The $369 billion deal Senate Majority Leader Charles E. Schumer (D-N.Y.) forged Wednesday with Sen. Joe Manchin III (D-W.Va.) would transform how the country produces energy and upend the auto industry, even though it falls short of what the United States needs to do to meet its global warming pledge by the end of the decade.
The agreement — which includes generous renewable energy and electric vehicle tax credits — could put the United States on track to slash its greenhouse gas emissions by 40 percent below 2005 levels by 2030, according to the Rhodium Group, a research firm. President Biden has pledged to cut emissions at least in half by then. If enacted, it would send a powerful signal to international climate policymakers and give investors a decade’s worth of assurance that could speed the transition away from fossil fuels.
The breakthrough defied the dynamic that has shaped environmental policy in the United States for two decades: Politicians have always postponed action on climate in favor of other issues they saw as higher priorities for voters. This time, as heat waves and floods pounded the United States and countries across the globe, Schumer and other Democrats refused to fold.
“This package is not nibbling at the edges here in terms of clean energy and really transforming the American economy,” said Ron Wyden (D-Ore.), chairman of the Senate Finance Committee and the chief author of the bill’s clean energy tax credits.
If it becomes law, the agreement would represent the nation’s most consequential climate policy yet. Without it, Rhodium projects that the United States would only be able to cut its emissions by 24 to 35 percent by the end of the decade.
The combination of executive action and state-led efforts to tackle climate change “can help close the rest of the gap” with Biden’s pledge, said Ben King, an associate director at Rhodium.
The bill’s passage would be a victory for those already suffering from the effects of climate change who are in danger of losing their homes, or even their lives, as conditions worsen.
It would also shore up America’s credibility in international climate talks, where Biden has sought to bring reluctant nations along with his own ambitious promises. Just as the collapse of talks earlier this month set off alarms overseas, the surprise agreement delighted them.
“We all needed some good news,” tweeted Tina Stege, the Marshall Islands climate envoy, who has often been critical of the slow pace of climate action from rich nations as her country disappears under the rising seas.
Delaying action, which Congress looked poised to do until Wednesday, would have carried severe consequences and made it exceedingly difficult to hold warming to 1.5 degrees Celsius (2.7 Fahrenheit), as global leaders have pledged.
Already, Earth has warmed more than 1.1 degrees Celsius (1.98 Fahrenheit) above pre-industrial levels, mainly because of the burning of fossil fuels. Scientists say each additional fraction of warming will increase the severity of hurricanes, floods, wildfires and heat waves in the years to come.
To stay on pace and give global leaders a shot at the 1.5-degree goal, the United States has to cut its emissions by about 260 million tons per year over the remainder of the decade, based on an analysis of Rhodium’s figures. Postponing climate legislation by just one year would have raised the stakes, requiring U.S. leaders to slash emissions by about 300 million tons annually. If it holds, the agreement would avoid the need for more radical action later on.
The new proposal includes some significant concessions on fossil fuels that would probably increase carbon pollution by requiring the federal government to auction off more public lands and waters for oil drilling. Manchin, whose home state of West Virginia is a major producer of coal and gas, had pushed for these provisions during the negotiations. But many climate advocates said those trade-offs, which Senate Democrats accepted to win Manchin’s support, were worth it.
The bill would mandate new lease sales in the Gulf of Mexico, which climate advocates had opposed but which the Biden administration was leaning toward regardless.
It would also make the development of renewable energy projects on federal land contingent on more oil drilling. For the Interior Department to issue a right of way for wind and solar projects — a necessary approval to connect to the power grid — the department would have to auction off at least 2 million acres for drilling during the previous year. Similarly, Interior wouldn’t be able to sell offshore wind leases until it had offered at least 60 million acres in waters for sale.
Brett Hartl, government affairs director at the Center for Biological Diversity, an environmental advocacy group, called the fossil-fuel-friendly provisions “super cynical.”
“If you look at the details, it’s a terrible deal,” Hartl said. “I don’t see frankly how the math even works, because the amount of leasing we would be locking in until 2032 would just be game-over for the climate.”
But Princeton University professor Jesse Jenkins, an energy policy expert and modeler, said that the bill’s climate calculus does pencil out.
“The measures in this bill do bind the administration’s hand to ensure leasing continues,” he said in an email, but added that any additional emissions from federal leasing are “dwarfed by the emissions reductions driven by the bill.”
A new fee on methane emissions from the oil and gas industry and an Environmental Protection Agency regulation curbing emissions of the potent greenhouse gas are also expected to reduce carbon pollution.
“While it is unfortunate that the bill includes some support for the continued production of fossil fuels on public lands and waters,” said Sam Ricketts, co-founder and adviser for Evergreen Action, an environmental group, “we recognize that it is the result of a long, painstaking process necessary to achieve the support of all 50 Democratic senators in this Congress.”
Another less-noticed-but-significant provision extends tax credits for biodiesel, and includes incentives for “sustainable aviation fuel” to reduce the airline industry’s emissions. Experts are concerned that both measures would increase demand for biodiesel, made from soybean and palm oil, worsening greenhouse gas emissions and accelerating deforestation by giving farmers an incentive to clear land for plantations.
More broadly, the climate and tax package would bolster American energy production and combat climate change through tax incentives for the renewable energy sector, increasing wind, solar, battery and geothermal construction. Tens of millions of drivers would qualify for new tax credits to buy electric vehicles. Homeowners across the country would get financial help to pay for heat pumps and insulate their properties.
The bill also sets aside $60 billion to help low-income areas with predominantly Black or Latino populations, with some of that aimed at helping these communities cut emissions and tap into clean energy.
And it authorizes the Department of Energy to issue $250 billion in loans, a huge increase that could help car companies shift to making electric vehicles and spur domestic manufacturing of solar panels and batteries.
“What’s going to happen with this bill is a wave of investment in renewable energy,” said Lachlan Carey, a senior associate at RMI, a clean energy think tank.
An analysis by the group found that those new investments would lower the cost of electricity by shifting the country away from the more expensive fossil fuels, such as coal, and toward cheaper renewable energy. Though the effects of this transition would probably take a few years to reach individuals, they could save American ratepayers $5 billion annually by 2024, the group found.
“This couldn’t come at a better time,” Carey said. “Gas prices are hurting American consumers, Russia’s invasion of Ukraine has highlighted the risks of relying on fossil fuels, and of course China continues to dominate industries like solar, like batteries, like wind. This bill really unleashes the power and ingenuity of the American private sector to compete in the industries that are going to define this century.”
Sen. Martin Heinrich (D-N.M.) who delivered his first climate-change speech as a senator in 2013, said in a statement that the package represented a rare win on a seemingly intractable issue.
“There is certainly more to do and say, but tonight I will sleep a little easier knowing we have fought successfully for the future our kids deserve.”
Chris Mooney, Michael Birnbaum and Tony Romm contributed to this report.