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Oct. 1, 2022

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What do climate provisions in the U.S. Senate bill mean for Washington?

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SEATTLE — The climate provisions of the U.S. Senate bill passed Sunday would create a slew of long-term federal tax breaks for proposed Washington solar farms, offer a $700 million investment in fuel technology sought by the developer of a next-generation Washington nuclear plant and broaden incentives for consumers to shift to electric cars and reduce fossil use in their homes.

All of this adds a substantial boost to a far-reaching effort by the state government to move Washington largely off fossil fuel energy by midcentury.

“We now have a federal-state team to meet common goals,” said Geoff Potter, deputy director of federal affairs for Gov. Jay Inslee’s office. “It’s an unprecedented scale of investment but also a range of investment.”

The Senate bill, which is expected to gain approval from the House of Representatives later this week, helps define U.S. climate policy at a juncture in history when scientists say concerted global efforts are required to fend off the worst impacts of greenhouse gas pollution.

In the United States, national efforts to put a price on carbon pollution — or put other regulatory measures in place to move the nation off fossil fuels — have repeatedly failed, reflecting the deep political divide between Republicans and Democrats over what governments should do to address climate change.

The Senate bill passed Sunday without any Republican votes largely consists of financial incentives and investments totaling $369 billion in energy security and climate change programs.

That leaves the struggle to put a price on carbon pollution — long proposed by environmentalists as a key tool in making the difficult transition off fossils fuels — largely to state initiatives.

So far, carbon pricing has gotten the most traction in states with Democratic control like Washington, where Gov. Jay Inslee has worked with allies to pass major legislative measures.

These Washington state laws require power utilities by 2045 to shift off fossil fuels that release greenhouse gases, create an ever-lowering cap on greenhouse gas emissions that major polluters must meet, and also set up standards to reduce the carbon emissions in fuels for the transportation fleet.

“The lesson of history is unequivocal in that there is absolute need in a substantive economic transformation for a carrot-and-stick approach,” said state Sen. Reuven Carlyle, D-Seattle, who played a major role in developing state law to reduce greenhouse gas emissions and is leaving office at the end of this term.

Carlyle noted that the federal legislation does include a fee on a powerful greenhouse gas pollutant — methane — if flared without burning from oil and gas fields, and there could be other such fees on specific pollutants. But he doubts that systemwide carbon pricing at the federal level will be developed.

Becky Kelley, senior climate policy adviser to Inslee, said the Senate legislation would make it cheaper and easier for people to comply with state laws. It is complementary and “will make the whole system work better,” Kelley said.

The blueprint for Washington’s energy future is still a work in progress.

The Senate bill passed Sunday includes $700 million to help two developers of next-generation nuclear power plants with plans in Washington secure a specialized nuclear fuel that the U.S. currently lacks the capacity to produce.

Maryland-based X-energy and Bellevue-based TerraPower, founded by Bill Gates, use a fuel called HALEU — or “high-assay, low-enriched uranium” — which requires higher enrichment than fuels used in the current generation of nuclear power plants. The bill includes financial assistance to produce more of this fuel in the United States.

X-energy has proposed construction of four small reactors, each stocked with billiard-ball-sized “pebbles” packed with uranium fuel.

The project is proposed for development by 2028 at a Hanford site near the Energy Northwest nuclear power plant or possibly in Grant County. And about half of the $2.2 billion cost is projected to be covered by federal funding approved in earlier legislation.

The bill recognized a gap in the supply chain, and is necessary to develop the Central Washington reactor project, and others subsequent reactors, said a statement from X-energy that called the bill “bold and transformational policy” that also would offer clean energy tax credits for advanced nuclear energy.

The project has drawn criticism from Ed Lyman of the Union of Concerned Scientists, a nuclear watchdog that has questioned the safety of the technology and called for more safeguards in design and development.

For vehicle owners who may be considering a shift to electric cars, the bill offers long-term federal tax credits to all models of electric vehicles so long as they comply with provisions intended to encourage more of the battery and other automotive parts be produced in the United States.

This would replace a federal tax credit program that previously phased out as car manufacturers increased sales, and left popular models produced by Tesla and Chevy without any of this support.

The new bill offers a $4,000 tax credit for lower- and middle-income consumers to buy used electric or other zero-emission vehicles and up to $7,500 to buy new zero-emissions vehicles.

But there are plenty of questions about how this sweeping new federal tax credit program would work as some manufacturers are expected to have problems complying with the provisions intended to encourage U.S. production of batteries and other electric car parts.

Also, in the Seattle area, as well as other parts of the country, supply disruptions have combined with already strong demand for electric vehicles to create a scarcity.

“We don’t have any. If you want one, you got to get in line and wait,” said Luk Blackwell, general manager of Bill Pierre Ford in Seattle, who said waiting time depends on configuration but varies from four months to a year and half.

“They don’t need more incentives. We need more product,” Blackwell said.

In the years ahead, as more electric cars surge into the markets, some say that the federal tax credits should be much more targeted to offer greater incentives to those who now put the most miles on their vehicles, and thus have bigger carbon footprints.

“That low-mileage driver is maybe more affluent, and you are giving them a hand to buy a car that would be a lot better off in the hands of someone who used it a lot more,” said Matthew Metz, the Seattle-based founder of Coltura, a nonprofit that advocates for a transition to electric vehicles.

Metz said his organization reached out to senators to try to get a more targeted approach to the bill that offers more incentives to “superusers.”

“We weren’t able to get much traction,” Metz said.

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