Finish the job: Congress passed infrastructure package, but BBB investments are still needed

In 2021, Congress passed the Infrastructure Investment and Jobs Act — including around $60 billion for energy infrastructure such as transmission lines, electric vehicle (EV) charging, building weatherization and demonstration projects for new technologies like hydrogen, carbon capture and nuclear energy. This latest effort builds on the major investments already made in 2020 for clean energy innovation — spearheaded by Sens. Murkowski (R-Alaska) and Manchin (D-W.Va.)  on the Senate Energy and Natural Resource Committee.

All of that funding is sorely needed to improve the resilience of our nation’s critical energy infrastructure and to bolster American competitiveness in the global competition to be a clean energy superpower. 

But now, Congress risks wasting the full potential of the infrastructure bill investments if they fail to follow up by passing the Build Back Better (BBB) Act. Why? Because the infrastructure package only addresses half of the clean energy market. It invests in developing and driving down the initial costs of emerging clean technologies and pilot projects, but it does nothing to build the commercial demand to get them to scale in the time it’s needed most. 

To solve climate change, we need an array of affordable clean energy technologies. If they are unaffordable and unavailable for use widely, the U.S. will not decarbonize fast enough. Without the follow-on investments in the Build Back Better Act, Congress will be, at best, hamstringing the large down payment they just made in the infrastructure package and, at worst, leading these promising investments to a dead end.

To bring any new energy technology to scale, concepts must be proved viable in laboratories across America. From there, promising technologies are further developed and demonstrated at scale. But any technology that makes it to the demonstration stage must cross the commercialization “valley of death” — the capital-intensive, high-stakes phase where technologies go from small-scale projects to widespread commercial deployment. At this stage, many technologies fail because commercial demand just isn’t there. It could be because of a lack of policy support, or because incumbent competitor technologies, like fossil fuels, are just too subsidized, artificially cheap and dominant in the market.

This is where the Build Back Better Act can change the game. The bill includes $555 billion in long-term grants, incentives and tax credits — which will lower costs and accelerate demand for clean technologies. 

Take for example EVs. The infrastructure package provides $7.5 billion for EV charging infrastructure. This investment recognizes the reality that the EV market will grow massively in the coming years — driven by historic consumer demand. But making these vehicles more affordable is key to wide-scale adoption — which is a core reason for the tax credits included in the Build Back Better Act.  

EV and electric car battery storage markets will emerge eventually, but without the Build Back Better Act provisions, they will grow slowly. This not only puts the U.S. at a disadvantage to countries who understand the importance of investing early, it impedes the nation’s ability to make the transition to cleaner, cheaper and more reliable energy on a timeframe necessary to address climate change.

This is also true for things like clean hydrogen — a technology that has the potential to offer cleaner production options for the heaviest industries.  

The infrastructure package provides $8 billion for at least four clean hydrogen demonstration hubs — providing the U.S. an opportunity to catch up with countries in Europe, Asia and the Middle East determined to shape the market. But, as noted above, the costs of clean hydrogen production are still higher than the costs of fossil hydrogen. The Build Back Better Act includes several crucial, complementary policies to kickstart sustainable growth of the clean hydrogen market and ensure U.S. industries keep pace with competitors abroad. That includes a first-of-its-kind hydrogen production tax credit, which would make it less expensive for end-users to buy clean hydrogen and use it for a wide variety of applications from transport to industry. Without these tax credits, the clean hydrogen infrastructure investments made under the bipartisan infrastructure package will have a harder time connecting their products to market.

Manchin, who championed clean energy investment in 2020 and in last year’s infrastructure package, suspended his participation in final negotiations on the Build Back Better Act recently. He cited concerns about the reliability of our electric power supply and accelerating a market beyond what technology allows. In some ways, these are understandable concerns that all lawmakers should consider when decision-making. But they also represent a misunderstanding about the current state of our energy system and what’s needed for its future. The truth is: The energy transition is happening far too slowly — too slowly to make the energy system more resilient, to address climate change and to help the U.S. secure a competitive advantage in these technologies of the future. 

Failure to comprehend our energy reality and the need to act suggests the U.S. is not willing to bet on its own future. If we let this moment pass, we may be unable to compete, to lead and to really invest in the vision of a zero-carbon, resilient economy. It also means that the billions of dollars recently invested in clean energy innovation could lead to promising technologies that may never make it to market. 

In the race to be the clean energy technology provider of the future, why would the U.S. handicap itself right out of the starting blocks? When it comes to clean energy, Build Back Better investments will complement the down payments made in the bipartisan infrastructure package. While some lawmakers continue asking if we can afford to spend money on the energy transition, we should instead be asking: How can we afford not to?

Sarah Ladislaw is director of RMI’s U.S. Program.

John Larsen is partner at Rhodium Group.

Energy Environment