On March 2, 2021, members of the United States House of Representatives introduced H.R.1512, the Climate Leadership and Environmental Action for our Nation’s Future Act (“CLEAN Future Act”). The CLEAN Future Act, aims to achieve net zero greenhouse gas (“GHG”) emissions by 2050 in concert with the target identified by the United Nations Intergovernmental Panel on Climate Change to limit temperature increases to 1.5°C in order to avoid the most catastrophic consequences of climate change. H.R.1512 is a revision of draft legislation released in January 2020.
The 981-page legislation aims to address climate change at both the sector level and economywide, and authorizes $565 billion in spending over the next decade to achieve decarbonization. Some of the major provisions of the CLEAN Future Act are summarized below. In addition, the House Committee on Energy & Commerce has provided a more comprehensive fact sheet that identifies original terms from the January 2020 draft of the proposed legislation, new terms added in the March 2021 draft, and provisions that were removed and already signed into law.
Title 1 of the CLEAN Future Act sets an interim national goal to reduce GHG emissions by no less than 50 percent below 2005 levels by 2030. The CLEAN Future Act impacts the Power Sector, Transportation Sector, Building Sector, and Industrial Sector, and directs EPA to evaluate all federal agency and state plans for meeting the national goal.
For the Power Sector, Title II of the legislation sets a Clean Energy Standard of 100% clean energy generation by 2035 to be achieved by requiring all retail electricity suppliers to reach 80 percent clean electricity by 2030 and 100 percent by 2035, phasing out the ability of fossil fuel power plants to earn partial credits by lowering the carbon intensity factor from 0.82 (adjusted for upstream GHG emissions) in 2030 to 0.4 in 2035, and various other measures. The legislation also seeks to support greater build-out of the Transmission System, establishes an Office of Transmission at FERC to help oversee the build-out, and provides support for grid strengthening, energy storage distributed energy resources, and microgrid investments. Title II also provides for reform of the Public Utility Regulatory Policies Act of 1978 (“PURPA”) by adding three new federal standards listed in Section 111(d) that each state commission and nonregulated electric utility is required to consider implementing: (i) energy storage systems as part of a supply side resource planning process,(ii) non-wires solutions (defined as grid investments that use “nontraditional solutions” such as distributed generation, energy efficiency, demand response, and microgrids, among others) instead of a transmission/distribution system upgrade, and (iii) requiring community solar program offerings. Title II also proposes to amend Section 210 by requiring that qualifying facilities have the option of entering into fixed priced energy contracts— undoing a significant ruling in FERC’s recent Order Nos. 872 and 872-A (see July 20, 2020 edition of the WER; and November 24, 2020 edition of the WER).
Notably, Title II retains some potentially groundbreaking provisions from the January 2020 draft, including: (i) empowering FERC to end the isolation of the Electric Reliability Council of Texas by removing the condition that interconnections and coordination within and among regions established by the Commission provided for by Federal Power Act (“FPA”) section 202(a) be voluntary, (ii) mandating all FPA jurisdictional public utilities to join a Regional Transmission Organization (“RTO”) or Independent System Operator (“ISO”) within two years of enactment of the CLEAN Future Act, and (iii) preempting state laws restricting individual consumer access to clean energy in interstate commerce expressly notwithstanding the FPA section 212(h) prohibition of FERC mandating transmission to ultimate consumers directly or through “sham” wholesale transactions and its savings clause concerning state regulatory authority over transmission to end users. In addition to removing the reliance on voluntary interconnection and coordination of FPA Part II as enacted and revisiting FERC’s decision not to compel participation in RTOs or ISOs, the provision would be the first to revise the compromise on retail transmission reflected both in the Energy Policy Act of 1992 and FERC Order 888.
Title III provides for improved efficiency measures by setting new target energy efficiency (“EE”) standards, supporting model building energy code development, authorizing funding to promote proven EE programs as well as new EE programs, among various other measures aimed at promoting EE.
For the Transportation Sector, some of the major provisions in Title IV include expanding electric vehicle infrastructure by authorizing $500 million in funds to deploy EV infrastructure and establishing a program to determine where electric vehicle supply equipment will be needed to meet demand as the EV market expands. Various provisions in Title IV aim to address diesel emissions and also requires the establishment of GHG emission standards for non-road sources. The legislation authorizes $2 billion annually to promote the electrification of transportation infrastructure including a pilot program to electrify refrigerated vehicles, and decarbonization at ports, and $2.5 billion annually to revitalize EPA’s clean school bus program.
Title V addresses the Industrial Sector and some of the key provisions include establishing the position of the Assistant Secretary of Energy for Manufacturing and Industrial Decarbonization and establishing the Federal Buy Clean Program to reduce embodied emissions (defined as the amount of GHG emissions emitted during the production of a product) in projects involving Federal funds and establish a “Climate Star Program” to promote products produced with less embodied emissions. Title V also supports carbon sequestration with funding as well as providing funding to implement smart manufacturing practices and a grant program to support manufacturing of clean energy systems and decarbonization of energy-intensive product manufacturing.
Environmental Justice is addressed in Title VI which codifies an Interagency Federal Working Group on Environmental Justice, establishes an Office of Energy Equity at the Department of Energy to develop an agency-wide environmental strategy, and provides for numerous measures to promote environmental justice through the provision of information and training, and various grants.
Title VII addresses Super Pollutants, especially methane production from the oil and gas sector by requiring existing sources to cut emissions 65 percent below 2012 levels by 2025 and 90 percent below 2012 levels by 2030. Title VII also would prohibit routine flaring from new oil and gas sources, limiting routine flaring for existing sources to 80 percent below 2017 levels by 2025, and completely phasing out the practice by 2028. Title VIII further addresses domestic black carbon pollution by directing EPA to promulgate new rules if existing rules are insufficient to cut emissions 70 percent below 2013 levels by 2025.
Title VIII provides for economywide policies and establishes a Clean Energy and Sustainability Accelerator to assist with the transition to a net-zero carbon economy. Of note to public companies, the CLEAN Future Act directs the Securities and Exchange Commission to require public companies to disclose information about their exposure to climate-related risks, including direct and indirect GHG emissions, and risk management strategies to identify and mitigate the physical and transition risks posed by climate change.
Titles IX and X which provide for Waste Reduction and Worker and Community Transition, respectively, are new titles added to the March 2021 revision. Title IX promotes the modernization of recycling and waste management and aims to reduce waste generation. Finally, Title X aims to exacerbate the impact and provide support to workers and affected communities during the transition to a clean energy program.
On March 3, 2021, the CLEAN Future Act was referred to a number of Committees and Subcommittees for consideration of provisions that fall within their respective jurisdiction.
The full text of H.R.1512 is available here.
A link to the Fact Sheet prepared by the Committee of Energy and Commerce is available here.
The United Nations 2050 Goal is available here.