Democratic leaders are racing to finalize a revised proposal to tackle climate change and jump-start the nation’s transition to clean energy, part of a larger sprint to strike a deal with Sen. Joe Manchin III (D-W.Va.) on their stalled spending bill this month.
While top Manchin aides say they are far from a deal, some Democrats are still hoping to finalize a retooled climate proposal as soon as next week, when lawmakers are set to return from recess, according to two people familiar with the matter, who spoke on the condition of anonymity because they were not authorized to comment publicly. Already, party leaders have held advanced discussions with the West Virginian on spending to combat climate change, including how to curb emissions of methane, a potent planet-warming gas, the individuals said.
Last year, Democrats proposed placing a fee on oil and gas companies’ methane emissions as part of their ill-fated legislative package, known as the Build Back Better Act. But Manchin raised concerns about the fee, saying it would be duplicative of proposed regulations from the Environmental Protection Agency. Democrats are now working out with Manchin a potential solution that would exempt companies from the methane fee if they comply with the EPA regulations once the rules are finalized, the two people familiar with the matter said.
The individuals cautioned that lawmakers and their staff are still discussing the idea and that no final deal on methane — or the rest of their climate agenda — has been reached. Over the past year, Democrats have repeatedly thought they were close to striking an accord with Manchin, only to see negotiations collapse at the last moment because of misunderstandings, miscommunications and lingering policy differences.
“Suggestions that a reconciliation deal is close are false,” said Sam Runyon, a spokesman for Manchin, in a statement. “Senator Manchin still has serious unresolved concerns and there is a lot of work to be done before it’s conceivable that a deal can be reached he can sign onto.”
Justin Goodman, a spokesman for Schumer, said any mention of a final deal is “speculation,” adding: “We continue to have productive conversations.”
But Senate Environment and Public Works Chair Thomas R. Carper (D-Del.), whose panel has jurisdiction over the methane fee, believes the potential compromise would ensure that companies are reducing their methane emissions regardless of EPA regulations, those familiar with the matter said. Finding a legislative solution to the issue has taken on added significance since the Supreme Court last week limited the EPA’s powers to curb greenhouse gas emissions from power plants.
The haggling over climate provisions comes after Democratic leaders finalized a plan to lower prescription drug prices for seniors, signaling progress on another key pillar of their economic agenda. Under the plan, the federal government would for the first time be allowed to negotiate the price of certain drugs on behalf of Medicare beneficiaries. Some party lawmakers saw the development as crucial toward crafting a broader package that could come to the Senate floor as soon as the end of July, a timeline Schumer previously outlined to his caucus.
But a wide array of issues — about the size, scope and cost of the package — remain up for debate.
On climate, for example, Democrats are still wrangling with Manchin over a tax credit for electric vehicles. The West Virginia lawmaker has voiced concern that the tax incentive could be a handout for wealthy Americans who purchase expensive electric cars. While the issue is unresolved, a potential compromise could involve “means testing,” in which the tax credit would be restricted to consumers who earn below certain income thresholds.
Another unresolved issue concerns a suite of tax credits for producers of clean energy from sources such as wind and solar power. Manchin has indicated that he will not support a spending bill that includes what’s known as direct pay, in which payments are sent directly to companies that produce clean energy for consumers. A potential compromise could involve restricting eligibility for direct pay to nonprofits, according to one person familiar with the matter.
The overall price tag of the climate and energy provisions in the spending bill could total around $300 billion to $350 billion, though the amount will change as negotiations continue. That pales in comparison with the $555 billion climate package in the earlier version of the bill that passed the House last year.
Manchin has argued that such spending could add to the national debt and worsen inflation as prices are skyrocketing. But the smaller amount on environmental programs may be difficult to accept for some liberal House lawmakers, who view the measure as their last chance to pass robust climate legislation before the midterm elections this fall, when Republicans could wrest control of Congress.
“I wanted more than $555 billion to meet the moment on climate,” Rep. Ro Khanna (D-Calif.), deputy whip of the Congressional Progressive Caucus, said in an interview Thursday. “I was in meetings at the White House where I pushed for more."
However, Khanna said he would encourage fellow liberal House members to accept any climate deal that emerges in the Senate.
“The alternative is zero dollars,” he said. "Significant investment is much better than zero.”