Marin, state stand to gain from historic new climate and energy bill

From offshore wind turbines to electric vehicles to solar panels, the state — and Marin — stand to emerge as major winners with the passage of a historic climate and energy bill in Washington, D.C., which experts said could supercharge California’s already ambitious emissions goals.

The bill, dubbed the “Inflation Reduction Act,” cleared the U.S. Senate on a 51-50 vote this week, with Vice President Kamala Harris breaking a tie. It now heads to the House of Representatives, where passage is expected Friday, and then to President Biden’s desk for his signature.

The 775-page bill, the culmination of more than year of negotiations and deal-making, achieves key priorities for Democrats. Among them: a 15% minimum tax on corporations, a requirement that the federal government negotiate with pharmaceutical companies to lower drug prices for Medicare, and an extension of health insurance subsidies under the Affordable Care Act.

But the centerpiece is a sweeping effort to reduce climate change. The measure provides $369 billion over the next 10 years for federal tax credits, grants and other incentives to dramatically expand solar power, wind power, electric vehicles, battery storage projects and other efforts to reduce greenhouse gas emissions that are warming the planet.

“The domestic manufacturing, the investments and incentives for all of these technologies and jobs that are part of the clean energy economy — we have never done anything at this scale,” said Marin Rep. Jared Huffman, a Democrat.  “On the consumer side, people are going to benefit from an improved set of tax credits for everything from electric vehicles, heat pumps and induction stoves that will decarbonize and electrify our lives.”

California has led the nation in passing laws to reduce pollution since the 1960s, when then-Gov. Ronald Reagan created the California Air Resources Board.

Billions of new federal incentives in the bill will help California reach its climate goals more easily than if Sacramento had to fund them on its own, said Anand Gopal, executive director of strategy and policy at Energy Innovation, a San Francisco research firm.

“There’s a lot of money that can flow to the state,” Gopal said. “This bill will help the state go even faster than what we were planning to do.”

Over the past 20 years, California governors from Gray Davis to Arnold Schwarzenegger to Jerry Brown and Gavin Newsom have promoted electric vehicles by tightening smog standards, and offering rebates, tax credits and access to carpool lanes for EV drivers.

Currently, 16% of cars sold in California, or one in six, is electric. More EVs are sold in California than any other state. California has 43 companies that manufacture electric vehicles or electric vehicle equipment, led by Tesla, and electric vehicles are the state’s largest manufactured export, with an annual value of $5.6 billion.

But the state is still far short of Brown’s goal of 5 million electric vehicles sold by 2030, having recently passed 1.2 million. And studies show more chargers are needed.

MCE, the electricity provider formerly known as Marin Clean Energy, offers $3,500 rebates for lower-income residents in its service area in Marin, Contra Costa, Napa and Solano counties. Additionally, MCE also offers $3,500 rebates for multifamily home and businesses to create electric vehicle charging stations. The state will need about 250,000 charging stations by 2025 if it wants to reach its goal of 5 million electric vehicles, according to MCE chief executive officer Dawn Weisz.

Weisz said the bill would work to expand the reach of these rebates.

“As a public agency supplying clean power to our communities, the (legislation) will allow MCE to better support our communities as they grapple with the devastating impacts of climate change by building more clean power right here in California, helping our customers lower their electric bills, and improving their health and quality of life through clean energy technologies,” Weisz wrote in an email.

In 2020, Newsom signed an executive order banning the sale of new gasoline-powered passenger vehicles in California starting in 2035, following the lead of many European countries.

California already has a $2,000 rebate for electric vehicles. But the state’s incentives rise and fall depending on whether California’s budget is in surplus or deficit.

The new bill extends an existing $7,500 federal tax credit for people who buy electric cars. Importantly, it drops a current rule that left out companies once they have sold 200,000 electric vehicles.

Tesla and General Motors hit that cap in 2018. So buyers of those vehicles have not been eligible for the federal tax credit in recent years. Nissan and other automakers are nearing it.

Huffman said there are concerning caveats attached to lifting the cap. A new standard would be added, he said, that would allow up to $7,500 tax credits depending on the sourcing of the raw materials for the batteries and where the components are assembled.

“It’s meant to provide the sourcing of battery materials from countries that are trade partners of the United States and not China, basically,” Huffman said, “and it’s meant to kind of jumpstart the domestic capacity to assemble these components.”

Manufacturers will find it difficult to meet those standards in the first few years, Huffman said, which could limit the effectiveness of the tax credits early on.

The new federal bill also provides a $4,000 tax credit for the sale of used electric vehicles.

Californians have seen record droughts, searing heat waves and massive wildfires in recent years — all of which have been made worse by the warming climate.

Through dozens of programs and laws, greenhouse gas emissions peaked in California in 2004 and have fallen about 14% since. But the state has a goal of reducing emissions 40% from 1990 levels by 2030. And it’s only cut them about 6% so far from 1990 levels.

To continue expanding fossil-free power, state law requires 100% of the electricity that California consumes must come from carbon-free sources like wind, solar, geothermal, hydropower or nuclear power by 2045. Currently, 59% does.

Bill Carney, president of Sustainable Marin’s San Rafael chapter, said Marin has set more aggressive targets of reducing total greenhouse gas emissions by 60% by 2030 compared to 2005 levels and having net-zero emissions by 2045.

Carney said an unsung allocation in the bill would provide billions of dollars for restoring forests, carbon capture at agricultural areas, urban tree planting and restoring coastal habitats.

The new infrastructure will also work toward efforts to electrify more buildings in Marin, Carney said, with the building sector currently accounting for about a third of Marin’s greenhouse gas emissions. About 27% of that comes from natural gas uses and the remainder from electricity generated by coal or natural gas-fired power plants.

“There is a big opportunity sitting there where we as a county could move forward in filling that national gap,” Carney said, referring to the federal greenhouse gas reduction target.

The new bill passed Sunday, which was endorsed by the Silicon Valley Leadership Group, Intel, Microsoft and other tech companies, contains $30 billion in production tax credits for U.S. manufacturing of batteries, solar panels, wind turbines and critical minerals processing. And it extends for 10 years a 30% federal tax credit for rooftop solar panels.

Not everyone is happy. Senate Republican leader Mitch McConnell, R-Kentucky, called the bill “a so-called climate bill that will have no meaningful impact on global temperatures whatsoever.”

Huffman said he will support the current version of the bill, but immediately work to undo the oil and gas leasing provisions.

Gopal’s organization calculated that for every 1 ton of carbon emissions from the new drilling, 24 tons would be saved from the bill’s green provisions, and that the bill would prevent up to 3,900 premature deaths from air pollution and create 1.5 million new jobs by 2030.