Year end COVID-19 relief/stimulus package includes sweeping energy provisions

The US$900 billion COVID-19 relief/stimulus package passed by Congress and signed by the President on December 27 includes sweeping energy provisions that constitute the most significant energy legislation passed by Congress in more than a decade. Among the energy-related provisions that were added to the massive package assembled by Congress in the last days of the 116th Congress are: 

• The Energy Act of 2020 and the Energy for the Environment Act together authorize approximately US$35 billion of federal spending on energy innovation and related initiatives. Provisions in the bill include:
  • Acceleration of energy and water efficiency in federal buildings and schools
  • Rebate programs to encourage replacement of energy inefficient motors and transformers
  • A program to encourage the availability of high assay low enriched uranium (HA-LEU) for domestic research and commercial use
  • Reauthorization of DOE’s Nuclear Research Program (ARDP) and other nuclear research programs
  • Milestone-based funding program for commercializing new fusion technologies
  • New and expanded fusion energy research programs
  • Limits on importing uranium from Russia
  • A new fusion energy research program
  • Research programs for water power, geothermal, wind, and solar energy
  • Reauthorization of ARPA-E
  • Reforms to the DOE loan guarantee program designed to remove the barriers to closing new loan guarantees, including a provision allowing for loan guarantee costs to be paid out of federal appropriations
  • Reauthorization of the DOE Weatherization Assistance Program

• Extensive provisions to encourage electricity grid modernization
  • A national goal to permit at least 25 gigawatts of renewable electricity on federal lands
  • A new DOE energy storage RD&D program including a storage materials recycling program
  • Extensive provisions to encourage electricity grid modernization
  • New DOE carbon capture, storage and utilization programs, including a commercial scale carbon capture technology demonstration program
  • A new DOE high efficiency turbine RD&D program for power and aviation use, focusing on using hydrogen and other renewable gas fuels
  • A study on blue hydrogen technology
  • A new DOE carbon removal research and demonstration program focused on methods and technologies for removing CO2 from the atmosphere at a large scale
  • A new DOE industrial emissions reduction technology development program
  • A new DOE Critical Minerals RD&D program to develop advanced separation technologies for extraction and recovery of critical materials from coal
  • A new DOE Critical Minerals Security program requiring the Executive Branch to designate a list of critical minerals, conduct resource assessments of such minerals, conduct research regarding production, recycling and alternatives to critical minerals, and for other related purposes
  • New DOE Smart Grid research, development and commercialization programs
  • Establishment of a DOE Office of Technology Transitions designed to encourage greater commercialization focus in DOE R&D programs

• Protecting Our Infrastructure of Pipelines Enhancing Safety (PIPES) Act of 2020 reauthorizes the Pipeline and Hazardous Materials Safety Administration and amends and enhances its authority as follows: 
  • Increases the minimum number of PHMSA’s inspection and enforcement personnel and provides for incentive pay to enhance PHMSA’s workforce development
  • Provides that PHMSA can collects fees related to safety and inspection reviews of certain LNG facilities directly from the facility
  • Directs PHMSA to study its research and development capabilities and whether an independent pipeline safety testing facility could improve capabilities
  • Codifies and adds to existing due process procedures and protections related to the imposition of civil penalties
  • Requires PHMSA to create rules requiring operators of natural gas gathering, transmission, and distribution pipelines to conduct methane leak detection and repair programs
  • Requires that the inspection and repair programs of gas and hazardous liquid pipelines must meet the new leak detection and repair requirements, including for methane
  • Directs PHMSA to conduct a rulemaking to establish safety requirements for idled pipelines
  • Authorizes a new risk-based regulatory system for large-scale LNG facilities and increases civil penalties for violations
  • Requires the National Academies of Science to study potential standards for installation of automatic and remote-controlled shut-off valves on existing pipelines located in high consequence and unusually sensitive areas
  • Requires PHMSA to update its regulations to specify that coastal beaches, certain coastal waters, and the Great Lakes, are unusually sensitive areas
  • Directs PHMSA to update regulations related to emergency response plans
  • Requires PHMSA to issue regulations that require distribution pipeline operators  to complete maps and records of critical pressure control infrastructure
• Tax Extenders – Most but not all special energy tax credits and other preferences that were expiring at the end of 2020 are extended at least a year (2 years in some cases); some are made permanent. Highlights among these provisions include:
  • Energy Efficient Commercial Buildings Deduction made permanent
  • Extension of renewable electricity Production Tax Credit (PTC) for projects under construction by the end of 2021;  Wind PTC is extended for 2021 at 60 percent of full value
  • Extension of Energy Investment Tax Credit (ITC) at 26 percent for solar and other technologies that begin construction by the end of 2022, and at 22 percent for such projects that begin construction by the end of 2023 (and at 10 percent for solar in years thereafter).  Projects must be placed in service by the end of 2025 to qualify for the credit levels higher than 10%
  • Extension of the ITC at the full 30 percent level for offshore wind facilities that begin construction through the end of 2025
  • Waste Energy Recovery Property (generating electricity from waste heat from buildings or equipment, with maximum capacity of 50 MW) eligible for ITC at 26 percent for projects that begin construction through the end of 2022, and 22 percent for projects that begin construction by the end of 2023 
  • Extension of the ITC at 10 percent for geothermal heat pumps, microturbine and combined heat and power property that begin construction by the end of 2023
  • Extension of the US$1.01 per gallon second generation biofuel credit through the end of 2021
  • Extension of the fuel cell motor vehicle purchaser credit of US$4,000 - 40,000 through the end of 2021
  • Extension of the 30 percent alternative fuel refueling (including ethanol, biodiesel, natural gas, hydrogen and EV charging) property credit, capped at US$30,000 per commercial location, (US$1,000 residential) through the end of 2021
  • Extension of the 10 percent 2-wheeled plug-in vehicle purchaser tax credit, capped at US$2,500, through the end of 2021
  • Extension of US$0.50 per gallon credit for alternative fuels and alternative fuel mixtures through the end of 2021

Throughout January, we will issue a series of more detailed descriptions of some of the foregoing provisions and analyze how they might be implemented by the Biden Administration. As part of this series, on December 24 we posted a blog highlighting some of the nuclear provisions in the bill—you can read it here.

Authored by Greg Junge, Amy Roma, Jonathan Stoel, Hilary Tompkins, Jamie Wickett, Sachin Desai  and Mary Anne Sullivan