Overnight Energy & Environment — Presented by ExxonMobil — Dems seek to preserve climate provisions

Welcome to Wednesday's Overnight Energy & Environment, your source for the latest news focused on energy, the environment and beyond. Subscribe here: thehill.com/newsletter-signup.

Today we're looking at the ongoing balancing act on the reconciliation package's climate provisions, a suggestion by a Senate Democrat on what the White House can do and taking a deep dive on renewable energy tax credits in the bill.

For The Hill, we're Rachel Frazin and Zack Budryk. Write to us with tips: rfrazin@thehill.com and zbudryk@thehill.com. Follow us on Twitter: @RachelFrazin and @BudrykZack.

Let's jump in.

Senators work to keep climate priorities in bill

Democrats are clamoring to keep their climate priorities in the spending bill passed by the House as Sen. Joe Manchin (D-W.Va.) pushes for adjustments.

Democratic senators on Wednesday said a fee on methane emissions and a tax credit for union-built electric vehicles are among the provisions that are still being negotiated. Both are in the House-passed bill.

How do they feel about it? "I feel like we're in a good spot. There are two or three policies we're having to work out, so we'll see," Sen. Debbie Stabenow (D-Mich.) told reporters when asked about the chances that the legislation would be significantly changed.

Manchin and centrists in the House already used their clout to cut back at some of the climate provisions prized by progressives. While additional changes are likely, their size and scope are not entirely clear.

And how are the negotiations going? Sen. Tom Carper (D-Del.), who chairs the Senate Environment and Public Works Committee, said he has been in "very constructive" discussions with Manchin about the methane program.

"He shared with us the concerns that they have with the original methane fee and we have taken their very constructive comments," Carper said. Carper said Manchin and House moderates from Texas have raised concerns about the provision, but he said they were not as concerned after the program was adjusted to also include financing to help companies to stop emitting methane before they are hit with a fine.

Democrats have modified their proposal charging drillers for excess emissions of methane - a potent greenhouse gas that's a major contributor to climate change - to also include incentives to help companies cut down on releases of the gas.

Read more about the ongoing process here.

Coons: Set fee for carbon-intensive products

Sen. Chris Coons (D-Del.) expressed confidence to reporters Wednesday that the White House could impose a border tax on carbon-intensive products even if Coons is not successful in adding it to the Democratic reconciliation package.

"I think so," Coons told press when asked whether the Biden administration could impose a so-called border carbon adjustment on its own. The Delaware Democrat had earlier said he believed such a tax would work best when passed legislatively alongside a carbon fee.

Could they do more? As to whether the Biden administration could "impose an additional price on carbon, I don't see that mechanism right now," Coons said.

"But in a series of recent meetings with Canadian leadership, with German leadership, with EU leadership, I've discussed the urgency, the importance of a border carbon adjustment system, or approach that would bring together at least those countries," Coons added.

The Delaware senator, considered one of the Senate's climate hawks, made the remarks Wednesday following a press conference in which he and several other Democratic senators called for the social spending package's climate provisions to be preserved.

The state of play: Sen. Joe Manchin (D-W.Va.), who is a key vote on the package, has repeatedly objected to energy and environmental aspects of the bill, including the Clean Electricity Payment Program, which would have implemented financial incentives for electric utilities to transition to renewable energy.

The program was confirmed to be removed from the Senate package this fall. The West Virginia Democrat has also expressed reservations about provisions such as a methane fee and a tax credit for electric vehicle manufacturers that use union labor.

Read more about Coons' remarks here.

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Dems push tax credits to bolster clean energy

Industry groups and experts see Democrats' proposed clean energy tax credits as a major boost for expanding alternative energy deployment and tackling climate change, underscoring the high stakes as the party seeks to advance the measures.

Modeling has shown that the effects of the credits included in the Build Back Better package could as much as double the current record rate of renewable deployment and cut significant emissions from the U.S. electric sector.

The legislation, the core of President Biden's domestic agenda, contains a number of tax credits expected to benefit energy sources including solar, wind and nuclear and bolster technologies like storage, transmission and carbon capture.

How would it work? Under the bill, renewables like wind and solar would be able to use either a tax credit that gives them money based on how much power they produce or a tax credit that allows companies to deduct as much as 30 percent of their investment.

Both the production tax credit (PTC) and the investment tax credit (ITC) would last through 2031. These credits are currently already in existence, but the legislation would extend them and bring the ITC up from its current 26 percent cap.

Under the legislation, people using these credits would also be able to receive tax benefits as a direct payment - instead of through more complicated mechanisms.

Suzanne Leta, head of policy and strategy at the solar energy firm SunPower, said the expansion of the solar investment tax credit was among the legislation's "most impactful" climate provisions.

Currently, she noted, the tax credit is only available for deployed solar energy, but provisions in the reconciliation package would expand it to microgrids and standalone battery storage.

Read more about the proposed tax credits here.

OIL GROUPS LOOK TO MANCHIN FOR SPENDING BILL CHANGES

Oil and gas trade groups publicly appealed to Sen. Joe Manchin (D-W.Va.) on Wednesday to help them nix several provisions in Democrats' climate and social spending bill.

In a letter addressed to Manchin that was shared with reporters, eight groups expressed opposition to provisions.

The measures they took aim at include those that: increase fees for public lands drilling, ban drilling in the Eastern Gulf of Mexico, and the Atlantic and Pacific Oceans and add fees for abandoned oil and gas wells on public lands.

The groups signing the letter are: the American Petroleum Institute, National Ocean Industries Association, American Exploration and Production Council, Energy Workforce and Technology Council, International Association of Geophysical Contractors, Independent Petroleum Association of America, Louisiana Mid-Continent Oil and Gas Association and US Oil and Gas Association.

"It is our hope that as this bill is considered by the Senate, these punitive provisions are removed," said the letter to Manchin, who is both a key swing vote and the chair of the chamber's Energy and Natural Resources Committee.

ON TAP FOR TOMORROW

• The Senate Energy and Natural Resources Committee will hold a legislative hearing to consider nine bills

• The House Oversight Committee will hold a markup hearing to consider H.R. 5477, the Federal Agency Climate Planning, Resilience, and Enhanced Preparedness (PREP) Act.

A MESSAGE FROM EXXONMOBIL

WHAT WE'RE READING

• Texas city OKs new natural gas drilling near daycare. 'This may not be over,' The Fort Worth Star-Telegram reports

• Hunt for the 'Blood Diamond of Batteries' Impedes Green Energy Push, The New York Times reports

• Will Biden shut down a Midwest pipeline? 4 issues to watch, E&E News reports

• Environmental groups ask Maine to suspend energy project, News Center Maine reports

• Pembina nixes Jordan Cove LNG plant project in Oregon, Reuters reports

ICYMI

• Hundreds of toxic sites in California threatened by sea level rise due to climate change

• US must cut plastic production to save oceans, report says

And finally, something offbeat and off-beat: Can't go wrong with a classic.

That's it for today, thanks for reading. Check out The Hill's energy & environment page for the latest news and coverage. We'll see you tomorrow.