Paths to Climate Action on Capitol Hill

By and Joshua McBee and Kyle Saukas

January 31, 2021

Congressional climate action has become more likely with Democrat victories in the Georgia Senate run-off elections if Democrats can agree on how to do it.

Exactly what form any climate-focused legislation may take depends on a variety of factors, most importantly the views of a handful of Senators and Representatives who, because they are closest to the ideological middle, wield outsized influence over legislative outcomes. Often challenged by Republicans with false claims of being “supporters” of the Green New Deal, many Democratic Senators and Representatives are focused on finding bipartisan approaches that may limit action if Republicans cling to a strategy of obstruction. Additionally, the powers of Congress and the rules of the institution can create barriers to moving legislation forward without a supermajority.

Here we analyze the various avenues for Congressional action on climate and energy, discussing the outcomes associated with each, indicating which are likeliest, and noting key players.

Path 1: Reconciliation

The likeliest vehicle for climate and energy policy in the coming years may involve a process known as “budget reconciliation,” a procedural mechanism intended to make it easier for Congress to pass a federal budget.

The main advantage of reconciliation over standard legislation is that, unlike other bills, reconciliation bills are not subject to the filibuster and can therefore pass the Senate with only 51 votes. For the next two years (absent a death or change in political party by a Senator), Senate Democrats will have the power to pass reconciliation bills without any Republican votes, since the President of the Senate, Vice President Kamala Harris, would cast the tie-breaking vote. However, there are various limitations on, and drawbacks to, the reconciliation process.

First, Congress can basically pass only one reconciliation bill per fiscal year (technically Congress can consider up to three reconciliation bills per year, but the constraints on how it would have to do so generally make this approach impractical). In 2021, the Senate could pass two reconciliation bills, however, because the Senate did not pass a reconciliation bill in the calendar year 2020.

Second, the so-called “Byrd Rule,” which is named after then-Senate Minority Leader Robert Byrd, who introduced the rule in 1985, limits what can be included in reconciliation bills. The Byrd Rule allows Senators to raise a point of order against “extraneous” provisions in reconciliation bills, such as changing Social Security, changing the overall level of spending or revenue, or increasing deficits outside of the 10-year budget window. However, since a simple majority can overrule the Parliamentarian’s decisions regarding what can pass through reconciliation rules, Democrats could ignore, eliminate, or amend the Byrd rule.

Given this flexibility, climate policy can be advanced significantly through reconciliation bills. Realistically, however, many of the more ambitious proposals, such as enacting some variant of a clean energy standard (CES) through reconciliation, are unlikely to be enacted in this way. Such proposals are likely to be seen as too much of a departure from Senate norms and may face opposition from moderate Democrats.

Among the climate and energy policies more likely to be enacted through reconciliation are:

  • Ending fossil fuel subsidies,
  • Tax credits and rebates for electric vehicles, renewables, and carbon capture use and sequestration,
  • Reinstating and expanding a tax credit known as 48C, which provided a credit of up to 30 percent for investments in building new manufacturing facilities or expanding existing facilities to produce clean energy technologies and for which the more conservative Senate Democrats, including Senator Manchin (see below), have expressed support.
  • Congress may also scrap plans to hold another auction for permits to drill in the Arctic National Wildlife Refuge (ANWR), the statutory authority for which is an earlier reconciliation bill.

More ambitiously, some members of Congress are hoping to use reconciliation to create a federal Green Bank, which would have the potential to channel a massive amount of funding toward green infrastructure projects such as new transmission lines, smart-grid upgrades, high-speed rail, public transit, electric vehicle charging stations, and more.

Democrats could theoretically pass a carbon tax through budget reconciliation since it would fit within the Byrd rule. It is unclear, however, whether all 50 Senators in the Democratic party would support a carbon tax. Speaker of the House Nancy Pelosi would need to corral her slim majority of Representatives in the House as well to make this path feasible. Also, as Vice President Biden did not campaign on a carbon, tax he does not have a public mandate for this policy. The odds of a carbon tax passing via budget reconciliation, with or without some support from a few Republicans, are low but there is still a chance a deal could be brokered.

Path 2: Bipartisan Compromise

With the newly established 50-50 split of the Senate, Democrats have a slim grasp on the majority, which means that even a single defector could prevent legislation from passing. Given this dynamic, a group of moderates – both Democrats and Republicans — have a large influence on the scale, ambition and content of proposed policies to address climate change. The key swing voters in the Senate are explored further below.

Democrats

Joe Manchin III (Democrat, West Virginia), who once shot a bullet through a copy of the Waxman-Markey cap-and-trade bill in a televised campaign ad, will have an enormous influence on national climate and energy policy this year. Senator Manchin is the chair of the Senate Energy and Natural Resources Committee, which is in charge of energy resources and public lands.

With a score of only 49 percent, Senator Manchin receives relatively low marks from the League of Conservation Voters (LCV). That score makes him one of the least “green” Democrats in the Senate. However, he has evolved over the years and now accepts mainstream climate science, allowing him to make inroads with environmentalists. He still maintains a focus on energy independence and endorses an “all-of-the-above” energy approach, which includes coal, natural gas, and other fossil fuels in addition to clean energy sources.

Senator Manchin has stated his commitment to working across the aisle to find bipartisan compromises with climate-friendly Republicans. His priorities as chair will be focused on a just transition for fossil fuel workers like the many coal works in his home state, establishing a “commonsense” clean energy standard, clean manufacturing tax credit, funding research, and development for energy efficiency. The senator’s home state of West Virginia is the second-highest coal-producing state in the country, and, as a result, Senator Manchin has been outspoken in his support for the development of carbon capture, utilization, and storage (CCUS) technologies as well.

Kyrsten Sinema (Democrat, Arizona) may also be a crucial swing vote on climate and energy policy. Her voting record on climate change is moderate, scoring 77 percent from the LCV. However, her views on climate change seem to be mixed. Her voting record makes her the most conservative Democrat in the Senate according to GovTrack.

She came out against the progressive Green New Deal but has supported other measures to increase funding for clean energy, especially solar power innovation and generation, and she believes that greenhouse gas emissions should be regulated. Climate, the environment, and energy are not listed as priorities on her Senate or campaign websites.

Some signs show the dynamics of climate change in Arizona may provide Senator Sinema the opportunity to pursue bolder action if she chooses. Her home state of Arizona has established a new clean energy standard of 100 percent carbon-free electricity. Arizona’s other Senator, Mark Kelly, made climate action a core tenet of his campaign in 2020 and performed better than Joe Biden in the 2020 election. Polls are finding that a supermajority of Arizonans want the federal government to take more action on climate change.

Jon Tester (Democrat, Montana) has a reputation as a moderate, but generally has a strong record on climate, scoring 86 percent from LCV. Montana is a major coal producer and Senator Tester bases his views on climate on its intersection with other issues.

For instance, Senator Tester has rejected the Green New Deal not because of its wide-sweeping vision of mitigating climate change, but because of its attached economic policies. The Senator supports research into CCUS technologies and funding for renewable energy projects, but, if a climate policy is accompanied by non-climate related progressive initiatives, Senator Tester may withhold his support.

In addition, Senators Mark Warner (Democrat, Virginia) and Angus King (Independent, Maine), who caucuses with the Democrats, may also withhold support from more progressive policies.

The House Speaker Nancy Pelosi saw her caucus lose seats in the 2020 election and now sits with a majority of only nine more Democratic-held seats than Republicans. Any climate legislation that aims to pass through the House must gain the support of Democrats from states like Texas, New Mexico, Pennsylvania and others where the fossil fuel industry provides many jobs. While the outlook for climate legislation to pass through the House is stronger than in the Senate, the most ambitious plans may not find enough support.

Republicans

Susan Collins (Republican, Maine) has the strongest environmental voting record of any Senate Republican, with an LCV score of 64 percent. She was one of three Republican Senators to support President Obama’s Clean Power Plan and is a member of the bipartisan Senate Climate Solution Caucus.

However, Senator Collins has been criticized for her more recent votes on climate issues, specifically voting for President Trump’s tax cut package which also included a provision to open the ANWR to drilling activities. Given her history and the fact that she represents a Democratic-leaning state, Senator Collins could break with her party to vote for a climate-friendly bill, including climate pricing, research and development of clean energy technology, and green jobs.

Lisa Murkowski (Republican, Alaska) is a long-time ally of Senator Manchin and sits with him on the Senate Energy and Natural Resources Committee. Traditionally, she has gone back and forth on working with Democrats, disagreeing with them on some climate policies, like the Waxman-Markey cap-and-trade bill, while agreeing with them on some policies like the bipartisan American Energy Innovation Act. With a score of just 18 percent from the LCV, she has received low marks for her environmental voting record.

She has also received more campaign contributions from the oil and gas industry than any other industry and hails from an oil-producing state. She was a key force in opening ANWR to drilling activities, which saw little industry interest and has been temporarily paused by the Biden Administration. Senator Murkowski may support moderate climate proposals, especially those that are focused on research and the development of new technologies.

Mitt Romney (Republican, Utah), a former presidential nominee, is among the Republicans most likely to support bipartisan climate legislation. Although he has a score of 14 percent from the LCV, Senator Romney has a history of strong action on climate change. As governor of Massachusetts, he worked to bring down the state’s greenhouse gas emissions and meet a regional target set in 2001. One of his former top staffers, Gina McCarthy, went on to run the Environmental Protection Agency (EPA) during the Obama Administration and is now President Biden’s White House climate czar.

Senator Romney opposes the Green New Deal but believes that the government should provide incentives for clean energy technology development and has discussed the benefits of a carbon tax. The Senator is no stranger to breaking with his party — he was one of the most outspoken critics of President Trump during his tenure. However, it remains to be seen if he would be willing to compromise with Democrats on climate or energy policy.

Bipartisan Legislation at the End of 2020

The climate and energy bill passed at the end of 2020, which was attached to the COVID-19 relief act and part of the year-end omnibus bill, was the largest climate package in more than a decade and could portend what bipartisan action may look like during the Biden administration. The main parts of the legislation commit to phasing out hydrofluorocarbons (HFCs) and funding clean energy programs that promise significant emissions reductions. Business and environmental groups had mixed reactions but agree that Congress could build on the agreement and offer stronger bipartisan climate legislation this year.

The bill’s key climate commitment is to reduce the use of HFCs, often used as coolants by chemical manufacturers, by 85 percent over the next 15 years. This phaseout would put the United States into compliance with the 2016 Kigali Amendment to the Montreal Protocol, in which nations agreed to curb the use of HFCs, given that they can be up to thousands of times more harmful than CO2 for global warming.

The United States has not ratified the Kigali amendment yet. President Biden will ask the Senate to do so, but even if the Senate does not ratify the amendment, the laws passed in late 2020 will mean that the United States will take action in line with the Kigali timetable for phasing out HFCs. Global compliance with Kigali could reduce cumulative emissions by up to 900 million tons of CO2 by 2035, possibly avoiding up to half a degree Celsius increase in global warming, according to analysis by the Rhodium Group.

The omnibus bill included other climate-related provisions, including the authorization of the use of $35 billion toward clean energy programs over the next five years. It specifically allocates billions toward research and development into solar and wind power, energy storage, grid modernization, and carbon capture, utilization and storage (CCUS) efforts.

The bill also extends existing tax credit programs for onshore wind by one year, solar by two years, and carbon capture under Section 45Q by two years. The carbon capture tax credit extension alone could cut cumulative industrial emissions by 342-585 million tons of CO2 by 2035, according to the Rhodium Group.

Other key climate elements include unlocking $3 billion for port maintenance, reauthorizing the Weatherization Assistance Program, and strengthening pipeline safety by requiring companies to find and fix methane leaks.

Industry groups, for the most part, applauded initiatives in the bill, while environmental groups called for stronger climate action. The U.S. Chamber of Commerce and the Business Roundtable commended the bipartisan efforts underpinning the bill. The Solar Energy Industry Association and the American Clean Power Association noted their support for the extension of tax credits, while the Air-Conditioning, Heating and Refrigeration Institute saw the HFCs phaseout as a major win for chemical manufacturers. On the other hand, NGOs emphasized that more needs to be done and called for acceleration toward transitioning to clean energy.

It remains to be seen whether Congress will build off of this bill, given that the Democrats have the slimmest of majorities. Though the energy and climate provisions were bipartisan and based specifically on cooperation between Senator Murkowski and Senator Manchin, they were attached to a bill that was required to pass to avoid a government shutdown. Bipartisan cooperation may be more difficult in the future as climate change still remains a contentious issue in a very polarized Congress. Still, it could provide a template for climate legislation in 2021, with provisions attached to larger bills, such as COVID relief packages or infrastructure legislation.

Path 3: Abolishing the Filibuster

In this least likely scenario, all 50 Democrats would have to vote for a change to the Senate rules which eliminates the filibuster, a Senate mechanism that enables Senators to block any legislation that cannot secure the support of 60 Senators. Changing this rule requires a simple majority, but on January 25, 2021, two Democratic Senators (Manchin and Sinema) said publicly that they would not support abolishing the filibuster at any point in the next two years.

Unless they change their minds, this leaves Democrats without the majority needed to do away with the filibuster during this Congressional term. If the filibuster were to be eliminated, wide-sweeping, climate-focused bills on the scale of Waxman-Markey or even the Green New Deal would be much more feasible. Still, even then, the moderate Senate Democrats mentioned above would likely demand that elements of the original Green New Deal resolution be avoided.

Congressional Review Act

The Congressional Review Act (CRA) is an obscure law passed in 1996 that creates a streamlined procedure for Congress to nullify regulations promulgated by various federal government agencies with a simple majority vote. Democrats in Congress can use the CRA to nullify regulations promulgated by the Trump Administration. While not a path forward for climate legislation, the CRA provides Congress the opportunity to take significant action on climate change by overturning a slew of regulations implemented at the end of Trump’s term.

However, Congress’s ability to nullify Trump’s rules will be limited in several ways. For one, Congress has 60 legislative working days to nullify rules once they are finalized. Because Congress takes so many breaks, 60 legislative days stretch out for many calendar months. As a result, only agency rules finalized after August 21, 2020, are subject to nullification using the CRA. Moreover, the CRA requires a majority vote by both houses of Congress. In addition, once the CRA is used to nullify a regulation, the administration cannot promulgate another rule that is, as the statute puts it, “substantially the same.”

Consequently, Congress must be careful not to use the CRA to scrap any Trump administration regulations that are overly close to those with which the Biden administration would want to replace them. (It is unclear how close is too close: “The law does not define ‘substantially the same,’ nor does it say who should, and the matter has never been tested in court.”) However, there are practical limits to what Congress can do here, given that there are few opportunities for debate and votes by the full House and Senate. In 2017, Congressional Republicans and President Trump were able to use the CRA to nullify only 16 Obama-era rules.

Several Trump administration climate and energy rules may be vulnerable to nullification using the CRA. Congress could use the CRA to reverse the Trump administration’s repeal of the Clinton-era “once in, always in” air toxics rule, which required factories, refineries, and other large industrial plants to maintain “maximum achievable” pollution controls even after their emissions fell below the thresholds that put them in the category of “major” sources of mercury, benzene, and other hazardous pollutants. Critics say the move increased hazardous pollutants in communities located near power plants. Other Trump administration rules that may be vulnerable to nullification include the administration’s Arctic drilling leasing plans, as well as its narrower definition of critical habitats, which would keep more land open to development by precluding the use of the Endangered Species Act to protect habitat that was used historically used by a threatened species or that could be important as species move in response to as climate change.

The Path Ahead

Look for Democrats to push hard and fast on climate legislation using the paths available to them. Republicans have already begun to use Biden’s early executive orders and any ambitious climate legislation from Congressional Democrats as part of their strategy to take back the House and Senate in 2022. For Democrats, securing some wins on climate and building a stronger consensus of what they wish to achieve with stronger majorities will fuel their outreach to climate-focused voters who helped them secure a governing trifecta in 2020.

Achieving a middle ground on this issue will be a significant challenge for officials seeking reelection in competitive districts. However, the payout of having tangible wins to share with climate-concerned voters could provide major dividends. Altogether, these factors mean the path forward for climate legislation on Capitol Hill isn’t clear but the 117th Congress will still make climate change a primary issue.

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