Democrats not yet ready to trim climate ambitions despite Manchin blow

“We have no choice but to forge a path forward. The planet is warming and we are already experiencing violently weird weather all the time,” Sen. Brian Schatz (D-Hawaii) told POLITICO. “It’s no secret that Joe Manchin has views on climate action that differ from many of us.”

For now, Democrats are committed to reconfiguring a sweeping climate package centered on clean energy tax incentives rather than pushing through smaller potentially agreeable policies through regular order with Republican votes. But the bill faces an uncertain future heading into a midterm election year when it is usually difficult to pass major legislation.

“This wasn’t the last word. Tinker around the edges, but let’s figure this out to get this done,” Rep. Kathy Castor (D-Fla.), chair of the House Select Committee on the Climate Crisis, told POLITICO. “There is common ground on investing in lower cost clean energy, especially with the tax package.”

Despite Manchin’s most recent proclamations, Democrats and environmental activists following negotiations say the gap with the West Virginia moderate on climate provisions is narrower compared with other policy areas of President Joe Biden’s Build Back Better agenda.

“BBB is not dead. It is not the end of the road,” said Tiernan Sittenfeld, senior vice president of government affairs at League of Conservation Voters. “There’s no sugarcoating that we are very disappointed in what Senator Manchin said yesterday. But we believe it is just too important and we’re too close, and we absolutely need this once-in-a-generation progress.”

Indeed, Manchin made a counter-offer to the White House last week saying he would accept a $1.8 trillion package spending hundreds of billions on addressing climate change, while nixing other policies such as the expanded child tax credit, according to The Washington Post.

“We just did the work and worked with his staff and did so in good faith over a really long period of time and had dozens of hours of good faith negotiations,” said Schatz, who added he spoke with Manchin on the climate elements as recently as Sunday. “I am not saying we were done, but we were very nearly done, so that puts us in a better position to move forward on climate.”

That means Democrats are unlikely to cut climate change from their policy menu even if they are forced to narrow the package and revamp the time frames for the remaining elements to address Manchin’s concerns about budget gimmicks.

Democrats may be required to make difficult choices on what provisions to keep, Rep. Paul Tonko (D-N.Y.) told POLITICO.

“The elements of Build Back Better are very important, all of them,” he said. “But I want us to get climate done to the best of our ability,” added Tonko, who chairs the Energy and Commerce Committee’s environment and climate change subcommittee.

Manchin’s objections to certain provisions of Democrats’ climate plans were well-documented, particularly any policy he viewed as “punitive” to the oil and gas industry, putting the fate of Democrats’ methane fee on the line. But Senate negotiators exerted confidence for weeks that they could reach a middle ground with Manchin on the fee.

Manchin also opposed tax credits supporting the purchase of electric vehicles that would increase the incentive if the car is made by union workers. He signaled other concerns about the electric vehicle credits in a radio interview with West Virginia MetroNews on Monday.

“Why are we allowing someone that makes $500,000 to get a discount on an electric vehicle? That doesn’t make any sense to me at all,” Manchin said.

Manchin’s office did not respond to requests for additional comment.

But Democrats and climate activists are quick to point out that Manchin has been less publicly critical of the clean energy tax credits, which they take as a sign that he could support a version of the House-passed green energy tax package.

“It’s still somewhat a open question of which aspects of the climate provisions he is most opposed to,” said Christy Goldfuss, senior vice president of energy and environment policy at the Center for American Progress. But she added Manchin has not seemed “to ever point his ire at the overall power sector tax credits.”

The House credits are extended over a decade and include expansions of already existing credits, which is notable given Manchin has called on Democratic leaders to revamp the bill to fund programs for 10 years and offset the cost over that time frame.

The bill passed by the House earlier this year included $320 billion in incentives that would expand existing tax credits for wind and solar, while also providing subsidies for technologies Manchin has long favored, including nuclear power, clean hydrogen and carbon capture for use on fossil fuel plants.

Democrats could be forced to downsize clean energy credits to Manchin’s interest in a smaller package, but it’s unclear what cuts or changes would look like.

Multiple advocacy group officials who follow the negotiations told POLITICO that Manchin has asked questions about the direct pay element of the package, but it’s not seen as a red line.

Several of the House-passed tax incentives, including the investment and production tax credits and the carbon capture and sequestration credit, would be eligible for “direct pay,” meaning they would be fully refundable. That in turn would make clean energy projects less reliant on the sluggish tax equity market.

Clean energy advocates have long pointed to the direct pay option as crucial for the long-term future of the industry since it would allow entities with little or no tax liability to utilize the credits.

Some liberal Democrats, though, are tired of waiting for Manchin to dictate legislation he can support.

Progressive Caucus Chair Rep. Pramila Jayapal (D-Wash.) said Monday that she wants the Biden administration to instead take executive action on climate change, among other issues.

“I think, at this point, we should not wait for that legislative path for the president to take action,” Jayapal said in a call with reporters.

That path, however, could prove problematic for climate action, given that it could be undone by the next presidential administration.

Activists are warning Biden and Democrats that not advancing climate action could risk enthusiasm from base voters in the midterm elections next year. Climate is a top priority of young Democrats, polls have repeatedly shown.

“It will be absolutely impossible for us to convince young people to come out to vote if Joe Biden doesn’t do anything on climate this coming year,” said Deirdre Shelly, campaign director of the Sunrise Movement.

Matthew Choi contributed to this report.