A Wonky Policy Proposal in the Reconciliation Bill Could Help Prevent Climate Chaos

The Clean Electricity Payment Program is an essential part of the Democrats’ climate package

By James Steinbauer

September 13, 2021


Photo by tora1983/iStock

When the US Senate passed a bipartisan infrastructure bill in early August, most of the ambitious ideas that President Joe Biden proposed to cut greenhouse gas emissions were whittled down to ensure the bill got enough votes from Republicans. The most meaningful policy—a Clean Electricity Standard, or CES, that would require power companies to replace fossil fuels with renewables such as solar and wind—was left out entirely.

Now, the policy is back on the table—albeit with a new (and even wonkier) name: The Clean Electricity Payment Program, or CEPP. 

The program could lead to “the biggest change in our energy policy since the lights went on,” Senator Tina Smith, Democrat of Minnesota and the CEPP’s greatest champion in Congress, told Vox in July.

The CEPP has already overcome its first hurdles on the path to becoming law. The House Energy and Commerce Committee recently finished a rough draft of its version of the CEPP, and it will begin debating the policy on September 13—the last step before it is sent to the full House for a vote. In the Senate, the $3.5 trillion budget blueprint approved in August includes at least $198 billion for the Energy and Natural Resources Committee to draft its own version of the CEPP.

If a CEPP makes it out of that committee intact—not a guaranteed outcome, with conservative Democrat Senator Joe Manchin at the helm—climate activists say the program would help meet President Joe Biden’s ambitious emissions reduction goals. In a letter sent to Senate Democrats in late August, Majority Leader Chuck Schumer said an analysis from his office found that the climate provisions in the reconciliation package would reduce US greenhouse gas emissions to 45 percent below 2005 levels by 2030—just five points shy of Biden’s Paris Agreement pledge.

The CEPP would be responsible for more than 42 percent of those emissions reductions.

“It is essential that a Clean Electricity Payment Program be included in the budget reconciliation bill,” Becca Ellison, the deputy policy director for Evergreen Action, told Sierra. “It would ensure that utilities are adding clean electricity at the pace demanded by science.”

The rebranding of a CES as a CEPP has to do with the fact that Democrats are trying to pass it through the Senate’s complicated budget reconciliation process. There are two crucial bars a policy passed through budget reconciliation needs to meet: It can’t increase the deficit after 10 years, and it needs to produce some sort of change in the budget—it doesn’t matter if money goes in or out, but money has to be involved. 

And there’s another caveat: That exchange of cash has to be a central component of the policy. It can’t be simply incidental. 

This is where the old CES ran into problems. In its traditional formulation, a CES is a regulation that mandates utilities ramp up the percentage of renewable electricity they produce every year. While it can include fines for failing to meet that target, those aren’t the policy’s primary component—in other words, they’re incidental. 

To get around this, congressional Democrats have designed the new CEPP to act as a budget-based alternative to a CES. The version proposed by the House would establish a series of federal grants to incentivize utilities to deliver electricity from renewable sources, such as wind and solar, directly to consumers. If a utility increases its share of renewable electricity at the rate set in the legislation, it gets a payment. If a utility increases its share of renewables at a lower rate, or not at all, it pays a penalty. Money in. Money out. 

“The bar really is the parliamentarian and making sure that we conform to reconciliation rules,” Senator Martin Heinrich, Democrat of New Mexico, said at a virtual conference held by Bloomberg Government in July. “The reasons why it is structured the way it is is to conform to those rules and make sure this is largely about math and not overtly setting policy.”

The reasons the CEPP is such an important part of the Democrats' climate package are three-fold. The first is the sheer scale of the problem. The power sector is the second-largest source of greenhouse gas emissions in the United States, so there is a lot of room to cut emissions rapidly.

“Just subsidizing renewable energy generation doesn’t do the trick. We need to incentivize utilities to stop building more fossil fuel infrastructure and start building and buying more clean energy infrastructure.”

The second reason has to do with what energy analysts call the “multiplier effect.” This is the idea that cutting emissions in the power sector will ultimately lead to emissions reductions in transportation, buildings, and industry through electrification. In that sense, a CEPP would tackle the first part of the larger strategy to wean our economy off fossil fuels: Make electricity clean, then electrify everything.

A CEPP is also a departure from our current strategy for expanding renewables, said Arjun Krishnaswami, a climate policy lead at the Natural Resources Defense Council. Until now, most federal clean energy policies have focused on encouraging renewable energy generators that feed into the grid. A CEPP would directly target the utilities that provide electricity.

“We need electrical utilities to change their practices,” Krishnaswami told Sierra. “Just subsidizing renewable energy generation doesn’t do the trick. We need to incentivize utilities to stop building more fossil fuel infrastructure and start building and buying more clean energy infrastructure.” 

At the moment, around 40 percent of the electricity in the United States comes from clean energy—half of that comes from solar, wind, and hydroelectric dams and half from nuclear power. To meet Biden’s goal of an 80 percent renewable electricity grid by 2030, we would need to add additional solar and wind power at a rate of more than 4 percent each year.

Several analyses released since Biden took office have converged to show that a CEPP would not only make this possible but that the resulting electricity grid would be dependable and lead to trillions of dollars in economic benefits.

In one study, researchers at the University of California, Berkeley, analyzed what it would take to create a renewable electricity grid that could reliably meet energy demand every hour of every day for seven years—with each year experiencing different weather conditions. They determined the United States would need 950 gigawatts of new wind and solar energy and over 225 gigawatts of battery storage capacity to meet Biden’s goal. That’s more than 130 gigawatts a year. It’s a lot, but possible. For one example, the researchers pointed to China, which added 120 gigawatts of new wind and solar capacity in 2020.

A separate study by researchers at Princeton University’s Andlinger Center for Energy and the Environment found that this rapid transition to a renewable grid would create 3 million jobs over the next decade—enough to offset any job losses in the fossil fuel industry by 500,000 to 1 million

Another way to think of the benefits of a CEPP is to consider what it would avoid: $637 billion in climate-related damage to infrastructure (calculated using a little-known figure called the social cost of carbon) and more than 300,000 premature deaths from air pollution over the next 30 years, according to an analysis by the Clean Energy Futures project. For those who need a dollar sign to grasp the value of this, it’s equivalent to more than $1.13 trillion in health benefits (and even this, the researchers admit, is a conservative number because it doesn’t include potential reductions in climate-related illness, such as heat stroke). 

There is evidence that a clean electricity standard is also broadly popular among voters nationally. Several surveys conducted over the past few months by the progressive polling firm Data for Progress found that 62 percent of registered voters support moving the country to a 100 percent renewable electricity grid by 2035. During a more recent survey that included more of the nitty-gritty details about how a CEPP would work, 58 percent of the more than 1,200 likely voters polled said they would support the policy—including a third of Republicans. 

“It’s a pretty good sign, in my opinion, that support for the CEPP is relatively unchanged from support for the general principle of a clean electricity standard, even when we dive more into the policy specifics,” Danielle Deiseroth, the senior climate data analyst for Data for Progress, told Sierra. “Usually, we see thermostatic opinion to certain policies—that is, backlash develops over time. However, I’ve been polling the clean electricity standard for the better part of the past year, and support has remained strikingly consistent.”

Whether that popularity will translate into passage in the final reconciliation bill remains to be seen. The details of the CEPP could change. It could end up getting less money. Senator Manchin is likely to insist that the definition of clean energy includes fossil fuels combined with technology that captures greenhouse gas emissions and buries them underground—a strategy climate activists loath but energy analysts say is unavoidable. (Representatives from Manchin’s office did not respond to detailed questions about the senator’s position on the CEPP.) 

What is clear is that action to reduce US greenhouse gas emissions can’t come soon enough. In August, a major United Nations scientific report concluded that the burning of fossil fuels has locked the planet in an intensifying climate crisis for at least the next 30 years. Since then, two massive wildfires in California crested the granite peaks of the Sierra Nevada for the first time in history, and Hurricane Ida struck the Louisiana coast as the strongest storm the state has seen since the 1850s. Scientists say both events would be common in the climate future we’ve created for ourselves. A CEPP would be the first real step in avoiding that future.