McCarthy Floats Dropping CEPP To Win Climate Measures In Budget Plan

Source: By Rick Weber, InsideEPA • Posted: Thursday, September 30, 2021

White House domestic climate chief Gina McCarthy says a scenario in which Democrats fail to include a clean electricity performance plan (CEPP) in their budget “reconciliation” legislation would not prevent the administration from achieving its climate targets, arguing EPA and other agencies’ climate rules will complement any Hill action.

“It doesn’t mean I don’t want the clean energy payment plan, and it doesn’t mean we’re going to give it up without lots of kicking and screaming,” McCarthy said during a Sept. 30 event hosted by Environmental Entrepreneurs (E2).

She added: “It does mean that I don’t think we need to have every penny in here to make tremendous progress.”

McCarthy was referring to the CEPP included in the House Democrats’ reconciliation bill, which has emerged as a sticking point in fluid, high-level negotiations with moderates such as Sen. Joe Manchin (D-WV). He has raised particular concern about the $150 billion earmarked for clean energy incentives to utilities, which would be paired with penalties for power suppliers that fall short of their targets.

Top Democrats have increasingly acknowledged that the top-line spending in the package must be reduced from the oft-cited $3.5 trillion figure, in order to appease moderates’ concerns. However, it remains to be seen whether such a funding squeeze will affect climate-related programs or other social spending in the sprawling bill.

McCarthy’s comments come at a critical point in congressional negotiations to ensure progressives and moderates hang together in dual votes to approve the reconciliation bill and a $1.2 trillion bipartisan infrastructure package negotiated by the White House and Senate.

The bulk of President Joe Biden’s climate priorities would be funded without any Republican votes through budget reconciliation procedures. McCarthy acknowledged this point, and she appeared to argue against allowing the debate over the CEPP to kill the overall spending package.

“Anything near this level of investment sends a gigantic signal to the private sector, and they are so creative about making their own path forward” on cutting emissions, she said.

“We’re going to get to Glasgow in November with our heads held high,” McCarthy added, referring to the Nov. 1-12 United Nations climate talks in Scotland that are seen as a crucial test for implementing the 2015 Paris climate agreement.

Echoing McCarthy, Energy Secretary Jennifer Granholm in a separate Sept. 29 event hosted by the Washington Post underscored the need for the reconciliation bill to retain major climate-related provisions.

Asked if the omission of climate elements would be considered a failure, she responded: “Yeah, it would be. It would be a failure not just in legislative policy, not just for the president, it would be a failure for the country, for the people who want to be able to get jobs in this $23 trillion global market for clean energy jobs.”

Granholm also predicted that Biden would “get significant pieces of his agenda through, and it will be amazing. I am confident, that certainly in the climate space, that there will be significant legislation passed.”

Climate Goals

The major expansion of clean energy tax credits and electric vehicle incentives in the reconciliation bill, as well as the CEPP and other climate provisions, have been touted by congressional Democrats as central to achieving Biden’s renewed commitment to cutting greenhouse gases under the Paris Agreement.

The CEPP would create “a real compliance strategy for utilities that’s both penalties and investments,” McCarthy noted, adding “it’s an important part of this.” She said “utilities want this” while arguing the payments would essentially go to consumers by funding the clean-energy projects they want.

However, she argued, “penalties don’t go to consumers [under the House plan]. Those penalties go actually to the shareholders of the [utility] company,” holding them accountable to the program’s clean energy deployment targets.

Despite offering a defense of the program on the merits, McCarthy noted “there are other ways to get at this in terms of regulatory constraints.” She said the non-CEPP incentives in both the reconciliation and infrastructure bills will offer “other opportunities for investment strategies . . . that we know the market will respond to do.”

McCarthy, who served as EPA administrator in the Obama administration, noted that Biden’s whole-of-government approach to climate change offers more “tools” for achieving its emission reduction goals.

“I’m not just sitting at EPA, I’ve the whole government, now,” she said, describing the administration’s approach as a “comprehensive opportunity” that’s “not just environment” but is focused on creating jobs through a Civilian Climate Corps and other worker training programs that would be funded by the reconciliation bill.

McCarthy’s comments at the E2 event, which encouraged listeners to call their members of Congress to vote for both bills, struck a slightly different tone from her appearance last week at an Axios event.

There, she underscored the importance of congressional action while saying, “We have the tools that we need available to us to make this the decisive decade and we’re going to keep using them.”

At the same, the White House is touting growing corporate support for its “build back better” reconciliation legislation, as well as the infrastructure package, in a push to get both bills over the finish line.

“Yesterday, three major U.S. companies — Ford, General Motors, and Walmart — made announcements demonstrating how investments to tackle the climate crisis will also create jobs and support domestic industries,” the White House said in a Sept. 29 press release.

The release cites statements offering general support for both bills from General Motors and Walmart, as well as Ford Motor Company’s announcement of $11 billion in electric vehicle and battery manufacturing investments in Kentucky and Tennessee in anticipation of markets that the legislation would help bolster.

The statements come amid numerous reports of negotiations between Biden’s team and Sens. Manchin and Kyrsten Sinema (D-AZ) on the size of reconciliation plan.

As part of the back and forth, House Speaker Nancy Pelosi (D-CA) has expressed hopes that Democrats could soon announce details on a framework of the reconciliation measure, with progressive lawmakers threatening to vote against the narrower bipartisan bill as soon as Sept. 30 if a path forward on the reconciliation plan is not clear. — Rick Weber (