The Democrats’ job-crushing green agenda is heading toward the ditch.
by Kimberly Strassel, September 17, 2021 Wall Street Journal
There’s a simple reason Democrats have never in 20 years rounded up the votes for an economy-crushing climate bill: It’s political suicide. As the reconciliation battle rages, that reality is finally—belatedly—setting in.
House Democrats this week wrapped up committee work on their $3.5 trillion reconciliation bonanza, and most of the hoopla was over taxes and entitlements. But in the background, progressives also grappled with the first signs that their other major priority—a sweeping climate agenda—is veering toward a ditch. It turns out a relevant number of Democrats are reluctant to destroy their states’ energy industries (and millions of jobs), or to saddle consumers with skyrocketing prices and blackouts.
All eyes are, again, on Sen. Joe Manchin. West Virginia’s coal industries (mining and power plants) support some 17% of the state’s economic output, and its utilities are more than 90% reliant on that fuel. More relevant for the reconciliation fight, Mr. Manchin is chairman of the Senate Energy and Natural Resources Committee, which was tasked in August with handling the crown jewel of progressives’ climate agenda—the Clean Electricity Payment Program.
CEPP is a punitive regime that would require utilities to buy or generate a set additional amount of renewable energy, year on year. Companies that hit the mark get federal payments; companies that don’t face steep fines. Natural gas doesn’t count. About half the states don’t currently have renewable mandates; this would force them into a federal quota program. The rules would also require them to shut down reliable fossil-fuel plants prematurely, killing jobs, raising costs, and provoking the sort of power crises seen in Texas and California.
Democrats managed to summon surprise somehow when Mr. Manchin—of West Virginia—on Sunday lambasted the program, noting that the industry is already moving to cleaner fuels. “It makes no sense to me at all for us to take billions of dollars and pay utilities for what they’re going to do as the market transitions,” he told CNN’s Dana Bash. Ms. Bash tried to suggest Mr. Manchin was in the pocket of Exxon. In reality, he’s listening to labor groups like the United Mine Workers, who are opposed to CEPP, noting it will destroy the very blue-collar, union jobs Democrats claim to care about.
But Mr. Manchin is hardly alone. Seven House Democrats from Texas—a center of fossil-fuel production—on Monday sent a letter to Speaker Nancy Pelosi objecting to provisions “targeting the U.S. oil, natural gas, and refining industries.” They noted that oil and natural gas companies support “11 million domestic jobs” and also took aim at the CEPP, specifically its exclusion of natural gas.
Then there are Democrats who worry the program will harm states that have already moved away from fossil fuels, or hurt markets. “We don’t need blunt penalties that are impossible for energy producers to avoid,” Arizona Rep. Tom O’Halleran told the Journal this week. The bottom line: Energy remains central to functioning state economies, and enough Democrats continue to understand the political folly of crushing jobs and consumers with ruinous mandates.
These criticisms have sent Democratic leaders scrambling for fig-leaf compromises. Minnesota Sen. Tina Smith has floated including carbon-capture in CEPP, thereby allowing utilities like those in West Virginia to skate from penalties. Others are suggesting CEPP might be scrapped in favor of a carbon tax. The problem? Progressives long ago came out against carbon taxes as too obviously hurting the poor. Progressives prefer hiding their price hikes in complicated programs like CEPP, which force utilities to do their energy dirty work.
Green groups are already in a lather. The White House and progressives had demanded the reconciliation bill strip fossil-fuel industries of longstanding tax provisions that allow them to recover costs. Yet in response to blowback from Democrats in oil-and-gas states like Texas, Ohio and Pennsylvania, the House Ways and Means Committee reconciliation draft this week didn’t include those repeals. The omission sent the green lobby around the bend. Ways and Means Chairman Richard Neal’s “failure to tackle billions of dollars in direct subsidies to the fossil fuel industry is an egregious dereliction of duty,” railed Food & Water Watch policy director Mitch Jones. “No handouts for fossil fuels can be allowed. Not one dollar will be tolerated.”
Speaker Pelosi has so far managed to keep Congressional progressives from joining in this throw down, no doubt counseling that some compromise will be required. But how much will they tolerate? The Bernie Sanders wing of the Democratic Party is already apoplectic that Mr. Manchin and Arizona Sen. Kyrsten Sinema say they won’t support $3.5 trillion. If Democrats from energy states hold strong, a final reconciliation bill may consist primarily of the renewable-energy tax credits that have been the mainstay of Democratic energy policy for decades. Here’s to betting that won’t wash with progressives who have made climate central to their congressional existence.
Give the green coalition credit for staving off political reality as long as it did, pretending a climate agenda would sail through Washington. It may still pass, but not before a bruising internal Democratic fight.