Overnight Energy & Environment — Presented by the American Petroleum Institute — Democrats eye potential carbon price in reconciliation bill

by Rachel Frazin and Zack Budryk - 09/03/21 6:28 PM ET

Welcome to Thursday’s Overnight Energy & Environment, your source for the latest news focused on energy, the environment and beyond. Subscribe here: digital-staging.thehill.com/newsletter-signup.

Today we’re looking at Democrats floating carbon pricing in their spending package, progressives criticizing the Line 3 pipeline and a House-proposed tax aimed at boosting solar.

For The Hill, we’re Rachel Frazin and Zack Budryk. Write to us with tips: rfrazin@digital-staging.thehill.com and zbudryk@digital-staging.thehill.com. Follow us on Twitter: @RachelFrazin and @BudrykZack.

Let’s jump in.

But first, a programming note: there will be no Overnight Energy on Monday. We’ll be back on Tuesday.

Democrats float carbon price in spending package

Senate Finance Committee Democrats on Friday floated the idea of a carbon price as one of several options they’re looking at to help pay for their $3.5 trillion spending package according to a document obtained by The Hill.

The document comes as Democrats are in the process of crafting the reconciliation bill — and it’s unclear which of the policies listed in it, including the carbon price, will ultimately make it into the package.

It lists several three potential approaches for its carbon pricing scheme:

A tax on the carbon dioxide content of “leading” fossil fuels like coal, oil and natural gas upon extraction. This tax would start at $15 per ton and increase over time.
A tax per ton of carbon dioxide emissions from major industries including steel, cement and chemicals
A tax per barrel on crude oil

The document said that each of these provisions would come with a rebate or other form of relief for low-income taxpayers and a border adjustment to make sure that foreign companies also have to pay for the tax.

It also pitches repealing “major” fossil fuel tax subsidies including tax credits and deductions for extraction, “preferential treatment” for foreign income and the ability for pipeline companies to avoid corporate income tax.

And they suggest a 20-cent pound fee on the sale of virgin plastic that’s used to make single-used plastics.

A MESSAGE FROM API

The American Petroleum Institute released a new analysis of the natural gas and oil industry’s impact on the U.S. economy. Learn how the industry is powering each state’s economy here.

‘Squad’ members call on Biden to shut down Line 3 pipeline in Minnesota

Several members of “the squad” — a group of progressive House Democrats — called on President Biden to shut down construction of the Line 3 pipeline in a Minneapolis press conference Friday, citing indigenous opposition and environmental risks.

Rep. Ayanna Pressley (D-Mass.) called shutting down the pipeline a “no-brainer,” adding “President Biden has the opportunity and … the responsibility in making good on his word to be the climate president, and must direct the Army Corps of Engineers to revoke the permit for Line 3.”

“The voices of indigenous people are often not prioritized … we want this issue to be elevated and for it to be important enough for the president to take action,” added Rep. Ilhan Omar (D-Minn.).

A refresher: In June, the Justice Department backed a Trump-era approval of a permit for the pipeline, saying in a legal filing that the government had followed its legal obligation to consider the project’s environmental impacts.

Meanwhile, the progressives aren’t done: The representatives are set to visit the pipeline site in Bemidji on Saturday, where they will meet with indigenous leaders opposed to the project.

Read more here.

Democrats on key panel offer bill on solar tax incentive

A group of Democrats on the tax-writing House Ways and Means Committee introduced a bill Friday aimed at encouraging clean-energy production that they’re seeking to include in a forthcoming multitrillion-dollar spending package.

The legislation would allow solar companies to be eligible for a full-value production tax credit. Currently, this incentive is available for wind and geothermal energy.

The bill’s release comes as President Biden and congressional leaders have made it a top priority to pass a spending package that includes renewable energy incentives along with funding for child care, education, health care and other Democratic priorities. Democrats plan to pass the spending package through the budget reconciliation process to sidestep the need for any GOP support in the Senate.

And they’re invoking Biden’s clean electricity push. The sponsors of the solar bill say it should be included in the reconciliation measure because it would help advance Biden’s goal of achieving carbon-free electricity production by 2035.

“Let’s get this in the reconciliation package so we can help make the United States carbon free by 2035,” Rep. Thomas Suozzi (D-N.Y.), a sponsor of the solar bill, said in a statement. “This legislation makes that goal that much easier to attain.”

Read more about the bill here.

WHAT WE’RE READING

Feds responding to reports of oil, chemical spills after Ida, The Associated Press reports
Climate Change Is Bankrupting America’s Small Towns, The New York Times reports
Los Angeles approves 100% clean energy by 2035 target, a decade ahead of prior goal, Utility Dive reports
Ariz. mine developer loses bid to shrink jaguar habitat, E&E News reports

The American Petroleum Institute released a new analysis of the natural gas and oil industry’s impact on the U.S. economy. Learn how the industry is powering each state’s economy here.

ICYMI