The US CLEAN Future Act — What’s In It?

Originally published on WRI’s Resource Institute Blog.
By  Dan Lashof, Devashree Saha, Karl Hausker, Greg Carlock, Kevin Kennedy, and Tyler Clevenger 

U.S. Representative Frank Pallone, chair of the House Energy and Commerce Committee, together with subcommittee chairs Bobby Rush and Paul Tonko, introduced the CLEAN Future Act on March 2, 2021. While numerous climate bills are introduced in each Congress, this proposal deserves special attention: It is the first major piece of climate legislation to be introduced since President Biden assumed office, and it is authored by leadership of the committee with primary jurisdiction over climate policy in the House. It is an updated version of a discussion draft circulated last year, reflecting dozens of hearings, input from experts and activists, and the changing political and physical climate.

Chairman Pallone promised to hold legislative hearings on the bill, and some version is likely to be reported out of the committee and eventually pass the House. While the bill’s prospects in the closely divided Senate are murkier given its arcane rules requiring a super-majority to advance most major legislation, significant elements of the bill could be enacted before the end of this year.

Here, we outline the major features in brief, as well as some important measures that are not included.

1. National Emissions-reduction Target

Like last year’s discussion draft, the CLEAN Future Act of 2021 (CFA) starts by setting a national goal to achieve a 100% clean economy by no later than 2050 (defined as net-zero or negative greenhouse gas emissions). Importantly, this year’s bill adds an interim goal to reduce greenhouse gas emissions at least 50% by 2030 from 2005 levels, the same goal WRI urged the Biden administration to establish through its forthcoming Nationally Determined Contribution (NDC) under the Paris Climate Agreement. Analysis shows that this target is both ambitious and achievable through measures that would create good jobs, make the U.S. economy more competitive internationally, and make Americans healthier.

While these goals are not directly enforceable, the CFA tasks agencies with using their existing legal authorities to achieve them and tasks the EPA with tracking progress and recommending to Congress any additional legislative authority that may be needed.

2. Climate Federalism

Recognizing the integral role that state governments must play in achieving national targets, the CFA would require states to develop State Climate Plans to achieve interim and midcentury emissions-reduction goals set by the EPA to collectively meet the national targets. Each state would be able to craft emissions-reduction pathways tailored to its unique priorities and circumstances. Under this model of climate federalism, states would submit a proposal to the EPA that details emissions-reduction plans for each decade until 2050. This approach builds on the leadership of the 25 governors who have committed to the goals of the Paris Agreement through state clean electricity standards, zero emission vehicle programs, natural climate solutions, and other policies.

In the event that a state misses an interim target, it is required to submit a revised plan and, until the target is met or the revised plan is satisfactory, would need to offset increased emissions from any source with double the emission reductions from other sources. The bill would require the EPA to set a carbon fee that kicks in if it determines that a state has failed to submit an adequate plan. EPA would set the fee at a level calculated to be sufficient to put the state on track to meet its emissions target.

In addition to $200 million in federal grants for the preparation of state plans, states would be provided with a portfolio of state-level strategies developed by the EPA, including performance-based fuel standards, carbon removal strategies, pollution phaseout plans, and more. States can also apply for grants under a Race to Net-Zero Grant Program. Furthermore, the CFA allows for regional collaboration, effectively encouraging the expansion and proliferation of pacts such as the Regional Greenhouse Gas Initiative (RGGI) and Transportation Climate Initiative (TCI).

3. Environmental Justice

While Title VI of the bill focuses on environmental justice, equity and justice components are woven into all aspects of the legislation, reflecting the elevated priority Congressional Democrats are putting on equity as they consider ways to address climate change. For instance, in the transportation section, the bill provides directions on expanding access to electric vehicles in underserved communities.

Within Title VI, the provisions aim to not only protect the health and safety of communities disproportionately impacted by environmental harms and risks (also referred to as “environmental justice communities”), but also include grants to enable those communities to participate in decision-making processes under the Clean Air Act, Safe Drinking Water Act, and Solid Waste Disposal Act.

Ample evidence highlights how communities of color are disproportionately exposed to toxic air pollution from facilities located in their neighborhoods. The CFA increases air quality monitoring for toxic air pollutants and expands the national ambient air monitoring network in environmental justice communities. It also restricts the issuance of permits for major sources of air pollutants in areas that are determined to be pollution burdened.

Other provisions include funding for a new program to replace lead water service lines across the country, a 10-year deadline for cleaning up all federal Superfund sites, protections for underground drinking water sources from enhanced oil recovery, new coal ash disposal requirements, and repeal of oil and gas production exemptions from landmark environmental laws. The CFA also creates a climate justice grant program to provide $1 billion each year from 2022 to 2031 to help communities respond to the impacts of climate change.

Taken together, these provisions provide a bold roadmap for the federal government to protect historically marginalized communities from legacy toxic exposures and the effects of climate change.

4. Worker and Community Transition

The importance of helping workers and communities dependent on the fossil fuel industry to find new opportunities and diversify their economic base as the country transitions to a low-carbon economy cannot be overemphasized. While “just transition” policies are gaining traction in a handful of U.S. states, including Colorado and New Mexico, the CFA acknowledges the significant responsibility of the federal government.

To begin with, the bill broadens the conversation to include all workers and communities adversely affected by the low-carbon transition, including those with ties to oil and gas industry and those manufacturing internal combustion engine vehicles. This is important given that much of the national conversation so far has focused on coal workers and communities.

The bill creates an Office of Energy and Economic Transition in the White House, entrusted with developing federal policies on just transition. With the help of an interagency energy and economic task force and a stakeholder advisory committee, the office would coordinate across federal agencies to align transition strategies. The legislation also calls for the creation of a clearinghouse to provide information on federal programs, grants, loans, loan guarantees, and technical assistance that can help impacted workers and local communities.

The legislation also creates new programs to support fossil workers who have lost their jobs, and provides funding assistance to local governments that have been fiscally impacted due to closure of a fossil fuel employer.

One promising program is “community-based transition hubs,” which would provide federal funding to entities with relationships to local and regional economic development organizations, workforce development, and other community organizations to provide assistance to displaced workers and aid communities with economic diversification. The hubs would support workers by providing information and facilitating enrollment in locally available training and employment opportunities and offering prevocational services to prepare individuals for employment, among other things. This reflects a more bottom-up approach to investing in communities, enabling federal dollars to be targeted to local challenges and needs.

5. Transportation

Title IV of the CFA authorizes more than $100 billion over the next decade to electrify the U.S. transportation system, which is currently the largest source of climate-altering pollution in the country. It prioritizes projects that will reduce diesel emissions, providing substantial health benefits to communities of color and others overburdened by pollution. It would provide major support for domestic manufacturing of electric and other advanced vehicles.

Key provisions include:

• Grant and rebate programs authorizing almost $50 billion for charging infrastructure for both passenger vehicles and trucks, and programs to electrify equipment at airports, ports, railyards and other freight facilities.
• A dedicated $25 billion program to clean up ports, which are a major source of pollution impacting environmental justice communities. The bill also reauthorizes the broader Diesel Emissions Reduction Act program at $5 billion over 10 years and directs EPA to set emissions standards for non-road engines and aircraft.
• Establishes a revised Clean School Bus program at EPA, authorizing $25 billion over 10 years to support the replacement of diesel school buses with zero-emission electric buses and associated charging infrastructure. At least 40% of program investments will be dedicated to communities of color, low-income communities and environmental justice communities.
• Authorizes $25 billion for retooling plants to manufacture electric vehicles, with priority given to at-risk or recently closed plants. To be eligible, manufacturers must pay prevailing wages and commit to continuing production at the facility for at least 10 years.

6. Power

Title II of the legislation addresses the power sector.

The centerpiece is a proposed federal Clean Electricity Standard (CES) that would require all retail electric providers to generate 80% of their power from zero-emissions sources by 2030, and 100% by 2035, consistent with President Biden’s campaign pledge. Key provisions of the CES include:

• A credit system for compliance that awards full credits for zero-emission power generation and partial credits for generation with emissions below specified carbon-intensity benchmarks.
• An Alternative Compliance Payment system to provide flexibility to covered entities, while also granting the EPA administrator some limited authority to defer compliance by a maximum of five years.

Among other provisions, Title II would:

• Direct the Federal Energy Regulatory Commission (FERC) to lower barriers to interstate transmission expansion, and to establish an Office of Transmission to assess current transmission policies.
• Amend the Public Utility Regulatory Policy Act (PURPA) to require states and utilities to consider investment in energy storage systems; consider non-wire alternatives to traditional transmission investments; and offer community solar programs to all ratepayers.
• Authorize programs to promote microgrids, distributed energy resources, and solar installations in low-income and underserved areas; and improve resiliency, performance and efficiency of power grids.

7. Industry

Achieving the goal of net-zero emissions by 2050 will require significant steps to reduce emissions from the industrial sector. The CFA takes several important steps in that direction.

One of the major challenges in creating markets for low-carbon products such as steel and concrete is the lack of clear, consistent and transparent information on the embodied carbon in those products. This bill would build on progress from the private sector in the use of environmental product declarations (EPDs), which provide information on the lifecycle environmental impacts of products. This bill would bring the power of the federal government to bear on the problem, helping ensure that EPDs or similar disclosure tools follow clear and consistent rules and creating a national database.

The bill would also create a Buy Clean program that creates standards for the embodied emissions in construction materials and manufactured products purchased in projects with federal funding, and create a voluntary Climate Star program. Similar to the successful Energy Star program, this initiative would identify and certify products with significantly lower embodied carbon emissions. Such a voluntary program would aid companies and consumers looking to reduce the carbon footprint of the products they purchase.

The bill also includes two provisions to help manufacturers improve their efficiency. It directs the Department of Energy (DOE) to expand the existing work of the national labs in assisting small and medium manufacturers in implementing smart manufacturing practices, and would authorize $100 million over 10 years for states to support this effort. The bill also would authorize $10 billion over 10 years to establish a rebate program for industrial facilities to improve their energy and water efficiency and reduce greenhouse gas emissions.

While these steps will not be sufficient on their own to decarbonize U.S. industry, they are a good starting point and provide a foundation for more ambitious action.

8. Buildings

In 2019, residential and commercial buildings accounted for 35% of U.S. carbon dioxide emissions due to their direct use of fossil fuels directly and from the electricity they consume. The CFA tackles energy use in both new and existing buildings in several ways.

The first is a push for stronger building energy codes that aim for all new buildings built by 2029 to use 50% less energy compared to buildings built under today’s codes. The new codes would also ensure that all new buildings built in 2030 and after are “zero energy ready,” meaning they are highly efficient and could meet their energy needs through onsite or nearby sources of zero-emission energy.

The CFA targets state and local public facilities with nearly $40 billion of investment over 10 years to improve resilience, increase energy efficiency, expand use of renewable energy and enhance grid integration. This includes $1.5 billion for tribal governments, $1 billion for public schools and $100 million for nonprofits.

The legislation also revives two successful programs utilized under the American Recovery & Reinvestment Act (ARRA) during the 2009 recession. This includes $35 billion for the Energy Efficiency and Conservation Block Grant Program to finance energy efficiency, renewable energy, zero-emission transportation and the use of alternative fuels in commercial and industrial buildings. It also reauthorizes the State Energy-Efficient Appliance Rebate Program at $3 billion — 10 times the ARRA level — and expands eligibility to encourage adoption of electric appliances.

Finally, the CFA makes a large push to retrofit the nearly 140 million existing residential buildings. It establishes a new home energy savings rebate program that would provide $1,500 to property owners for the installation of insulation, air sealing, and replacement of a heating, ventilation and air conditioning system. This rebate could be as much as $4,000 if upgrades achieve a 40% reduction in energy consumption, which would cut household utility bills while reducing emissions.

However, this rebate program is limited only to appliances that improve the thermal efficiency of the home, excluding important equipment like EV chargers. Electrification of all appliances and vehicles, when combined with clean electricity generation, is the best way to achieve net-zero emissions.

9. Methane Emissions and Waste Reduction

The expansive bill contains an array of additional climate provisions, including measures to reduce methane emissions and waste. The legislation aims to reduce methane emissions from oil and gas operations 65% below 2012 levels by 2025 and 90% by 2030. Efforts to tighten emissions leakage would be aided in part by a technology commercialization program to develop waste-reduction improvements in the oil and gas sector, as well as grants to improve the performance of natural gas distribution systems.

The bill also encourages reductions in emissions and waste from the plastics industry, which is currently surging in production. It proposes a pause on issuing permits for plastic-producing and some petrochemical facilities, and directs the EPA to issue emissions and health standards for the industry. The legislation also takes aim at waste accumulation by revamping the nation’s recycling system and establishing a grant program to support community-level zero-waste projects.

What’s Missing from the CLEAN Future Act?

As expansive as the CLEAN Future Act is, it is not comprehensive.

First, although the legislative jurisdiction of the House Energy and Commerce Committee is broad, it does not include carbon taxes, other taxes, or tax credits (which fall under the Ways and Means Committee); transportation system planning and construction (Transportation and Infrastructure Committee); or the contribution that natural and working lands can make to removing carbon dioxide from the atmosphere (Agriculture and Natural Resources Committees). Additional legislation covering these important components of a comprehensive plan to tackle the climate crisis will need to be developed separately.

Within the jurisdiction of the Energy and Commerce Committee, the largest gap in the bill is the lack of a national emissions cap with specific enforceable emission limits for sources outside the electricity sector (which are covered by the Clean Electricity Standard). Instead, the CFA leaves it up to states to ensure that economy-wide emissions reduction targets are achieved, which could lead to inconsistent results.

The bill also lacks a mandate to phase out the sale of polluting vehicles. The House Select Committee on the Climate Crisis recommended that Congress enact a national standard to ensure all passenger vehicles sold produce zero emissions starting no later than 2035. Similarly, the Select Committee recommended that all new medium- and heavy-duty vehicles produce zero emissions no later than 2040. The bill’s provisions on electrifying the federal vehicle fleet are also less ambitious than these targets.

Failure to include these recommendations in the CFA is puzzling, particularly given General Motors’ recent commitment to sell only zero-emission passenger vehicles by 2035 and the formation of a Zero Emission Transportation Association of leading clean vehicle manufacturers and charging infrastructure providers, which called for 100% of vehicles sold by 2030 to be electric. While the EPA has existing authority under the Clean Air Act to set vehicle emissions standards, a Congressional mandate would avoid the risk of regulatory delays and litigation.

Other provisions of the CFA could be enhanced as the bill moves through Committee hearings and markup. For example:

• A grant program could be added to support construction of underground powerlines that would be less vulnerable to damage from extreme weather and could avoid land-use conflicts by following existing railroad and highway rights-of-way.
• A federal low-carbon fuel standard could be included to reduce transportation fuels’ emissions-per-gallon-equivalent.  This standard could replace the existing renewable fuels standard, which expires in 2022 and is not based on emissions-per-gallon-equivalent performance.
• A low-carbon fuel standard could be established for fuels used to provide heat in industry and buildings, while a low-carbon products standards could be established for all cement and steel used in the United States.
• Provisions aimed at electrifying existing buildings could be strengthened by providing incentives to replace fossil fuel water heaters and furnaces with electric heat pumps.

These measures would help achieve the goals of the CLEAN Future Act by accelerating construction of the electricity transmission infrastructure needed to support a zero-emissions electricity system, as well as the equipment needed to use that clean electricity to eliminate emissions from other sectors.

Despite some limitations, the CLEAN Future Act provides a great starting point for turning President Biden’s necessarily ambitious agenda for tackling the climate crisis into specific policies that create good-paying jobs, address the legacy of environmental injustice, and, well, create a clean future. The pathway from bill introduction to enactment is strewn with potholes, but the CLEAN Future Act clearly lays out the direction we must travel.