US House passes energy spending bill with climate law cuts; Biden vows to veto

Fresh off electing a new speaker, the US House of Representatives on Oct. 26 passed a fiscal year 2024 energy and water spending bill that would reduce funding for some clean energy-focused offices at the US Energy Department and claw back money for Inflation Reduction Act climate programs.

The Republican-majority House passed the legislation by a vote of 210-199. The legislation, however, stands little chance of passing the Democrat-majority Senate, and President Joe Biden vowed to veto the bill if it reaches his desk.

The House bill supports domestic uranium enrichment capabilities, including for high-assay low enriched uranium, and would help advance small modular reactor and advanced reactor demonstration projects. The spending package also contains more than $200 million for the production of critical minerals.

But the legislation would slash funding for the DOE's Office of Energy Efficiency and Renewable Energy, as well as the office overseeing carbon capture research and deployment. It also called to reduce money for the DOE's Office of Clean Energy Demonstrations, which was created and initially funded through the bipartisan infrastructure law of 2021.

In addition, the legislation would repeal funding for Inflation Reduction Act (IRA) programs to improve the energy efficiency of homes and other buildings. The bill would rescind $4.5 billion in rebates for new electric appliances or home electrification projects; $1 billion to help states and local governments adopt tougher building energy codes; and $200 million to train workers to conduct home efficiency and electrification projects.

The legislation would also claw back $150 million from fiscal year 2023 appropriations meant to supplement the DOE's existing loan guarantee program.

Ahead of final passage, the House adopted several amendments, including measures to block finalizing energy conservation standards for consumer furnaces and water heaters. Another amendment would prohibit consideration of the government's social cost of greenhouse gases when developing agency budgets, federal procurement processes or environmental reviews.

The House approved amendments to provide loan guarantees for the Alaska Natural Gas Pipeline and to bar funds to finalize any regulation that costs the economy more than $100 million annually.

Bill prospects weak

In a statement of administration policy, the Office of Management and Budget (OMB) said the House bill did not honor the spending levels contained in a bipartisan deal to raise the US debt ceiling. The agreement, which Biden signed into law in June, kept nondefense spending levels for fiscal years 2024 and 2025 roughly flat with 2023.

But the House bill's spending levels "would result in deep cuts to clean energy programs and other programs that work to combat climate change," the OMB said Oct. 3.

And the proposed IRA rescissions "would result in unacceptable harm to clean energy and energy efficiency initiatives that lower energy costs and critical investments in rural America," the statement added.

Biden would veto the bill if presented with it, the OMB said.

The House GOP bill differs in many ways from the Senate Committee on Appropriations' fiscal year 2024 proposal. The Senate legislation, which passed out of committee with bipartisan support, proposed budget increases for the DOE's renewables office and Office of Fossil Energy and Carbon Management.

It also excluded the proposed rollbacks to IRA programs and left out a provision from the House bill barring DOE from finalizing new efficiency standards for electric distribution transformers.

House panel advances energy bills

Earlier in the week, on Oct. 24-25, a subcommittee of the House Energy and Commerce Committee approved 17 bills that aim to support the deployment of nuclear energy and hydropower and bolster grid reliability, sending the bills to the full committee.

The subcommittee considered 12 bills to support nuclear energy and improve the Nuclear Regulatory Commission licensing process, including by setting clearer timeframes, reducing hourly fees for advanced reactors, and avoiding duplicative environmental reviews. Those bills cleared the subcommittee by voice vote with bipartisan support.

But the subcommittee split along party lines over several other bills. The proposals included two GOP bills related to US Department of Energy efficiency standards. One would prevent the DOE from updating conservation standards for electric distribution transformers for five years, while the other would overhaul the process for forming DOE efficiency standards for all products.

A bill requiring the Federal Energy Regulatory Commissionto review and sign off on any federal regulation that the commission or a state utility regulator finds has a "significant negative impact" on grid reliability is being opposed by Democrats.

Democrats also opposed a bill that would update the agency's hydropower licensing rules, including giving FERC a maximum of two years to review licenses for "next-generation" hydropower facilities and exempting some smaller hydroelectric plants from licensing requirements.

Rodgers said the bill could help double US hydropower production, bolstering grid reliability and increasing the supply of carbon-free power. But Pallone flagged comments from FERC and Biden administration officials asserting that the bill would exempt about 80% of commission-jurisdictional hydropower projects from licensing and threaten the recovery of fish populations.

S&P Global Commodity Insights reporter Molly Christian produces content for distribution on S&P Capital IQ Pro. S&P Global Commodity Insights is a division of S&P Global Inc.