March 11, 2018

Democrats Release Infrastructure Plan With $80 Billion for Grid Upgrades

The plan includes funding for energy storage, smart grid technologies, microgrids and electric vehicles—paid for by reversing parts of the Republican tax bill.

Senate Democrats released a $1 trillion infrastructure plan Wednesday framed as a way to give Republican "tax giveaways" for the wealthy back to the American people.

While the plan is unlikely to be embraced by President Trump or gain traction in a GOP-controlled Congress, it serves as a meaningful policy document as the nation heads into a grueling midterm election season.

"Our plan will improve the daily lives of millions of American families by creating a 21st century transportation network, rebuilding water systems and schools, making our electric system stronger and our communities more resilient, and much more," the Democrat plan states. "And we will make these critical investments without undermining important environmental protections."

The White House unveiled a $200 billion infrastructure plan last month that sought to “stimulate at least $1.5 trillion in new investment over the next 10 years,” largely from local and private sources. Many environmental and clean energy groups opposed the plan, which they say is damaging or does nothing to improve U.S. health and prosperity. The plan is also facing strong pushback from local lawmakers, economists and even some in Trump's own party over how to pay for it. 

Democrats took a different tack by boosting federal spending and paying for it through additional tax reform. Major ticket items include $140 billion to repair roads and bridges, $115 billion for water and sewer infrastructure, $115 billion to update public transportation, and $40 billion to enable universal high-speed internet access.

For the power and cleantech sectors, the proposal includes an attractive $80 billion to "bring innovation to America's energy grid." That funding would go toward research, development and demonstration programs for "energy storage and other advanced grid technologies, including microgrids and distribution-level investments" and would "help integrate more renewable energy onto the grid, empower consumers, improve the security of the grid, and help meet electricity demand."

Smart buildings, smart transportation systems and smart grid technologies would also benefit from the $80 billion carve-out. In addition, the federal government would invest directly in advanced building management and controls at government-owned facilities under the Democratic plan, which states that smart technologies have the potential to increase U.S. GDP by 25 percent to 40 percent by 2030.

The plan also cites $300 billion in U.S. financial losses last year due to natural disasters, which Democrats say justifies increased grid resilience spending. The proposal goes on to highlight Democrat lawmakers' desire to boost investments in high-efficiency transmission lines, efficiency upgrades, and federally owned assets, including the Bonneville Power Administration and the Tennessee Valley Authority. President Trump's infrastructure plan would have privatized those assets. 

Policy measures accompanying the Democratic infrastructure budget include consolidating almost all existing renewable energy tax incentives into three new provisions that provide "a dramatically simpler set of long-term, performance-based energy incentives that are technology-neutral and promote clean energy in the United States." Democrats also proposed new incentives based on performance, rather than specific technologies.

The document includes the following policy changes:

  • Incentives for clean electricity: A technology-neutral tax credit for domestic production of clean electricity. This would be open to all resources, based on a simple rule: the cleaner the facility, the larger the credit. It would be available as either a production tax credit of up to 2.3 cents per kilowatt-hour or an investment tax credit of up to 30 percent. The credit would also be available for carbon-capture equipment, energy storage, and investments in grid security and resiliency to further reduce emissions and increase grid reliability.

  • Incentives for energy conservation: A performance-based tax credit for energy-efficient homes and tax deduction for energy efficient commercial buildings -- the more energy conserved, the larger the incentive. The incentives promote energy-efficient construction of new buildings, as well as retrofits to existing buildings, encouraging rehabilitations to reduce energy consumption.

  • Incentives for clean transportation fuel: A technology-neutral tax credit for domestic production of clean transportation fuel. Again, this would be open to all resources and be based on the rule: the cleaner the fuel, the larger the credit. This would provide a production tax credit of up to $1 per gallon. The existing tax credit for fuel cell vehicles would be made permanent, and the per-manufacturer limitation for the electric vehicle tax credit would be eliminated, accelerating the transition to a cleaner transportation system.

Furthermore, under a separate $30 billion effort to promote innovation transportation solutions, the Democratic plan calls for $3 billion for EV charging infrastructure and refueling corridors for hydrogen, propane and natural gas. 

To pay for the $1 trillion plan, Democrats propose reversing certain tax breaks. For instance, the corporate tax rate, which was slashed from 35 percent to 21 percent under the Republican plan, would climb back to 25 percent under the Democratic plan. Democrats would also restore the estate tax exemption to $11 million for couples, after the GOP bill doubled it.

Environment and clean energy groups gave a warm greeting to the Senate proposal.

"With this proposal, Senate Democrats are demonstrating what real leadership on infrastructure looks like: a tangible federal investment that drives us towards a clean energy future, plans for a changing climate, protects our natural resources and makes smart transportation choices," said Sara Chieffo, vice president for government affairs at the League of Conservation Voters. "We know that we don't need to sacrifice our environmental safeguards in order to boost our nation's infrastructure."

Stephanie Gidigbi, senior adviser to the Natural Resources Defense Council, called the plan "a genuine 21st century infrastructure proposal."

While both political parties agree the U.S. is in desperate need of an infrastructure overhaul, paying for it remains a sticking point. Some business groups say it's imperative to raise the gas tax in order to pay for infrastructure upgrades, but the idea has been panned by Republicans. GOP lawmakers are also rejecting the Senate Democrats' latest tax reform proposal to fund roads, waterways and the grid.

“If Chuck Schumer and the Senate Democrats spent more time working with Republicans on infrastructure and less time thinking of new ways to raise taxes on hard-working Americans, we would be making more progress,” said U.S. Senator John Barrasso, chairman of the Senate Committee on Environment and Public Works, in a statement Wednesday.

“More than 90 percent of American workers have seen more money in their take-home paychecks because of the tax relief law," he said. "Now Senate Democrats want to take their hard-earned money away from them."

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