for green power and electric vehicles, which are still very much in play.

Earlier this month, the energy policy think tank Resources for the Future predicted that if Congress enacted both the CEPP and the tax credits, by 2030 the U.S. could reduce electricity sector emissions by 81 percent from 2005 levels, compared with 46 percent without any congressional action (we’re going to deploy a lot of wind and solar no matter what, because they’ve become economically competitive). But with the tax credits alone, the U.S. could still reduce power industry emissions by 72 percent. Another think tank, Energy Innovation, reached a similar conclusion, finding that the CEPP would likely be responsible for around one-fifth to one-third of the carbon savings in the Democrats’ proposals.

“You get a fair bit of the way of the CEPP just with the tax credits,” Marc Hafstead, director of the carbon pricing initiative at Resources for the Future, told me. “I still think that those things have meaningful reductions.”

One reason the tax credits in the Democratic plan haven’t generated much attention is that, well, they’re tax credits—they sound dull. But in the end, they’re a tool for shoveling lots of funding at solar, wind, and other green power sources that has been effective in the past and could become even more so with the changes lawmakers are now proposing. Today, companies can claim tax credits for either building out new renewable sources or for generating electricity from them. The problem is that many of the firms behind these projects don’t have much tax liability to worry about, so they end up raising money by selling the rights to claim the credits to other investors such as big banks, which is a complicated and kind of cumbersome process involving lots of lawyers. The Clean Energy for America Act, the major tax credit proposal in the Senate, would simplify all this by letting companies just take the credits as cash if they don’t have taxes to offset. It also won’t start phasing the credits out until overall power sector emissions fall 75 percent below 2021 levels. In a similar vein, the bill’s tax credits for electric vehicles wouldn’t start to disappear until EVs make up half of all car and truck sales.

So if the phrase tax credits puts you to sleep, just think of them as a firehose of cash for developing renewables that will keep spraying until the U.S. starts hitting its decarbonization goals. Congress’ Joint Committee on Taxation has estimated that it could cost a bit under $300 billion, though in reality the spending could be higher if more companies than expected claim the credits.

If Congress ultimately passes the Clean Energy for America Act, or something similar to it, it’s conceivable that the Biden administration could meet its climate goals even without something like the CEPP or a carbon tax. But it would be hard. That was the basic message of a report this week from the Rhodium Group, which tried to plot out a path to a 50 percent emissions reduction by 2030 based on what was likely to emerge from Congress. Along with the tax credits, the Environmental Protection Agency would have to impose new regulations aimed at eliminating coal; states—specifically, the 25 of them that have already joined the U.S. Climate Alliance—would have to aggressively pursue zero-carbon electricity portfolios and clean transportation fuel standards, among other things. There are a lot of moving parts that might not happen or fail, but success is at least within the realm of possibility.

It’s still an open question whether Manchin will actually support a big tax-credit package aimed at zeroing out emissions. But Democrats I’ve talked to are optimistic. Publicly, Manchin has said he opposed the CEPP because he didn’t want to “pay private companies to do things they’re already doing,” but his objections have mostly seemed to be that the program would be too harsh on coal and gas. (He notoriously said he was “very, very disturbed” by the idea of getting rid of fossil fuels.) His line on climate legislation is that he wants “innovation, rather than elimination,” and that he wants any spending on lowering greenhouse gasses to be “fuel neutral,” meaning basically that there should be money for gas and coal plants that adopt carbon capture technology. The Clean Energy for America Act more or less checks those boxes, in part because its tax credits are available for building or producing power from any zero-emissions source, regardless of the specific technology.

A senior Democratic aide involved in crafting the legislation told me his team began talking to Manchin about it a year ago and “have been engaged with him throughout the process. There is stuff he likes about it. There is probably stuff he doesn’t like about it. But we have not gotten the kind of negative reaction from him that he had to the CEPP or to a carbon tax.”

None of this makes the situation Democrats have arrived at any less fundamentally infuriating. There appear to be 49 senators in the party ready and eager to act aggressively on climate change, but circumstances have somehow conspired to put the 50th vote in the hands of Manchin, who does not merely hail from a state where the fossil fuel industry dominates the political landscape, but who has in fact earned a fortune from the family coal brokerage he founded back in the 1980s, which is now run by his son. Last year alone, he pulled in almost $492,000 in dividends from his stake. It’s the kind of bitter historical irony that seems too hackish for fiction—the literal coal peddler somehow ends up in charge of the planet’s fate!—a detail that I imagine decades from now will make Americans pause while reading a doorstopper about this era and simply go, “Oh, come the hell on.”

But on the other hand, at least he isn’t a Republican. Through the sheer miracle of holding his seat in a deep red state, Manchin is at least giving Democrats the chance to try and deal with our warming planet. He’s keeping the door open on the issue—asked recently if he would support any sort of major climate action, he told reporters: “My God, absolutely. Criminy”—and if Manchin is willing to go along with a major tax credit program, it will be on the rest of the party to decide whether they can live with two-thirds of a loaf. “The thing that I’m fearful about is if progressives say now that Manchin’s killed the CEPP, the whole thing’s going to die, because we can’t support this,” Resources for the Future’s Hafstead told me. “What I don’t want to see, what I hope not to see, is that everything gets taken off the table because this one piece of the puzzle gets taken away.” Compromising with a human chimney might be painful, but there’s still a chance to do vast amounts of good.

Correction, Oct. 21, 2021: This piece originally misidentified the Clean Electricity Performance Program as the Clean Energy Performance Program.