On March 31, 2021, the Biden Administration released in broad brushstrokes its plan to address the country’s infrastructure.1 The “American Jobs Plan” calls for a grand total of more than $2 trillion in federal investment emphasizing infrastructure, a cornerstone of President Biden’s campaign trail pitch. The plan represents Biden’s second effort at major spending legislation, after the COVID relief bill enacted last month. It takes a broad view of what constitutes “infrastructure” and dovetails with President Biden’s other stated priorities, including climate change.
Repair roads and bridges
President Biden’s plan includes $115 billion to improve bridges, highways, and roads in critical need of repair. It focuses on the most economically significant bridges in need of reconstruction and the 10,000 smaller bridges in greatest disrepair. It will also target 20,000 miles of other roads with significant repair needs. In all of this, the plan calls for “fixing them right” by pairing repairs with improvements to safety and greater resilience, including from the anticipated impacts of climate change. For example, the plan includes provisions aimed at reducing congestion and creating new facilities for pedestrians and cyclists in an effort to improve greenhouse gas emissions from the transportation sector. In addition, the plan includes $20 billion to expand existing road safety programs and establish a new “Safe Streets for All” program focused on reducing crashes and fatalities, particularly for cyclists and pedestrians.
Major investment in electric vehicle market
The plan further links infrastructure upgrades to tackling climate change with a proposed $174 billion investment in electric vehicles (EVs) to incentivize automakers and suppliers to transition to the manufacture of EVs and batteries. The automobile industry, for its part, signaled in a letter to President Biden last week its willingness to work toward the EV transition, stating that automakers and suppliers expect to invest $250 billion in electrification by 2023.
To foster consumer demand for EVs, the infrastructure package proposes funding for point-of-sale rebates and tax incentives for EV-buying consumers. And, perhaps as important as any mechanism affecting the price of EVs, the plan calls for developing a national network of 500,000 EV chargers by 2030. A robust network of charging stations is needed to address longstanding consumer concerns over the ease of charging EVs and to support the anticipated increase in the number of EVs on the road over the next decade. The buildout of half a million charging stations, however, raises a host of related issues, including:
- environmental justice concerns, depending on where charging stations are sited;
- privacy concerns, as stations generate data on vehicle whereabouts and driver behavior;
- regulatory concerns, such as who has jurisdiction over EV charging stations that operate as grid resources;
- intellectual property rights related to adapters and other EV charging station components;
- “green” claims available to businesses that provide EV charging;
- contamination concerns stemming from underground storage tank decommissioning, as existing gas stations transition to charging stations; and
- tax implications for charging stations that generate income at property owned by real estate investment trusts (REITs).
Upgrade the electric grid and incentivize clean energy
The plan also allocates $100 billion to “reenergize America’s power infrastructure.” A central component of that effort calls for tax incentives to mobilize private capital and a new office within the Department of Energy—the Grid Deployment Authority—to spur buildout of new, high voltage transmission lines to increase grid resiliency and interconnection among existing regional grids. Concern about resiliency stems, in part, from climate change and its anticipated impacts, as record-setting hurricanes this past summer and fall and the recent power outages in Texas following a rare winter storm have shown.
And new transmission lines will be key to connecting expanding renewable energy generation with the demand for electricity. For example, lack of transmission capacity is one of the biggest challenges facing the offshore wind industry, particularly at onshore delivery points where there is often too much congestion. Even before President Biden’s infrastructure announcement, the need to stimulate transmission development has been in sharp focus, since the Federal Energy Regulatory Commission (FERC) issued a proposed transmission incentives policy more than a year ago.2 While it is not clear that FERC’s rulemaking process is progressing, the need for transmission incentives remains a key piece of the puzzle for clean energy development. And even with the proper incentives in place, access to public lands for siting transmission lines will be a crucial component of building this necessary infrastructure.
In addition to transmission, the plan addresses energy generation and transmission, incentivizing “clean energy” (renewable and other low- or no-emission sources of energy) and energy storage through the extension of existing tax credits and clean energy grants to state, local, and tribal governments. The plan also calls for federal investment in decarbonized hydrogen and carbon capture demonstration projects, in an effort to push cutting-edge technologies that can contribute to meeting the Administration’s emission reduction targets.
Other provisions that address climate change
The infrastructure plan aims to reduce carbon emissions in other ways, too. There are provisions to incorporate energy efficiency—through tax credits, funding, and grants—in the broader effort of building or retrofitting more than two million homes, modernizing public schools, and upgrading child care facilities. The plan also would allocate $35 billion for research on technological solutions to climate change, including the launch of a climate-focused version of the Advanced Research Projects Agency, dubbed “ARPA-C.” An additional $46 billion of federal procurement spending would be focused on clean energy technologies. And the plan calls for eliminating existing tax breaks for the fossil fuel industry, both as a means to fund the plan and to reduce carbon emissions.
Where the plan goes from here
President Biden’s plan last week represents his opening bid and kicks off what is likely to be a lengthy process in Congress. Now, Democratic lawmakers will draft the bill’s actual text, filling in the details around the plan’s broad policy pronouncements. President Biden has designated five cabinet secretaries—Transportation Secretary Pete Buttigieg, Energy Secretary Jennifer Granholm, Housing and Urban Development Secretary Marcia Fudge, Labor Secretary Marty Walsh, and Commerce Secretary Gina Raimondo—to push the plan through Congress. Democrats hope to make substantial progress on the bill by summer but acknowledge that it could take longer. Press secretary Jen Psaki said last week that the White House would “like to see progress by Memorial Day” with approval “by the summer,”3 while House Speaker Nancy Pelosi said her goal is to pass the legislation by July 4.
Members of Congress have already begun weighing in. Among Democrats, Senate Majority Leader Chuck Schumer said he “look[ed] forward to working with President Biden to pass a big, bold plan that will drive America forward for decades to come,” highlighting the plan’s investments in clean energy.4 Progressive Democrats such as Representatives Pramila Jayapal and Alexandria Ocasio-Cortez, meanwhile, said the infrastructure plan should be even larger. And moderate swing vote Senator Joe Manchin said he would not support the plan, as is, and voiced specific opposition to increasing the corporate tax rate from 21 percent to 28 percent, offering 25 percent as a compromise.
As for the Republicans, Senate Minority Leader Mitch McConnell announced his opposition to the plan signaling that the party will, at least initially, withhold their support. Some Republicans have said they could support pieces of the plan, especially those that line up with the more traditional aspects of infrastructure policy, such as the investments in roads and bridges. Republicans oppose, in particular, the corporate tax increases Biden proposes to pay for the bill.
To secure the bill’s passage in the Senate without Republican support, Democrats will likely have to rely on budget reconciliation, the procedural tool that allows the majority party to bypass the 60-vote filibuster threshold and pass a bill with only a simple majority. Proceeding to move such comprehensive legislation as part of the budget reconciliation process will keep Democrats from including any non-budgetary policies that would not pass the Byrd Rule, and will all but ensure a Democrat-only effort.
Because only one budget reconciliation bill can typically be adopted for a given fiscal year, and Democrats already passed President Biden’s COVID relief package using budget reconciliation this fiscal year, they could adopt the infrastructure plan as fiscal year 2022’s reconciliation bill. Democrats could also seek to pass one or more additional measures in the current fiscal year that “revise” the first reconciliation bill to include pieces of the infrastructure plan, a path that, according to Senator Schumer, the Senate parliamentarian has already blessed. If Democrats have additional opportunities to use budget reconciliation, that could take some political pressure off the party to include more controversial items in an initial infrastructure package.
Given the lengthy road ahead, significant opportunity exists to influence the final bill. Particularly because Democrats can afford to lose only a few House votes and no Senate votes from their caucus, members of both chambers may find they have significant leverage to secure changes to the bill in exchange for their support. As the bill is developed, it will be important for companies in relevant industries to remain abreast of changes to the bill and opportunities to shape those changes.