Last week, Senate negotiators released the text of the $1.2 trillion bipartisan infrastructure deal. For the first time since the deal was announced in June, we can actually see what’s in it.
On its face, this isn’t a climate bill. It invests significantly in a federal road and highway system that encourages fossil-fuel-based travel in private cars and trucks. It also just does too little, making significant investments that will be transformative only if (1) Democrats pass a more aggressive bill through reconciliation and (2) private companies play along.
Still, it’s a big deal, and I think this could be what the future of climate legislation looks like.
Journalists like to tell a familiar story about how, from the days of Hamilton to Eisenhower, the federal government nurtured infant industries and harmonized large internal markets. Then, in the 1980s, it backed off this set of tools, now dubbed “industrial policy.”
But the United States did stay involved with the development of personal computing and the internet, and in other industries in plenty of subtler ways. One of those is the Farm Bill, the $800 billion-ish package that Congress rouses itself to renew every five years. The bill is a mess: a mix of subsidies, loan guarantees, welfare programs, and incentives that push the American agricultural system in different directions at the same time. But it gets through, with Congress sometimes making it reflect Democratic priorities and sometimes Republican ones. Lately I’ve started to wonder: Isn’t that what U.S. climate legislation could look like? No big monumental bill, just a slow, iterative process that alters and supports the energy system over time? I think it could be. And I think this bill could wind up being a model.
So what does the deal change? The think tank Third Way has a good rundown of every climate- or clean-energy-related provision in the bill. What I want to offer here are some broader observations about what it means for U.S. climate policy:
The Biden administration wants to deploy low-carbon technology. I’ve written before about how the American government focuses too much on conducting basic research and too little on deploying and commercializing new technology. This bill may signal a shift in that approach. It authorizes $3.5 billion for four “regional hubs” focused on developing and commercializing technology that directly removes carbon from the air. It also devotes $8 billion to four hubs focused on zero-carbon hydrogen. (Hydrogen could be an essential part of making steel without emitting carbon pollution.)
President Joe Biden had initially requested 15 new hydrogen demonstration projects. But the bill bestows this small number of projects with bipartisan imprimatur, which may give investors more confidence to fund the space for the long term.
Some outcomes may depend on a second Biden term. The bill appropriates $5 billion to build electric-vehicle charging stations nationwide. But it grants another $2.5 billion to a looser program that could fund electric chargers or propane, hydrogen, or natural-gas fueling stations. Both pots of money expire in 2026.
I suspect that the Biden administration would prefer for nearly all of that money to go to EV charging, because even $7.5 billion likely isn’t enough to build Biden’s hoped-for 500,000 electric chargers. The White House seems to be wagering that it can either spend most of that money by 2025 or that it can win the 2024 election.
The U.S. could get high-speed rail—if we want it. The bill grants Amtrak $30 billion specifically for the Northeast Corridor, the line that connects Boston to Washington, D.C. That should be more than enough to allow truly high-speed rail on that line, the transit researcher Alon Levy told me. And if Spain, Germany, or South Korea’s rail agency was building the track, it would be enough, judging by their respective average costs per mile. But Amtrak can somehow spend billions merely maintaining the track at its current level, Levy said. If Biden, famously a rail devotee, wants to actually revolutionize travel in the country’s densest region while knocking carbon emissions, he should consider bringing in rail administrators from abroad to fix Amtrak.
The Department of Energy gets more powerful. No federal agency, in my view, is more deserving of pathos than the Department of Energy. When Congress established the DOE in 1977, its architects hoped that it would become the instrument of national industrial policy. Much like the Ministry of International Trade and Industry had done in Japan, the DOE could set the general direction of American technology development, providing subsidies and incentives to keep U.S. firms at the bleeding edge of progress.
That even sort of happened—for about three years. Then President Ronald Reagan scaled back the DOE’s power. This abdication was part of why the U.S. eventually lost control of the solar industry, a technology invented here.
The DOE’s ambit is growing again, and now that lawmakers in both parties have embraced industrial policy as the only way to counter China, you can see it gaining its old planning role. So the bill, for instance, beefs up the DOE’s ability to authorize new electricity transmission. It charges the DOE with spending $6 billion to beef up the nascent American battery industry. It frees the DOE to make loans to small businesses. And it also puts the DOE in charge of a program that will keep aging nuclear plants open.
Importantly, too, the bill instructs the DOE’s Energy Information Administration to start collecting new information about the country’s decarbonization and to improve its energy models. These models are used by companies, utilities, and government officials and are thought to bias against low-carbon energy sources. Consolidating information and coordinating action in this way are two of the federal government’s most powerful tools.
The bill prepares for governing amid climate change. Other agencies will also improve their data collection for a more tumultuous climate. The National Oceanic and Atmospheric Administration gets more than $500 million to improve its forecasts for local coastal flooding and wildfire spread. And a general sense emerges across the bill that congressional Republicans find it easier to adapt to climate change than mitigate it. The Federal Emergency Management Agency gets $3.5 billion, for instance, to reduce the damage of future flooding.
It isn’t enough. Considered together, what is in the bill would amount to one of the federal government’s most significant pushes ever on climate change. But it isn’t nearly enough to decarbonize the United States by the middle of the century. The bill contains money to grow the power grid, for instance, but no mechanism to ensure that the electricity in the grid comes from zero-carbon sources. For that, Democrats will need to pass a reconciliation bill.
The good news for Democrats is that a lot of policies beloved by their moderate wing are not in the deal. Senator Joe Manchin, one of the key negotiators of this deal, has championed a tax credit that would incentivize alternative-energy manufacturing in former fossil-fuel-rich areas—which is to say, his home state of West Virginia. I’ve heard that this credit was spirited into the partisan reconciliation package at the last moment. And a federal green bank, which is meant to help private capital “crowd in” to the climate-tech space, has also gone missing from the deal. I hope we see that, too, in the reconciliation bill.
So the bill is a good starting place, in other words. But the question I posed last week—does the Biden administration seek to remake U.S. economic governance forever, or just offer tweaks to the status quo?—remains unanswered.
