latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/bipartisan-us-house-duo-pitches-innovate-first-regulate-later-climate-concept-56967204 content esgSubNav
In This List

Bipartisan US House duo pitches 'innovate first, regulate later' climate concept

Case Study

A Leading Renewable Energy Financing Bank Gains Important Insights on U.S.- based Opportunities

Blog

Exploring the Energy Dynamics of AI Datacenters: A Dual-Edged Sword

Blog

Despite turmoil, project finance remains keen on offshore wind

Case Study

An Energy Company Assesses Datacenter Demand for Renewable Energy


Bipartisan US House duo pitches 'innovate first, regulate later' climate concept

SNL Image

U.S. Reps. David McKinley, R-W.Va., left, and Kurt Schrader, D-Ore., discuss their new framework for climate change legislation on Feb. 6, 2020, in Washington, D.C.
Source: S&P Global Market Intelligence

Amid a partisan divide in the U.S. Congress over climate change policy, one coal-state Republican and a West Coast Democrat have joined forces to craft a framework for reducing greenhouse gas emissions from the power sector in the coming decades.

The concept, which the two lawmakers plan to turn into draft legislation soon, seeks to get around partisan gridlock on the issue by melding core concepts championed by each party for addressing climate change.

"The bottom line here is... that current proposals for reducing carbon emissions are going nowhere," U.S. Rep. Kurt Schrader, D-Ore., said during a Feb. 6 briefing with reporters in Washington, D.C. "We can either flail about and try to score political points or we can actually get something done."

On Jan. 30, Schrader and Rep. David McKinley, R-W.Va., published an opinion piece in USA Today outlining an approach for climate legislation that they intend to introduce in 2020. The plan calls for "a decade of public and private investments in clean energy innovation and infrastructure development, followed by new regulatory standards to ensure environmental and energy goals are met."

The "pragmatic approach," according to the two lawmakers, would fund Republicans' preferred method of lowering emissions through technological innovation while offering Democrats the backstop of new emissions regulations down the road if carbon output is not falling quickly enough. The plan, however, would not include a price on carbon emissions despite support for the concept from many Democrats, large companies and some Republicans.

"We expect complaints about our approach from both the far left and the far right, not to mention from economics professors," Schrader and McKinley said in their op-ed. "While many would prefer a broad tax on emissions, we do not believe it can get through Congress."

The two House members gave more details on their plan during the Feb. 6 briefing. The proposal would stall federal carbon emissions rules for power plants under the Clean Air Act for 10 years, during which the federal government would provide "tens of billions of dollars" to scale up and deploy carbon capture and sequestration, improved energy storage systems and other clean energy technologies, Schrader said. That spending will be "exponentially larger" than current federal appropriations for clean energy research, development and deployment, he added.

At the end of that decade, a federal, technology-neutral clean energy standard, or CES, would go into effect that they estimate will achieve an 80% reduction in emissions by 2050 and make the power sector 95% "clean" by 2050. The CES' compliance obligations would fall on load-serving entities, which will have the option of receiving and trading clean energy credits to meet the law's requirements.

During the ten years after the bill's passage, the federal government can act under the Clean Air Act or other authorities to reduce emissions if CES regulations are not formed, funds for innovation are not appropriated, or emissions in the power sector grow significantly. But the two lawmakers have yet to work out the Clean Air Act provisions of their proposal or potential enforcement mechanisms for load-serving entities to meet their obligations.

"Those are the things we've got to flesh out," McKinley said.

The West Virginia lawmaker admitted that some utilities he has talked with want more time before the CES takes effect but he compromised on 10 years to balance the demand for quicker action.

"We're just going to have to muscle our way through and try to sell the idea of innovate first, regulate later," McKinley said.

Looking ahead

McKinley and Schrader's plan takes a softer approach than other climate proposals that seek to immediately set binding clean energy or emissions reductions limits and achieve 100% carbon-free power by 2050. But they said their concept stands a better chance of passage than those bills while regulation-leery Republicans control the U.S. Senate and White House.

"I'm tired of messaging bills," McKinley said. The congressman said he has talked "conceptually" with House Republican Leader Kevin McCarthy about the proposal and that McCarthy had not ruled out attaching such legislation to a climate package that House GOP lawmakers may introduce.

Green groups may also warm to the proposal, with at least one prominent environmental organization applauding the pitch.

"This bipartisan collaboration is an important step," said Ben Longstreth, senior attorney and deputy director of the Natural Resources Defense Council's federal policy group and climate and energy program. "The fact that a West Virginia Republican and Oregon Democrat have teamed up reflects a potentially significant shift here in Washington."

But, Longstreth added, "We don't see any reason to wait to put standards in place."