Senate Majority Leader Charles Schumer (D-N.Y.) and Sen. Joe Manchin (D-W.Va.) have agreed to spend billions of dollars to accelerate the production of electric vehicles, solar panels, wind turbines and to provide other incentives to bolster the clean-energy economy.
Schumer announced the details of a $369 billion energy-and-climate deal Wednesday, which Democrats plan to include in a budget reconciliation package scheduled for the floor next week.
Lawmakers estimate it will reduce U.S. carbon emissions by roughly 40 percent by 2030, putting the nation closer to meeting President Biden’s pledge of reducing carbon emissions by 50 percent by 2030, compared to 2005 levels.
“By a wide margin, this legislation will be the greatest pro-climate legislation that has ever been passed by Congress. This legislation fights the climate crisis with the urgency the situation demands and puts the U.S. on a path to roughly 40 percent emissions reductions by 2030, all while creating new good-paying jobs in the near and long-term,” Schumer said in a statement.
He said the package is now under review by the Senate parliamentarian and expects the Senate to vote on it next week.
It would also allocate $300 billion to reducing the federal deficit and extend expiring health care subsidies under the Affordable Care Act at a cost of $64 billion over three years.
The package is entirely paid for by $451 billion in tax proposals, including the establishment of a 15-percent corporate minimum tax, beefing up IRS enforcement of tax law and closing the carried interest loophole for money managers.
An additional $288 billion would come from empowering Medicare to negotiate lower drug prices.
“I thank Senator Manchin for his willingness to engage and his commitment to reaching an agreement that can earn the support of all 50 Senate Democrats,” Schumer said.
The energy and climate change provisions are spread across a broad bill aimed at lowering consumer energy costs, boosting manufacturing of clean energy technology and reducing carbon emissions throughout the economy.
The highlights include $4,000 consumer tax credits for lower- and middle-income Americans to buy used clean vehicles and up to a $7,500 tax credit to buy new clean vehicles, as well as a $1 billion grant program to make affordable housing more energy efficient.
The bill would offer $9 billion in consumer home energy rebate programs and 10 years of tax credits to make homes more energy efficient and use clean energy.
It would provide tax credits to encourage the manufacture of solar panels and wind turbines, $10 billion in investment tax credit to incentivize clean technology manufacturing centers, and $2 billion in grants to retool existing auto manufacturing facilities to produce clean vehicles.
The agreement calls for tax credits for clean sources of electricity and energy storage and $40 billion for grant and loan programs for states and public utilities to transition away from fossil fuels.
The tax chapter of the bill would tighten requirements for an estimated 200 large corporations that use loopholes in the tax code to pay an effective tax rate below 15 percent.
The IRS would receive $46 billion to beef up its enforcement operations and $25 billion for operations support along with $4.8 billion for modernization.
The legislation puts emphasis on directing new climate spending into lower-income and minority communities by including over $60 billion in “environmental justice priorities,” such as $3 billion for a block-grant program aimed at disadvantaged communities.
It would also fund $3 billion worth of grants to “reconnect communities divided by existing infrastructure barriers,” according to a summary of the proposal. This provision is aimed at what some critics call “racist highway design” that was intended to divide Black and White neighborhoods.
Another $3 billion would go to address air pollution at ports by purchasing and installing “zero-emission” equipment and $1 billion would go toward purchasing school and transit buses and garbage trucks that emit less pollution.