United States: Biden's Infrastructure Law: Energy & Sustainability Implications

On November 15th, President Biden signed the Infrastructure Investment and Jobs Act ("the Law") into law. The historic infrastructure plan includes the single largest investment to address climate change in U.S. history.¹ The Law allocates billions of dollars to priority areas, including significant funding for the development of carbon capture infrastructure, alternative energy sources and technologies (including, without limitation, solar, geothermal, clean hydrogen, advanced nuclear, hydroelectric power and battery technologies), grid infrastructure, and electric vehicle infrastructure.

Carbon Capture Infrastructure

To mitigate the most severe impacts of the climate crisis, many scientists have emphasized the importance of not only reducing emissions, but also removing carbon from the atmosphere. Carbon capture technologies are crucial to this effort - and Biden's infrastructure bill may provide the funding necessary to realize carbon removal solutions. The Law allocates $2.54 billion for demonstration projects related to carbon capture at coal- and natural gas-fired operations and $937 million for large-scale carbon capture pilot projects. To address the significant need for infrastructure devoted to capturing CO2, the Law provides $3.5 billion over five years for projects that help to develop four regional hubs to capture CO2 from the atmosphere and then transport, store, and use it. An additional $600 million is available in fiscal 2022 and 2023, and $300 million each year thereafter through fiscal 2026, to provide loan guarantees and secured loans supporting infrastructure projects to transport CO2.²

Alternative Energy Sources

The Law provides approximately $6 billion for battery storage technologies, $125 million for hydroelectric production incentives, $553 million to incentivize capital improvements at hydroelectric facilities, and $500 million for five clean energy demonstration projects that use technologies such as solar, microgrids, geothermal, direct air capture, storage, and advanced nuclear.³

The funds for battery storage technologies are split between battery material processing grants and manufacturing and recycling grants, with additional funds available for a battery recycling prize and programs at the DOE.

The funds available for hydroelectric facilities and technologies come in the form of production incentives, efficiency improvements, maintenance and enhancement of hydroelectric facilities by improving grid resiliency, improving dam safety and environmental improvements. The Law allocates $125 million for hydroelectric production incentives under the Energy Policy Act of 2005, and $553 million to incentivize capital improvements at hydroelectric facilities. Additionally, the Law directs the Secretary of Energy to establish a demonstration project for a pumped storage hydropower project to facilitate the long-duration storage of intermittent renewable electricity. The Law authorizes $10 million for fiscal years 2022-2026.⁴

The clean energy demonstration projects aim to demonstrate the viability of clean energy projects on current and former mine land in a manner compatible with any existing operations.⁵ The DOE, in consultation with the Departments of Interior, EPA, and Labor Department, will solicit proposals for clean project funding.⁶

The Law also amends the Outer Continental Shelf Lands Act to permit offshore energy storage. This change allows for the incorporation of energy storage technologies into future offshore energy development, such as battery storage for offshore wind.⁷

Electric Vehicles

The Law aims to provide a transformative investment in the nation's electric vehicle (EV) infrastructure. It includes $7.5 billion over five years for grants for electric vehicle charging stations and alternative fuel investments, with the aim of building a network of 500,000 EV chargers along highway corridors and within communities to make EVs accessible to all Americans.⁸ The legislation sets forth an additional $200 million for a grant program to support the research and development of recycling as well as reuse applications for electric vehicle batteries.⁹ Additionally, the Law makes EV charging eligible for funding through the Surface Transportation Block Grant Programs (STBGP).¹⁰

The Law reflects the Biden Administration's commitment to reducing U.S. emissions by 50-52% from 2005 levels in 2030, create a 100% carbon pollution-free power sector by 2035, and achieve a net-zero economy by 2050.¹¹

What's Next?

Federal agencies, such as the DOE, the Department of Transportation and the EPA, among others, will implement the law by disbursing funds to not only states and municipalities, but also to certain private parties and non-government organizations through new programs, grants or prizes. In connection with the vast number of additional programs, grants and prizes made available through the Act, federal agencies, and state and local governments will need to plan for the added administrative burdens associated with such programs, grants and prizes by potentially adding jobs, creating additional internal policies and infrastructures, and reorganizing certain divisions or creating subdivisions of their various organizations. This process, including the deployment of funds and the subsequent implementation of funds, is expected to span months, if not years.

Additionally, not all governmental bodies will prioritize reduction of carbon emissions, or funding of research, development and deployment of alternative energy technologies or other climate technologies. While a substantial amount of funds are dedicated directly towards advancing the development, piloting or researching of the climate technologies described above, much of the funds are not allocated specifically toward such endeavors. State and local governments will have broad discretion to utilize the funds disbursed to them. Relevant industry participants, climate technology companies, and other private parties should follow the developments at relevant government agencies closely to determine if any funds will become available to them.

Footnotes

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