Senate Majority Leader Chuck Schumer announced an agreement with Sen. Joe Manchin on a narrow reconciliation bill that would provide $369 billion in climate-related provisions, including more than $20 billion for farm bill conservation assistance and additional incentives for low-carbon biofuels and rural electric co-ops.
The 725-page bill they agreed to resurrects key parts of President Joe Biden's Build Back Better that were intended to spur the increased use of climate-smart farming practices, including cover crops.
The legislation would provide $19.9 billion for four conservation programs over four years, plus another $1 billion for conservation technical assistance and $300 million to USDA's Natural Resources Conservation Service to measure the impact of agricultural practices on greenhouse gas emissions.
“The historic investments will lower costs for Americans, support jobs in rural America, and tackle the climate crisis,”said Senate Agriculture Committee Chairwoman Debbie Stabenow, D-Mich. “We are equipping farmers, foresters, and rural communities with the necessary tools and resources to be a part of the solution and grow their local economies at the same time.”
The Environmental Quality Incentives Program would get $8.45 billion, starting with $250 million in fiscal 2023, which begins Oct. 1 The Regional Conservation Partnership Program would receive $6.75 billion. Another $3.25 billion would go to the Conservation Stewardship Program. The Agricultural Conservation Easement Program would receive $1.4 billion.
With each program, USDA would be required to prioritize projects that "mitigate or address climate change through the management of agricultural production."
“USDA conservation programs are oversubscribed, and this funding would go a long way in helping more producers across our country implement conservation practices to improve their operations and make their lands more resilient to the changing climate," said Michael Crowder, president of the National Association of Conservation Districts.
The bill, dubbed the Inflation Reduction Act of 2022, also would create a new "clean fuels" tax credit for low-carbon biofuels while providing $500 million for biofuel infrastructure, plus new funding for the Rural Energy for America Program and rural electric co-ops. An additional $5 billion would be earmarked for forestry.
Some $9.7 billion is provided for electric co-ops to use for carbon-capture projects as well as to improve the "long-term resiliency, reliability and affordability of rural electric systems." Another provision would allow co-ops to directly benefit from renewable energy tax incentives rather than working through for-profit third parties.
The existing $1-a-gallon tax credit for biomass-based diesel, now set to expire this year, would be extended through 2024. The clean fuels credit, which would be tied to a fuel's reduction in greenhouse gas emissions relative to fossil fuels, would be in effect from 2025 through 2027.
A separate tax credit for sustainable aviation fuel would be created to run through 2024, when it would be replaced by the clean fuels credit. Industry experts believe the bill text would allow a wider variety of SAF feedstocks to qualify for the clean fuels credit than a previous version would have.
The biofuel infrastructure funding would build on the Higher Blends Infrastructure Incentives Program started by the Trump administration with $100 million in 2020, said Paul Winters, a spokesman for Clean Fuels Alliance America.
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The broader bill would raise $739 billion through new taxes or spending cuts, mostly by setting a minimum corporate income tax at 15% and allowing Medicare to negotiate prescription drug prices. At least $300 billion of the revenue would go toward reducing the deficit. In addition to the climate provisions, the bill also would extend Affordable Care Act subsidies.
Manchin, D-W.V., had blocked Senate action on the Build Back Better bill, arguing that it would worsen inflation. That bill included more than $20 billion for conservation programs as well as payments of $25 an acre to farmers who plant cover crops, a provision that didn't make it into the Schumer-Manchin deal.
In a statement describing his agreement with Schumer, Manchin said of the energy and climate provisions, “I support a plan that will advance a realistic energy and climate policy that lowers prices today and strategically invests in the long game. As the superpower of the world, it is vital we not undermine our superpower status by removing dependable and affordable fossil fuel energy before new technologies are ready to reliably carry the load.”
Biden endorsed the agreement. "We will improve our energy security and tackle the climate crisis – by providing tax credits and investments for energy projects. This will create thousands of new jobs and help lower energy costs in the future," he said of the energy provisions.
Schumer said the Senate would consider the bill next week. He and Manchin also said they had reached an agreement with Biden and House Speaker Nancy Pelosi, D-Calif., to pass federal permitting reform legislation. That measure would "ensure all energy infrastructure, from transmission to pipelines and export facilities, can be efficiently and responsibly built to deliver energy safely around the country and to our allies," Manchin said.
This story has been updated with details of the bill.
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