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House-passed $1.7 Trillion Build Back Better Reconciliation Legislation; Includes $325 Billion in Green Energy Tax Incentives and More Than $92 billion in Spending to Address Robust Climate Change Goals

Published by Nat Eng and Peter Lawrence on Friday, November 19, 2021 - 12:00AM

As noted in Novogradac’s summary of the Nov. 3 version of the Build Back Better (BBB) reconciliation legislation, the overall framework of the set of renewable, clean energy and energy-efficiency tax incentive proposals as included in the September version was largely retained. However, the Nov. 3 BBB draft did make various changes throughout and the overall cost of the proposals increased by nearly $52 billion over 2022-31. The House passed the BBB legislation Nov. 19, sending the bill to the Senate, which will likely consider it after Thanksgiving.

These changes were a result of removing the proposed $150 billion in spending for the Clean Energy Payment Program (CEPP) from the September version of the Energy and Committee portion of the BBB reconciliation bill. This removal prompted congressional leadership to replace a portion of the lost resources devoted to CEPP to enhancing various green energy tax incentive proposals in the Nov. 3 BBB draft.

The two main green tax bills that served as inspiration for the green tax subtitle in the BBB reconciliation bill—the House’s Growing Renewable Energy and Efficiency Now Act (GREEN Act, H.R. 848) and the Senate’s Clean Energy for American Act (CEAA, S. 1298)—are now reflected in the Nov. 3 BBB draft. In essence, the GREEN Act architecture of the green energy tax proposals provide that existing technology incentives would be largely extended and enhanced to guide the first five years (through 2026) and serve as a transition to the framework envisioned in CEAA, which would provide technology-neutral production, investment and energy-efficiency tax incentives after 2026.

The following are highlights of green energy tax incentives and spending in the bill.

Cross-cutting provisions of green energy proposals

  1. Would use a two-tier structure. The green energy tax subtitle of the reconciliation bill would create and modify various new and existing renewable energy and energy-efficiency incentives within the tax code as two-tiered incentives with a “base rate” and a “bonus rate.” The base rate would be equal to 20% of the bonus rate and the bonus rate would generally be an increased rate for projects that meet certain prevailing wage and apprenticeship requirements mentioned below. Furthermore, for facilities to be eligible for a bonus rate up to 10%, they generally would need to adhere to domestic content requirements as described below.
     
  2. Would require cross-cutting labor-related provisions
    1. Prevailing wage. The reconciliation bill would require that, to claim the “bonus rate” with respect to a project, the taxpayer would have to ensure that any laborers and mechanics employed by contractors and subcontractors were paid prevailing wages during the construction of such project and, in some cases, for the alteration and repair of such project, and for a defined period of five years after the project is placed into service. In the event the taxpayer failed to satisfy these requirements, the taxpayer could cure the discrepancy by compensating each worker the difference between wages paid and the prevailing wage, plus interest, in addition to paying a $5,000 penalty to the Department of the Treasury for each worker paid below the prevailing wage during the taxable year. If the Secretary determined that such discrepancy is the product of intentional disregard, the taxpayer would have to compensate each worker three times the difference in wages and the penalty to the Treasury would be increased to $10,000 per employee.
    2. Apprenticeship. The reconciliation bill would require that, to claim the “bonus rate” with respect to a project, the taxpayer would have to ensure that no fewer than the applicable percentage of total labor hours were performed by qualified apprentices. The applicable percentage for purposes of this requirement would be 10% for projects for which construction begins in 2022. This rate would be increased to 12.5% in 2023 and 15% thereafter. This provision would require that each contractor and subcontractor who employs four or more individuals to perform construction on an applicable project would have to employ at least one qualified apprentice to perform such work. In the event a taxpayer failed to satisfy these requirements, the taxpayer could cure the discrepancy by paying a penalty to the Treasury equal to $500 multiplied by the total labor hours for which the requirement is not satisfied. In the event of a lack of available qualified apprentices necessary to satisfy this requirement with respect to construction of a project, this provision would provide for an exemption process by which taxpayers may be deemed as having made a good faith effort to hire qualified apprentices with respect to construction of such project.
    3. Exceptions. Energy credit has a 1-megawatt output (presumably AC) exception to the above prevailing wage and apprenticeship requirements
       
  3. Would require domestic content for the 10% bonus rate. The reconciliation bill would require for purposes of 2% base, 10% bonus credit, with respect to the facility for which a tax credit is claimed, the taxpayer would have to ensure that such facility was composed of steel, iron or products manufactured in the United States.

For purposes of these requirements, steel and iron that are not part of a manufactured product (other than manufacturing products that are primarily steel or iron) would have to be 100% produced in the United States.

Manufactured products would be deemed to have been manufactured in the United States if not less than the adjusted percentage of the total cost of the components and subcomponents across the project was attributable to components which are mined, produced or manufactured in the United States.
 

The application of the domestic content bonus is unclear. For the PTC, it is the applicable PTC rate multiplied by the applicable bonus percentage whereas for the ITC some interpret the bonus percentage as added on top of the applicable ITC percentage.


For purposes of this requirement, the adjusted percentage would be 40% for projects that begin construction before 2025, 45% for projects that begin construction in 2025, 50% for projects that begin construction in 2026 and 55% for projects that begin construction thereafter.

For offshore wind facilities, the adjusted percentage would be 20% for projects that begin construction before 2025, 27.5% for projects that begin construction in 2025, 35% for projects that begin construction in 2026, 45% for projects that begin construction in 2027 and 55% for projects that begin construction thereafter.

Tax incentive extensions and modifications

(Total for entire subtitle: $325.281 billion over 2022-31, increased from $273.456 billion in September)

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  • Would extend the renewable energy production tax credit (PTC) with a base credit rate of 0.5 cents/kilowatt hour and bonus credit rate of 2.5 cents/kilowatt hour through 2026 with a phasedown after that as specified below (score: $60.889 over 2022-31, increased from $42.851 billion in September).
    • Most facilities: The PTC for the following facilities would be extended through the end of 2026:
      • Closed loop and open loop biomass,
      • landfill gas (municipal solid waste),
      • trash (municipal solid waste),
      • qualified hydropower,
      • marine and hydrokinetic renewable energy facilities, and
      • geothermal.
    • Wind: The PTC for wind energy would be increased to the full applicable credit rate through the end of 2026.
    • Solar: The PTC for solar energy would be revived and extended through 2026.

Taxpayers could claim an increased credit for facilities placed into service after Dec. 31, 2021, if such facilities met domestic requirements described above. This provision would provide a base credit increase of 2% of the amount otherwise allowable with respect to such facility, or a bonus credit increase of 10% of the amount otherwise allowable with respect to such facility if prevailing wage and apprenticeship requirements are satisfied. After 2026, the incentive would transition to a technology-neutral PTC under Section 45BB after 2026 (Sections 136101 and 136801 of the reconciliation bill).

  • Would extend the renewable energy investment tax credit (ITC) for projects that begin construction before the end of 2026 and then would phase down over two years (score: $89.306 billion over 2022-31, increased from $63.907 billion in September). The provision would provide a base credit rate of 6% of the basis of qualified energy property or a bonus credit rate of 30% of the basis of qualified energy property. These credit rates would apply with respect to facilities placed into service after Dec. 31, 2026. After 2026, the incentive would transition to a technology-neutral ITC under Section 48F.

To claim the ITC at the bonus credit rate, taxpayers would have to satisfy prevailing wage requirements for the duration of the construction of the project and for five years after the project was placed into service, and apprenticeship requirements during the construction of the project. Projects that commence construction before date of enactment or have a maximum net output of less than one megawatt (AC) would be treated as eligible for the bonus rate (i.e., exempt from prevailing wage and apprenticeship requirements).

  • Solar: In addition to allowing taxpayers to elect to claim the PTC for solar energy facilities, the ITC for solar energy property would be extended, providing a base credit rate of 6% and a bonus credit rate of 30% through the end of 2026.
  • Geothermal: The ITC for geothermal energy property would be modified to match the credit timeline for solar energy property. Therefore, the ITC for geothermal energy property would be extended, providing a base credit rate of 6% or a bonus credit 30% through the end of 2026.
  • Other currently eligible property: The ITC for fiber-optic solar equipment, fuel cell property, microturbine property, combined heat and power property, small wind energy property, geothermal  waste energy recovery property and offshore wind property would be extended, providing a base credit rate of 6% or a bonus credit rate of 30% through the end of 2026, except for combined heat and power and  geothermal which have been extended through 2033. Combined heat and power is still eligible for a 10% ITC with no base or bonus delineation. No credit would be allowed with respect to such energy property that commences construction after 2033 or not placed in service before 2036.
  • Newly eligible property: The ITC would be expanded to include energy storage technology and linear generators. These technologies would be eligible for a 6% base credit rate or a 30% bonus credit rate through the end of 2026. These technologies are briefly described as follows:
    • Energy storage technology uses batteries and other storage technology to store energy for conversion to electricity and has a minimum capacity of 5 kWh, or in the case of hydrogen, stores energy. Thermal applications appear to be excluded from the definition of energy storage technology.
    • Linear generators convert fuel into electricity through electromechanical means using a linear generator assembly without the use of rotating parts. The credit for linear generators is limited to systems with a nameplate capacity of at least 1 kW.
    • Microgrid controllers control the energy resources and loads needed to maintain acceptable frequency, voltage or economic dispatch of a microgrid capable of operating as a single controllable entity independent from the electrical grid.
    • Dynamic glass or electrochromic glass which uses electricity to change its light transmittance properties to heat or cool a structure.
    • Biogas property that converts biomass into a gas which consists of not less than 52% methane, or is concentrated by such system into a gas which consists of not less than 52% methane, and captures such gas for productive use. Electricity production is not a requirement.
    • Interconnection property for amounts paid or incurred by a taxpayer for qualified interconnection property in connection with energy property with a maximum net output less than 5 megawatts.

Taxpayers could claim an increased credit with respect to energy property placed into service after Dec. 31, 2021, if such property met the domestic requirements described above. This provision would provide an increase on the base credit rate of 2% or an increase in the bonus credit rate of 10% with respect to the credit percentage allowable for such facility.

These amendments made by this provision would apply to facilities placed into service after Dec. 31, 2021. The amendments pertaining to newly eligible property would apply to periods after Dec. 31, 2021, under rules similar to Section 48(m) (Sections 136102 and 136802 of the reconciliation bill).

  • Would provide an additional 20% credit for the ITC if the solar facility was placed in service in connection with a qualifying low-income residential building/low-income benefit project, or an additional 10% credit if the facility is located in a low-income community, as defined by the new markets tax credit statute (Section 45D). The score for this proposal is incorporated in the score for the ITC extension and modification (both under the technology-specific approach through 2026 and under the technology-neutral approach during 2027-31).

The additional 20% credit is subject to a maximum net output cap of less than 5 megawatts. Additionally, a low-income benefit project is a project where at least 50% of the financial benefits of the electricity are provided to households with income less than 200% of the poverty line or less than 80% of the area’s median gross income.

There is annual capacity limitation of 1.8 gigawatts for each calendar year 2022 through 2026 for the additional 10% credit. The annual capacity limitation would be increased by the amount of any unused allocations from the preceding calendar year. Any excess capacity limitation after 2026 shall be carried over to the annual capacity limitation under Section 48F, the technology-neutral incentive subject to an annual 1.8-gigawatt limitation available during calendar years 2027-31, and zero for calendar years thereafter. This section would take effect Jan. 1, 2022 (Sections 136103 and 136803 of the reconciliation bill).

  • Would allow taxpayers to receive “direct payment” in lieu of a tax credit for certain renewable sources. The provision would allow taxpayers to elect to be treated as having made a payment of tax equal to the value of the credit they would otherwise be eligible for under the—
    • Section 48 ITC,
    • Section 45 PTC,
    • Section 45Q credit for carbon capture and sequestration,
    • Section 30C alternative fuel vehicle refueling property credit,
    • Section 48C advanced energy project credit
    • Section 48D investment credit for transmission property,
    • Section 48E zero emissions facility credit,
    • Section 45W zero-emission nuclear power production credit, and
    • Section 45X clean hydrogen production credit,
    • Section 45BB clean electricity production credit,
    • Section 48F clean electricity investment credit,
    • Section 45CC clean fuel production credit.

Rather than opting to carry forward credits to years when their credits can offset their tax liability, taxpayers could request a refund for the deemed payment of tax upon completion of construction. This provision would apply to projects placed into service after Dec. 31, 2021. Projects could make elections under this section starting 270 days after date of enactment. The score for this proposal is incorporated into the score of the PTC and ITC proposals (Section 136104 in reconciliation bill).

  • Would expand ITC for electric transmission property (score: $11.279 over 2022-31, increased from $9.765 billion in September). This provision would provide for a tax credit for the basis of qualifying electric transmission property placed in service by the taxpayer. The base credit rate would be 6% of the basis of qualified electric transmission property and the bonus credit rate would be 30% of the basis of qualified electric transmission property. To claim the ITC at the bonus credit rate, taxpayers would have to satisfy prevailing wage requirements for the duration of the construction of the project and for five years after the project is placed into service, and apprenticeship requirements during the construction of the project.

Qualifying electric transmission property would be defined as tangible, depreciable property which is:

  • An electric transmission line which has a transmission capacity of not less than 500 megawatts and is:
    1. capable of transmitting electricity at a voltage of not less than 275 kilowatts, or
    2. a superconducting line; or
  • Related transmission property.

This credit would be effective for property placed into service after Dec. 31, 2021, and before Jan. 1, 2032 (Section 136105 in reconciliation bill).

  • Would extend Section 30C Alternative Fuel Vehicle Refueling Property Credit through 2031 (score: $6.283 billion over 2022-31,.the same as in September) The provision expands the credit for zero-emission charging and refueling infrastructure by providing a base credit of 6% for expenses up to $100,000 and 4% for allowable expenses in excess of that amount. The provision provides an alternative bonus credit level of 30% for expenses up to $100,000 and 20% thereafter.
  • Would extend Section 45Q carbon oxide sequestration credit (score: $2.128 billion over 2022-31, increased from $908 million in September) for facilities that begin construction before the end of 2031. The provision would provide a base credit rate of $17 and a bonus credit rate of $85 per metric ton of carbon oxide captured for geological storage, and a base credit rate of $12 and a bonus credit rate of $60 per metric ton of carbon oxide captured and utilized for an allowable use by the taxpayer. The provision would also provide an enhanced credit for direct air capture facilities at a base rate of $36 or a bonus rate of $180 per metric ton of carbon oxide captured for geological storage and base rate of $26 or a bonus rate of $130 per metric ton of carbon captured and utilized for an allowable use by the taxpayer. To claim the 45Q credit at the bonus credit rate, taxpayers would have to satisfy prevailing wage requirements for the duration of the construction of the project and for each year during the twelve-year credit period, or where applicable, until the credit is phased out as determined by the Treasury Secretary, and apprenticeship requirements during the construction of the project.

The amendments made by this provision would apply for facilities placed into service after Dec. 31, 2021 (Section 136107 of the reconciliation bill).

  • Would create various credits including the following:
    • Section 45W zero-emission nuclear power production credit, and
    • Section 45X clean hydrogen production credit,
    • Section 45BB clean electricity production credit,
    • Section 48F clean electricity investment credit,
    • Section 45CC clean fuel production credit.

The above is intended to incentivize the production of clean(er) electricity and reduced emission fuels such as sustainable aviation fuel, hydrogen production, etc. through PTCs and ITCs at varying levels.The Section 45BB and Section 48F credits are the “technology neutral” credits in effect after 2026 and are designed to phaseout once certain greenhouse gas emission reductions are achieved.Section 45BB specifies this as when greenhouse gas emissions from production of electricity in the United States is less than 25% of the greenhouse gas emissions from 2021 levels.This in effect will extend the PTC and ITC out beyond the five-year extension.

  • Would expand eligibility of publicly traded partnerships to green energy (score: $975 million over 2022-31, same as September). The provision would expand the definition of qualified income for publicly traded partnerships from certain income derived from minerals and natural resources to include income derived from green and renewable energy. These additions would include income from certain activities related to energy production eligible for the PTC, property eligible for the ITC, renewable fuels, and energy and fuel from certain carbon sequestration or gasification projects eligible for credits under Sections 48B or 45Q (Section 136108 in reconciliation bill).
  • Would extend, increase and modify Section 25C nonbusiness energy property credit (score: $13.898 billion over 2022-31, reduced from $14.938 billion in September). The provision would extend the Section 25C nonbusiness energy property credit to property placed in service by the end of 2031. For expenditures and property placed in service starting in 2021, the provision would modify and expand the credit, including by:
    • increasing the percentage of the credit for installing qualified energy-efficiency improvements from 10% of the cost to 30%,
    • replacing the lifetime cap on credits with a $1,200 annual credit limitation and a $600 limitation per-item of property. These limitations exclude expenditures for geothermal and air source heat pumps, electric heat pump water heaters, and biomass stoves,
    • updating various standards and associated limits to reflect advances in energy-efficiency and removing eligibility of roofs and advanced main air circulating fans,
    • requiring that manufacturers and taxpayers comply with reporting the identification number of certain properties placed into service in order to access the credit, and
    • expanding the credit to cover the costs of home energy audits, allowing a credit of 30% of such costs up to a maximum credit of $150 (Section 136301 in reconciliation bill).
  • Would extend Section 25D residential energy-efficient property credit (score: $24.756 billion over 2022-31, increased from $20.951 billion in September). The provision would extend the credit for the cost of qualified residential energy-efficient property expenditures, including solar electric, solar water heating, fuel cell, small wind energy, geothermal heat pumps and expand the definition of eligible property to include battery storage technology. The provision would extend the full 30% credit for eligible expenditures through the end of 2031. Like the ITC, the credit would then phase down to 26% in 2033 and 22% in 2033. The credit would expire after the end of 2027. The provision would also expand the definition of eligible property to include battery storage technology. This credit is made refundable starting in 2024 (Section 136302 in reconciliation bill).
  • Would increase and modify Section 179D energy-efficient commercial buildings deduction (score: $626 million over 2022-31, same as September). Starting in 2022, the provision would update and expand the Section 179D energy-efficient commercial buildings deduction by increasing the maximum deduction, determined on a sliding scale. It would also change this maximum from a lifetime cap to a three-year cap. The provision would update the eligibility requirements so that property must reduce associated energy costs by 25% or more in comparison to a building that meets the American Society of Heating, Refrigeration and Air-cooling Executives standards as of four years before the date such building is placed into service.

The maximum value of the base deduction would be $0.50 per square foot, increased by $0.02 per square foot for every percentage point by which the designed energy cost savings exceed 25% against the reference standard, not to exceed $1 per square foot. The value of the bonus deduction would be $2.50 per square foot, increased by $0.10 per square foot for every percentage point by which designed energy cost savings exceed 25% against the reference standard, not to exceed $5 per square foot.

This provision would allow taxpayers to elect to take an alternative, parallel deduction for energy-efficient lighting, , and building envelope costs placed into service in connection with a qualified retrofit plan. The value of base the deduction would be determined by the reduction in a building’s energy usage intensity (EUI) upon completion of the retrofit, equal $0.50 per square foot, increased by $0.02 per square foot for every percentage point by which the reduction in EUI exceed 25%, not to exceed $1 per square foot. The value of the bonus deduction would be $2.50 per square foot, increased by $0.10 per square foot for every percentage point by the reduction in EUI exceed 25% against the reference standard, not to exceed $5 per square foot.

To claim the bonus deduction amount, taxpayers would have to satisfy prevailing wage and apprenticeship requirements for the duration of the construction of the project. To qualify for the alternative deduction, a building retrofit project would have to reduce a building’s EUI by no less than 25%. This provision would allow tax-exempt entities to allocate the deduction to the designer of the building or qualified retrofit plan. The amendments made by this provision would expire after Dec. 31, 2031. (Section 136303 in reconciliation bill).

  • Would extend, increase and modify Section 45L new energy-efficient home credit (score: $2.724 billion over 2022-31, same as September). The provision would extend the Section 45L new energy-efficient home credit through 2031.
    • Single family and manufactured homes. In the case of new homes acquired after 2022 that are eligible to participate in the ENERGY STAR Residential New Construction Program or Manufactured Homes Program, the provision would provide a $2,500 credit for energy-efficient single family and manufactured new homes meeting certain energy star requirements.
      • Single-family homes would have to meet the most recent Energy Star Single-Family New Homes Program requirements applicable to such dwelling location as in effect on the latter of Jan. 1, 2022, or Jan. 1 of two calendar years before the date the home is acquired and National Program Requirement Version 3.1 for homes acquired before 2025 and Version 3.2 thereafter.
      • Manufactured homes would have to meet the most recent Energy Star Manufactured Home National Program requirements as in effect on the latter of Jan. 1, 2022, or Jan. 1 of two calendar years before the date the dwelling is acquired.

This provision would provide a higher tier credit of $5,000 for eligible single-family and manufactured new homes certified as zero-energy ready under the Department of Energy Zero Energy Ready Home Program.

  • Multifamily homes. In the case of new homes acquired after 2022 that are eligible to participate in the ENERGY STAR Multifamily New Construction Program, the provision would provide a base credit of $500 and a bonus credit of $2,500 for multifamily units that meet:
    • the most recent Energy Star Manufactured Home National Program requirements as in effect on the latter of Jan. 1, 2022, or Jan. 1 of two calendar years before the date the dwelling is acquired and
    • the most recent Energy Star Manufactured Home Regional Program requirements applicable to such unit as in effect on the latter of Jan. 1, 2022, or Jan. 1 of two calendar years before the date the dwelling is acquired.

This provision would provide a higher tier base credit of $1,000 or a bonus credit of $5,000 for eligible multifamily units certified as a zero-energy ready under the U.S. Department of Energy Zero Energy Ready Home Program. To claim the bonus credit amount with respect to a multifamily unit, taxpayers would have to satisfy prevailing wage requirements for the duration of the construction of such units (Section 136305 in reconciliation bill).

  • Would extend Section 48C advanced energy project credit (score: $7.649 billion over 2022-31, increased from $2.133 billion in September). The provision would revive the Section 48C qualified advanced energy property credit, allowing the Secretary to allocate an additional $5 billion in credits for each of calendar years 2022 through 2023 and $1.875 billion for each of calendar years 2024 through 2031. $800 million in credits for each of calendar years 2022 through 2023 and $300 million in credits for each of calendar years 2024 through 2031 would be reserved for projects in automotive communities. Additionally, $800 million in credits for each of calendar years 2022 through 2023, and $300 million for each calendar year 2024 through 2031 would be reserved for projects located in energy communities.

Projects would receive a base credit rate of 6% of qualified investments in qualified advanced energy projects. To receive a bonus rate of 30%, taxpayers must satisfy 1.) prevailing wage requirements for the establishment, expansion or re-equipping of a manufacturing facility and for five years after the project is placed into service, and 2.) apprenticeship requirements during the construction of the project.

The Secretary would determine allocations to projects each year with a requirement that property is placed in service within four years of the date of the allocation. Projects would be given priority if the manufacturing is not for the assembly of parts or if they have the greatest potential for commercial deployment of new applications (Section 136501 in reconciliation bill).

  • Would create an advanced manufacturing investment credit (score: $10.197 billion over 2022-31, no September proposal). The provision would create an investment tax credit worth up to 25% for advanced manufacturing facilities. All taxpayers would be eligible for an ITC of at least 5%. Taxpayers paying prevailing wages and using registered apprenticeship programs would be eligible for an elevated ITC of 25%.

The ITC would be available for property for the manufacturing of semiconductors or semiconductor tooling equipment, including buildings and equipment that are integral to such manufacturing, which commenced construction before Jan. 1, 2026 (Section 136503 in reconciliation bill).

  • Would create an advanced manufacturing production credit (score: $2.472 billion over 2022-31, no September proposal). The section would provide a production credit for each eligible component that is produced and sold. Eligible components include solar polysilicon, wafers, cells and modules and wind blades, nacelles, towers and offshore foundations. The credits would generally be provided on a mass or watt-capacity basis.

The amount of credit allowed for eligible components would be increased by 10% if the final assembly of the components is at a facility in the United States that operated under a union-negotiated collective bargaining agreement.

The credits would be provided for eligible components produced and sold before Jan. 1, 2027. For components sold after that date, the credit would be reduced by 25% each year, and would be unavailable for components sold in 2030 and beyond (Section 136504 in reconciliation bill).

Major Energy-Related Spending Proposals ($41.4 billion)

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  • Home Energy Performance-Based, Whole-House Rebates. This provision would provide $360 million for contractor training grants to support home energy-efficiency retrofits and $5.89 billion for state energy offices to provide rebates for retrofits. It would also provide that home energy-efficiency retrofit rebates for high-efficiency natural gas HVAC systems and water heaters are eligible for six years after the date of enactment (Section 30411 in reconciliation bill).
  • High-Efficiency Electric Home Rebate Program. This proposal would provide $2.226 billion for U.S. Department of Energy (DOE) to provide homeowners and owners of multifamily buildings rebates for qualifying electrification projects, and $3.8 billion for rebates carried out in tribal communities or for low- or moderate-income households (Section 30412 in reconciliation bill).
  • Energy community reinvestment financing. This section would provide $5 billion to the Secretary of Energy for the cost of providing financial support to the Energy Community Reinvestment Financing Program under Energy Policy Act of 2005 (EPACT05) Section 1706, as added by this subtitle. Section 1706(b) directs the Secretary to establish a program to provide financial support to eligible entities for the purpose of enabling low-carbon reinvestments in energy communities (Section 30444 in reconciliation bill).
  • Advanced Industrial Facilities Deployment Program. This proposal would appropriate $4 billion to DOE to provide financial assistance, on a competitive basis, to projects for installing and implementing advanced industrial technology at energy-intensive industrial and manufacturing facilities (Section 30471 in reconciliation bill).
  • DOE loan authority. This section would make commitments up to a total principal amount of $40 billion to guarantee loans for eligible projects under the EPACT05 Section 1703. The section would further appropriate $3.6 billion for the costs of guarantees made under Section 1703 (Section 30441 in reconciliation bill).
  • Advanced Technology Vehicle Manufacturing. This provision would provide $3 billion to the Secretary of Energy for the costs of providing direct loans under Energy Independence and Security Act Section 136, known as the Advanced Technology Vehicles Manufacturing program, to produce advanced technology medium and heavy-duty vehicles, trains or locomotives, maritime vessels, aircraft or hyperloop technology (Section 30442 in reconciliation bill).
  • Domestic manufacturing conversion grants. This proposal would provide $3.5 billion for domestic manufacturing conversion grants relating to domestic production of plug-in electric hybrid, plug-in electric drive, and hydrogen fuel cell electric vehicles and components of such vehicles under EPACT05 Section 712 (Section 30443 in reconciliation bill).
  • Transmission line and intertie incentives. This proposal would appropriate $2 billion to DOE to provide incentives for the purpose of constructing new high-capacity transmission lines and for upgrading interties between the various interconnections (Section 30451 in reconciliation bill).
  • Grants to facilitate the siting of interstate electricity transmission lines. This section would provide $800 million to DOE for the issuance of grants to siting authorities to study the impacts of covered transmission projects, examine alternate transmission siting corridors, host negotiations regarding covered transmission projects, participate in regulatory proceedings, and for economic development activities for communities that may be affected (Section 30452 in reconciliation bill).
  • Zero-emissions vehicle infrastructure grants. This proposal would provide $600 million to DOE to provide financial assistance through state energy programs for Level 2 publicly accessible electric vehicle supply equipment. This section would also appropriate $200 million for direct current fast-charging infrastructure and $200 million for hydrogen fueling equipment through state energy programs. The financial assistance provided in this section targets the buildout of infrastructure in rural, underserved and disadvantaged areas (Section 30431 in reconciliation bill).
  • Nonprofit facility modernization. This section would provide $500 million for DOE to provide funding to states for the purposes of resiliency, energy efficiency, renewable energy, and grid integration improvements at public and nonprofit buildings (Section 30421 in reconciliation bill).
  • Zero building energy code adoption. This provision would provide funding for state energy program grants to assist states and local communities adopting updated building energy codes for residential and commercial buildings. It would appropriate $100 million for the adoption and implementation of the latest building energy codes, and $200 million for the adoption and implementation of zero energy and equivalent stretch codes (Section 30422 in reconciliation bill).
  • Tribal energy loan guarantee. This provision would provide $200 million to the Secretary of Energy to carry out the tribal energy loan guarantee program. This section would also enable that program to guarantee 100% of unpaid principal and interest and to access the Federal Financing Bank, and increase the cap on loan guarantees under the program to $20 billion (Section 30445 in reconciliation bill).
  • DOE planning, permitting and approval processes. This section would appropriate $125 million to DOE for the development of more efficient, accurate and timely reviews for planning, permitting and approval processes (Section 30461 in reconciliation bill).
  • Interregional and offshore wind electricity transmission planning, modeling and analysis. This proposal would provide $100 million to DOE to perform transmission planning, modeling and analyses regarding the development of interregional and offshore wind transmission projects and to convene stakeholders to address the development of such transmission projects (Section 30454 in reconciliation bill).
  • Federal Energy Regulatory Commission. This provision would provide $75 million to the Federal Energy Regulatory Commission for the development of more efficient, accurate and timely reviews for planning, permitting and approval processes (Section 30462 in reconciliation bill).
  • Organized wholesale electricity market technical assistance. This provision would appropriate $40 million to DOE for the purpose of providing states with technical assistance and grants to evaluate forming, participating in, expanding or improving organized wholesale electricity markets (Section 30453 in reconciliation bill).

Major Environmental Spending Proposals ($51.4 billion)

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  • Greenhouse gas reduction fund. This section would provide $29 billion to support the rapid deployment of low- and zero-emission technologies. It would invest approximately $20 billion in nonprofit financing institutions designed to support projects that reduce or avoid emissions by leveraging investment from the private sector. It would require that 40% of these investments benefit low-income and disadvantaged communities. Funds could also be used to establish or expand state and local financing programs that deploy low- and zero-emission technologies. In addition, it would invest $7 billion in state, local and nonprofit programs to install zero-emission distributed technologies in low-income and disadvantaged communities, as well as $2 billion in state, local, and nonprofit efforts to install zero-emission vehicle charging or fueling infrastructure (Section 30103 in reconciliation bill).
  • Lead remediation projects. This proposal would provide $9 billion for lead remediation projects, including lead service line replacement funding to be distributed pursuant to Section 1459B of the Safe Drinking Water Act. Funding could also go to grants to assist schools in the installation and maintenance of lead filtration stations, grants for school and child care program lead testing, and grants to schools for the replacement of school drinking water fountains that may contain lead. It would make clear that recipients of funds under the section would not be required to provide a cost-share. Provides 7% of the funds for administrative costs (Section 30301 in reconciliation bill).
  • Climate pollution reduction grants. This provision would provide $5 billion to the U.S. Environmental Protection Agency (EPA) to carry out Clean Air Act (CAA) Section 137, as added by this section. Section 137 would provide $250 million for grants for the costs of developing plans to reduce greenhouse gas air pollution and directs EPA to make such a grant to at least one eligible entity in each state. Section 137 would further provide $4.75 billion for EPA to competitively award grants to implement greenhouse gas air pollution reduction plans. Section 137(c) would establish an application requirement and terms and conditions. Section 137(d) would define an eligible entity to mean a state, air pollution control agency, municipality, Indian Tribe or a group of one or more such entities (Section 30116 in reconciliation bill).
  • Grants to reduce air pollution at ports. This section would provide $3.5 billion for the purchase and installation of zero-emission equipment and technology at ports, as well as the development of climate action plans at ports. It would require that 25% of investments are made at ports in nonattainment areas (Section 30102 in reconciliation bill).
  • Environmental and Climate Justice Block Grants. This proposal would provide $3 billion for investments in community led projects in disadvantaged communities and community capacity building centers to address disproportionate environmental and public health harms related to pollution and climate change (Section 30202 in reconciliation bill).
  • Methane emissions reduction program. This provision would provide EPA $775 million for grants, rebates, contracts and loans to reduce methane emissions from petroleum and natural gas systems. This section would also require the EPA Administrator to establish waste emissions thresholds for petroleum and natural gas facilities, and to impose and collect a charge on waste emissions that exceed such thresholds. The charge would start at $900 per ton of methane in 2023 and ramp up to $1,500 per ton by 2025 (Section 30114 in reconciliation bill).
  • Funding to address air pollution. This section would provide $280.5 million to EPA, of which $230.5 million would be for air quality monitoring via grants and other activities authorized under CAA Sections103(a)-(c) and 105, $45 million would be to carry out specified sections of the CAA with respect to greenhouse gases (GHG), and $5 million would be for grants to states to adopt and implement GHG and zero-emission standards for mobile sources pursuant to CAA Section 177 (Section 30106 in reconciliation bill).
  • Environmental Product Declaration Assistance Program. This proposal would provide EPA $250 million to establish and carry out an Environmental Product Declaration Assistance program to support development and enhanced standardization and transparency of environmental product declaration for construction materials and products (Section 30113 in reconciliation bill).
  • Funding for water assistance program. This provision would provide $225 million for grants, to be provided by the Environmental Protection Agency, to states and Tribes to provide assistance for low-income water customers to reduce arrearages and water rates for those customers (Section 30302 in reconciliation bill).
  • Grants to reduce waste in communities. This section would provide $190 million for investments in waste reduction infrastructure, incentives and related activities located in, or directly serving, low-income and disadvantaged communities (Section 30201 in reconciliation bill).
  • Collaborative Community Wildfire Air Grants. This proposal would provide the EPA $150 million to assist communities in developing and implementing collaborative community plans to prepare for, reduce risks of, and mitigate the health and environmental effects of wildfire smoke (Section 30104 in reconciliation bill).

Next steps

The Senate is expected to take up the legislation directly on the floor the week of Nov. 29. Before it can be voted upon, the Senate Parliamentarian must review the entire bill for compliance with the Byrd Rule governing budget reconciliation bills in the Senate. Such a review may lead to certain proposals being dropped and other changes being made in the Senate version of the bill. If so, the House would need to consider the bill again if the Senate passes such a revised bill. It may take until Christmas or the new year before final legislation could be enacted. Stay tuned.

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