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Biden signs historic climate and clean energy bill into law

Biden signs historic climate and clean energy bill into law
President Joe Biden signed into law on Aug. 16 the Inflation Reduction Act-- legislation that provides $369 billion for clean energy and climate change mitigation. (Courtesy: White House)

President Joe Biden has signed into law the most significant piece of legislation supporting clean energy and climate change mitigation in U.S. history.

The Inflation Reduction Act stands to devote $369 billion to clean energy incentives, energy efficiency, green fuels, and more— actions researchers say could bring the U.S. in line with its Paris Agreement goal of reducing greenhouse gas emissions by 40% from 2005 levels.

"With this law, the American people won and the special interests lost," Biden said at a bill signing ceremony on Aug. 16.

"For more than a century, our tax code has been weighted to promote fossil fuels, but now we’re just a presidential signature away from a level playing field that will unleash dramatic clean energy growth," said Gregory Wetstone, CEO of the American Council on Renewable Energy. "We cannot say that this bill alone will achieve our climate goals, but for the first time, it puts us on the path."

Abigail Ross Hopper, CEO of the Solar Energy Industries Association, called the Inflation Reduction Act "the most transformational clean energy package in history."

The Democrat-controlled House took action on the budget reconciliation package Friday after the bill already cleared the more precarious Senate last week.

President Joe Biden said he plans to sign the bill into law next week.

Energy Secretary Jennifer Granholm, Sen. Ron Wyden (D-OR), and Sen. Jeff Merkley (D-OR) toured the ESS iron flow battery manufacturing facility in Oregon on Aug. 9 to tout the impact of the bill on clean energy technologies, like long-duration energy storage.

“Innovative, long-duration energy storage technologies like ESS's iron flow batteries, built here in Oregon, can play a critical role in addressing the climate crisis and decarbonizing our grid," Merkley said. "The Inflation Reduction Act is the first step in building a resilient, low-carbon energy system that delivers real opportunity for Oregonians and Americans.”

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Arguably the important slice of the Inflation Reduction Act for clean energy proponents is the 10-year extension of the Investment Tax Credit and Production Tax Credit for solar, wind, geothermal, and hydro, which gives project developers and investors long-term market certainty.

Additionally, the bill expands ITC eligibility to include standalone energy storage projects— a perceived gamechanger for the industry and companies like ESS.

“The iron flow batteries being built by ESS Inc., are at the cutting edge of long-duration, sustainable battery technology, and they are being manufactured by workers right here in Oregon," Oregon Gov. Kate Brown said while touring the ESS facility last week.

Clean fuels get a boost

Honeywell UOP Sustainable Aviation Fuels (Courtesy: Honeywell UOP)

The Inflation Reduction Act would provide incentives for nascent technologies critical to decarbonizing areas of the economy, like aviation, that can't be addressed simply by swapping in clean electricity.

Producers or airlines would be eligible for a credit of $1.25 per gallon of SAF plus up to an additional 50 cents per gallon for each percentage point of lifecycle greenhouse gas emissions reduced, as compared to conventional jet fuel.

The Inflation Reduction Act defines the emissions reduction credit will be calculated based on "the most recent Carbon Offsetting and Re9 duction Scheme for International Aviation which has 10 been adopted by the International Civil Aviation Organization with the agreement of the United States" or a similar methodology.

To be eligible, the SAF must be produced in the U.S.

California-based renewable fuels producer Aemetis welcomes the boost.

The company is developing a renewable jet/diesel plant on a 125-acre former U.S. Army Ammunition production plant site in Riverbank, California. Aemetis has signed SAF offtake agreements with Delta, JetBlue, Alaska Airlines, Finnair, Japan Airlines, and others.

Eric McAfee, CEO of California-based renewable fuels producer Aemetis, said the incentives for SAF could lead to "the rapid growth of renewable fuels and carbon sequestration, reducing air pollution including aromatics, methane, and CO2 emissions.”

A spokesperson for Honeywell likewise said that the credits for SAF "could help close the gap on cost between SAF and traditional jet fuel and spur U.S. development of SAF infrastructure.”

The hard-to-abate aviation sector accounts for 9-12% of U.S. transportation greenhouse gas emissions annually, according to the U.S. Environmental Protection Agency.

While the technology to produce SAF exists today, global supply is only about 1% of demand. In 2018, about two million gallons of SAF were produced, according to the Energy Department, while global demand was estimated at 106 million gallons of conventional jet fuel in 2020.

Green fuels producer World Energy has a goal of producing 1 billion gallons of SAF by 2030.

"The United States’ leadership now stands to be a catalyst for a global acceleration for energy transition through the scaling of SAF, low-carbon hydrogen, renewable natural gas, biomass-based diesel fuels, and important new processes including carbon capture for sequestration or reuse," World Energy CEO Gene Gebolys told Renewable Energy World.

"This is a huge step forward in the race to transition to a low-carbon energy future.”

Some leading SAF producers, like Neste, are hoping for more long-term certainty down the road.

While Neste US president Chris Cooper welcomed the credits for SAF in the Inflation Reduction Act, he expressed concern that "narrowing eligibility for these credits after 2024 sends the wrong signal to low-carbon fuel producers and to end-users."

"A long-term, stable incentive is needed to speed the transition away from fossil fuels," he added.

On an otherwise normal flight from Chicago's O'Hare International Airport to Washington, D.C.'s Reagan National Airport on Wednesday, a United 737 Max 8 passenger flight operated with 100% sustainable aviation fuel -- a first, and monumental, step for the aviation industry. (Courtesy: United)

Airlines, in support of their own decarbonization goals, are driving much of the transition to cleaner fuels.

Currently, airlines are only permitted to use a maximum of 50% SAF. Last December, a United 737 Max completed a demonstration flight from Chicago's O'Hare International Airport to Washington, D.C.'s Reagan National Airport using 100% SAF.

Boeing, CFM International, Virent, World Energy, and United partnered on the 612-mile demonstration flight, which emitted an estimated 75% less CO2 than a flight using traditional jet fuel, the companies said. The flight used 500 gallons of SAF in one engine and an equal amount of traditional jet fuel in the other.

The demonstration flight aimed to prove that there are no operational differences between SAF and traditional jet fuel and offer a launching point for the resource to scale.

In addition to the demonstration flight accomplishment, United announced a corporate partnership with the goal of purchasing 7.1 million gallons of SAF in 2021.

Earlier that year, Airbus, Dassault Aviation, ONERA, the French Ministry of Transports, and Safran launched the first-in-flight study of a single-aisle aircraft running on unblended SAF provided by TotalEnergies.