After a year of impasses and impassioned pleas, Sen. Joe Manchin, D-W.Va., has given his blessing to budgetary legislation that would be the largest climate investment in U.S. history.
The nation’s dearth of past legislation to combat climate change makes that a low bar to clear, but many climate advocates see Manchin’s new support as a crucial step toward reining in U.S. greenhouse gas emissions and incentivizing an accelerated transition toward cleaner energy.
“I’m knocking on all the wood around me,” a heartened Jessica Eckdish, vice president of legislation and federal affairs at the BlueGreen Alliance, a national alliance of labor unions and environmental groups, said hours after Manchin announced his support for a new climate package Wednesday.
Democrats intend for the 725-page budget reconciliation bill to put the country on a path to a significant reduction in greenhouse gas emissions while lowering energy and health care costs for Americans.
In a statement announcing that he reached an agreement with Senate Majority Leader Chuck Schumer, D-N.Y., Manchin emphasized his expectation that the bill — titled the Inflation Reduction Act of 2022 — would pay down the national debt and live up to its name.
Manchin had suggested holding off on a new spending package until after U.S. Bureau of Labor Statistics inflation figures for July are released next month after his office cited a Bureau of Labor Statistics report that consumer prices had risen 9.1% from June 2021 to June 2022.
“People say, ‘Why didn’t you wait for the inflation figures?’” Manchin said in a news conference Thursday morning. “Because I know I’m not adding [to] inflation.”
Budget reconciliation packages are so named because they allow committees to change spending amounts in a fast-track process requiring only a simple majority to pass.
Manchin has long been a critical holdout vote in a Senate evenly divided between Democrat and Republican caucuses, given Republicans’ united opposition to budget reconciliation proposals.
The proposal is a significantly scaled-back version of the House of Representatives-passed Build Back Better Act that Manchin doomed by opposing in December. That bill would have extended since lapsed child tax credits that had lifted thousands of West Virginian children out of poverty — a provision left out of the Inflation Reduction Act after Manchin voiced budgetary concerns.
“Congress is making a profound mistake by leaving the Biden era’s single most effective program for reducing poverty and helping families meet their basic needs out of the draft reconciliation package unveiled in the Senate,” a coalition of groups that included the Children’s Defense Fund, a child advocacy and research nonprofit, and Children’s HealthWatch, a Boston Medical Center-based network of children’s health and policy experts, said in a statement.
But the White House said in a statement that the bill would help families by addressing high health care costs and investing in energy security by taxing large corporations and providing tax credits for energy projects.
Senate Democrats say the bill would raise roughly $450 billion to pay for deficit reduction and climate investments mainly through bolstered IRS tax enforcement, prescription drug pricing reform and imposing a 15% minimum tax on adjusted financial statement income for corporations with profits exceeding $1 billion.
The bill also would invest $64 billion in a three-year extension of subsidies in the expanded Affordable Care Act program through 2025, allow Medicare to start negotiating directly for the price of prescription drugs in 2023, and cap Medicare patient out-of-pocket costs at $2,000 per year.
But most of the bill’s investments are in climate and energy programs, amounting to $369 billion.
That’s substantially less than the $550 billion in climate and clean energy investments in the Build Back Better Act that Manchin rejected in December. It’s still enough, though, for Appalachian clean energy advocates to applaud the bill.
“So much of this proposal is good for Appalachia — we need the tools to create new jobs, address the climate crisis, and support struggling Appalachian communities,” Dana Kuhnline, campaign manager for ReImagine Appalachia, a regional coalition of community groups, said in a statement.
The bill would offer incentives to consumers to buy electric vehicles, electric and energy-efficient appliances, and rooftop solar.
Those include tax credits for electric vehicles assembled in North America of $7,500 for new vehicles and the lesser of $4,000 or 30% of the sale price for used vehicles. Required percentages of the vehicle batteries that must be made in North America are slated to increase from 60% for vehicles placed into service in 2024 and 2025 up to 100% by 2029.
The bill contains $9 billion in consumer home energy rebate programs geared toward low-income consumers for home appliance electrification and energy efficiency retrofitting.
The measure includes $60 billion for domestic clean energy manufacturing, featuring $30 billion in production tax credits for solar panels, wind turbines, batteries and critical mineral processing.
Proponents say the bill will alleviate energy supply chain issues fueling price hikes, helping cut inflation.
“It’s very encouraging to see solid agreement around sensible ways to lower energy costs and meet science-based emissions reduction benchmarks to avoid the worst impacts of climate change,” West Virginia Rivers Coalition executive director Angie Rosser said in a statement.
American Electric Power spokeswoman Tammy Ridout said the bill would spur the manufacturing of components needed to achieve clean energy goals and provide “good clean energy jobs for communities that have powered our nation for decades.”
“The energy provisions in the Inflation Reduction Act introduced by Sens. Manchin and Schumer are a promising step to further reducing carbon emissions while ensuring our customers’ energy needs are met during the transition in a cost-effective manner,” Ridout said in a statement.
Opponents of the Mountain Valley Pipeline are wary of Manchin’s statement that Schumer, President Joe Biden and House Speaker Nancy Pelosi, D-Calif., had agreed to advancing pipeline and transmission permitting reforms.
Manchin has been one of the most vocal supporters of the incomplete 303-mile pipeline slated to provide up to 2 billion cubic feet per day of natural gas from the Marcellus and Utica shale formations to markets in the Mid-Atlantic and Southeastern regions of the country.
“Here in Appalachia, we refuse to be sacrificed for political gain or used as concessions to the fossil fuel industry in this so-called deal,” Grace Tuttle of the Protect Our Water, Heritage, Rights, an interstate coalition of people and groups from West Virginia and Virginia organized against the Mountain Valley Pipeline, said in a statement.
The bill includes a fee on methane emitted from infrastructure natural gas and petroleum infrastructure that would rise to $1,500 per ton by 2026.
Charlie Burd, executive director of the Gas and Oil Association of West Virginia, didn’t criticize or endorse the proposal in a statement Thursday, saying continuous site-level emissions monitors and leak detection and repair processes reduce emissions while meeting growing demand.
“Regardless of policy negotiations in D.C. or Charleston, West Virginia’s natural gas and oil operators continue to invest in and implement innovative solutions to reduce emissions across the supply chain,” Burd said.
Appalachian miner advocates cheered a provision in the bill that would permanently extend the tax rate on coal production that funds the financially strained Black Lung Disability Trust Fund that pays federal benefits to miners.
“We told Senator Manchin we were counting on him to protect our black lung benefits, and today he proved that he was listening,” National Black Lung Association president and Beckley resident Gary Hairston said in a statement.
The tax expired at the end of 2021, reverting to substantially lower levels and threatening the long-term benefits of thousands of West Virginia mine veterans.
A 2018 report by the U.S. Government Accountability Office, a nonpartisan audit agency, found that trust fund borrowing might exceed $15 billion by 2050.
Financial risks to the Black Lung Disability Trust Fund loom especially large in West Virginia. There were 4,423 black lung claims in fiscal year 2021 under Part C of the Black Lung Benefits Act in West Virginia, according to U.S. Department of Labor statistics.
“This is a huge victory for every miner and mining family that is worried about how to pay for their bills and medication in light of the uncertainty around the Black Lung Disability Trust Fund,” Chelsea Barnes, legislative director of the environmental nonprofit Appalachian Voices said in a statement.
West Virginia Coal Association president Chris Hamilton did not respond to a request for comment.
Schumer said the full Senate will consider the bill next week.
“[W]e are guardedly optimistic about this breakthrough on climate legislation talks,” West Virginia Environmental Council president Linda Frame said in a statement, noting deadly flooding impacting the state’s Eastern Kentucky neighbors this week and alluding to climate change’s exacerbation of flood risks to especially prone states like West Virginia. “We need to sprint to that finish line.”