In 2021, Congress passed the Infrastructure Investment and Jobs Act, including approximately $60 billion for energy infrastructure such as transmission lines, electric vehicle (EV) charging, weathering of buildings and demonstration projects of new technologies such as hydrogen, carbon capture and nuclear energy. This latest effort builds on the major investments already made in 2020 for clean energy innovation – led by Sens. Murkowski (R-Alaska) and Manchin (DW.Va.) on the Senate Energy and Natural Resources Committee.
All of this funding is critical to improving the resilience of our nation’s critical energy infrastructure and to strengthening America’s competitiveness in the global competition to become a clean energy superpower.
But now Congress risks squandering the full potential of investments in the infrastructure bill if it fails to follow through by passing the Build Back Better (BBB) Act. Why? Because the infrastructure package only covers half of the clean energy market. It invests in developing and lowering the initial costs of emerging clean technologies and pilot projects, but it does nothing to create the commercial demand to scale them when it is most needed.
To solve climate change, we need an array of clean and affordable energy technologies. If they are unaffordable and unavailable for large-scale use, the United States will not decarbonize fast enough. Without the follow-on investments in the Build Back Better Act, Congress will, at best, hamper the large down payment it has just made in the infrastructure package and, at worst, drive these promising investments to a dead end.
To scale any new energy technology, concepts must be proven viable in labs across America. From there, promising technologies are developed and demonstrated at scale. But any technology that makes it to the demonstration stage must traverse the “valley of death” of commercialization – the capital-intensive, high-stakes phase where technologies move from small-scale projects to large-scale commercial deployment. . At this point, many technologies fail because the commercial demand simply does not exist. This could be due to a lack of political support or because competing technologies in place, such as fossil fuels, are simply too subsidized, artificially cheap and dominant in the market.
This is where the Build Back Better Act can be a game changer. The bill includes $555 billion in long-term grants, incentives and tax credits, which will reduce costs and accelerate demand for clean technologies.
Take for example EVs. The infrastructure package provides $7.5 billion for electric vehicle charging infrastructure. This investment acknowledges the reality that the electric vehicle market will experience massive growth in the coming years, driven by historical consumer demand. But making these vehicles more affordable is key to widespread adoption — which is a big reason for the tax credits included in the Build Back Better Act.
Battery storage markets for electric vehicles and electric cars will eventually emerge, but without the provisions of the Build Back Better Act, they will grow slowly. This not only puts the United States at a disadvantage against countries that understand the importance of investing early, but hampers the nation’s ability to transition to cleaner, cheaper, and more reliable energy in the timeframe needed to combat climate change.
This is also true for things like clean hydrogen – a technology that has the potential to provide cleaner production options for heavier industries.
The infrastructure package provides $8 billion for at least four clean hydrogen demonstration centers, providing the United States with an opportunity to catch up with countries in Europe, Asia and the Middle East committed to shaping the Marlet. But, as noted above, the costs of producing clean hydrogen are always higher than the costs of fossil hydrogen. The Build Back Better Act includes several essential and complementary policies to kick-start sustainable clean hydrogen market growth and ensure U.S. industries keep pace with competitors abroad. This includes a first-of-its-kind hydrogen production tax credit that would make it cheaper for end users to buy clean hydrogen and use it for a wide variety of applications, from transportation to industry. Without these tax credits, clean hydrogen infrastructure investments made under the bipartisan infrastructure package will find it harder to connect their products to market.
Manchin, who championed clean energy investment in 2020 and last year’s infrastructure package, recently suspended his participation in final negotiations on the Build Back Better Act. He cited concerns about the reliability of our power supply and the acceleration of a market beyond what technology allows. In some ways, these are understandable concerns that all lawmakers should consider when making the decision. But they also represent a misunderstanding of the current state of our energy system and what is needed for its future. The truth is this: the energy transition is happening far too slowly – too slowly to make the energy system more resilient, to deal with climate change, and to help the United States secure a competitive advantage in these technologies of the future. .
The failure to understand our energy reality and the need to act suggests that the United States is unwilling to gamble on its own future. If we let this moment pass, we may be unable to compete, lead and truly invest in the vision of a resilient, carbon-free economy. It also means that the billions of dollars recently invested in clean energy innovation could lead to promising technologies that may never come to market.
In the race to be the clean energy technology provider of the future, why should the United States handicap itself from the start? On clean energy, Build Back Better investments will complement installments made under the bipartisan infrastructure package. While some lawmakers continue to wonder if we can afford to spend money on the energy transition, we should instead ask ourselves: how can we afford not to?
Sarah Ladislaw is RMI’s US Program Director.
John Larsen is a partner at Rhodium Group.