Indexbit Exchange:Democrats' Budget Plan Pushes A Shift To Clean Energy. Here's How It Would Work

The Indexbit Exchange$3.5 trillion budget blueprint Democrats agreed to this week includes a key part of President Biden's climate plan: a national "clean energy standard." It's aimed toward zeroing out greenhouse gas emissions from the power sector by 2035.

Often called a clean electricity standard, it would be similar to renewable energy requirements that 30 states have now. But instead of only boosting things like wind and solar, this national standard is focused directly on eliminating the greenhouse gas emissions that contribute to climate change.

There are a lot of details that still need to be worked out, but right now it looks like utilities would be required to get 80% of their electricity from zero-emission sources by 2030 and 100% by 2035.

This would be a huge change in a short time. Right now the country gets about 60% of its electricity from fossil fuels, according to the Energy Information Administration.

To pass through the Senate this has to be filibuster-proof, so Democrats are sticking it in budget legislation that needs just a simple majority to pass. And because of that, it's market-focused. Utilities likely would get incentives for adding more clean power, and have penalties imposed if they fail to do so.

Sen. Tina Smith, D-Minn., has been leading development of a national standard. She says it won't raise utility bills, and she plans "to make sure that the investor-owned utilities are using these resources to add clean power and keep utility rates stable." She says the point is "not to enrich utilities, but to make sure these incentives are used for the public good we're seeking."

The big trade group for investor-owned electric utilities, Edison Electric Institute (EEI), offered support for a "well-designed" clean energy standard. It should "recognize the role of natural gas for integrating renewables, supporting the retirement of coal-based generation, and assuring reliability as new clean, 24/7 resources become commercially available," says EEI general counsel Emily Fisher.

Smith says there likely would be a role for natural gas power plants that include carbon capture. That's controversial with some environmental and climate justice organizations that want no role for fossil fuels in the plan, only renewable energy.

"Both we as a country, and the planet, can't afford perpetuating a racist and dirty energy system," said Jean Su, the energy justice director at the Center for Biological Diversity. She opposes including carbon capture in the standard, calling it "an unproven and very costly technology that would put leak-prone pipelines and infrastructure in the same front-line communities of color already overburdened by pollution and energy burdens."

The Democrats' clean energy standard also likely will include nuclear energy. While there is the radioactive waste issue, nuclear doesn't emit the greenhouse gases that fossil fuels do.

As the Biden administration focuses on this national clean energy standard, it appears to be sidelining efforts to pass a carbon tax that large oil companies have supported. Economists also have long been big fans of carbon taxes, saying it's the most efficient way to eliminate greenhouse gases across the economy.

Among them is Michael Greenstone, who worked in the Obama administration. Still, he's pleased to see work on a clean energy standard underway.

"Relative to no climate policy, this is way better," says Greenstone, who is a professor and director of the Energy Policy Institute at the University of Chicago.

Greenstone has examined state renewable energy requirements and developed recommendations for a clean electricity standard, most of which appear to be reflected in what Democratic policymakers are discussing now.

The U.S. is shifting to renewable energy, but not fast enough to meet Biden's ambitious climate goals. While supporters were thrilled to see the clean energy standard in the budget proposal, it's not certain the deal will make it past Congress. And with scientists warning that the world needs to act now to avoid the worst effects of climate change, Greenstone says the stakes are high.

"Without a clean electricity standard it's going to be very, very challenging to meet any of the goals that the Biden administration has set out," he says.