Bill calls for net-zero carbon dioxide emissions from the electric sector by 2050

Rep. Diana DeGette, D-Colo., on July 9 introduced legislation that seeks to achieve net-zero carbon dioxide emissions (CO2) from the electric sector by 2050 through the creation of a zero-emission electricity standard (ZEES).

The Clean Energy Innovation and Deployment Act of 2020 includes language that the American Public Power Association had recommended.

The bill would provide incentives to electric utilities for investments in clean energy and would also seek to protect low-income ratepayers through the expansion of the Low Income Home Energy Assistance Program (LIHEAP) and Weatherization Assistance Program (WAP).

Details on the ZEES

The bill would create a ZEES that would function like a clean energy standard. Beginning in 2022, electric utilities would submit zero-emission electricity credits (ZEECs) to the Secretary of Energy. Each ZEEC will represent one megawatt-hour of electricity generated without emitting CO2.

The legislation sets targets reducing CO2 emissions by 50 percent from 2005 levels by 2030 and getting to net-zero emissions no later than 2050. ZEECs would be tradable with other electric utilities.

Retail electricity suppliers would be required to submit ZEECs to the Secretary of Energy beginning in 2022. The amount of ZEECs required in 2022 and 2023 would be an average percent of zero-emission electricity sold by the electricity supplier from 2018-2020. Between 2024 and 2050, the required percentage of zero-emission electricity would increase by an even amount each year.

By 2050, retail electricity suppliers would have to sell 100 percent zero-emissions electricity.

ZEECs submitted to the Secretary beginning in 2024 and thereafter would be in amount representing a rolling average of zero-emission electricity sold over the previous three years.

Incentives for deployment of 100 percent zero-emission electricity

The bill would also create incentives to achieve net-zero emissions from the electric sector before 2050 through the creation of tax incentives and a Department of Energy grant program that would cover the costs of investments in zero-emitting generating units that replace CO2-emitting generation on a sliding scale.

For units that generate zero-emitting electricity before 2026, generators would receive a tax credit or grant to cover 50 percent of the cost of the generation. For those that do so before 2031, they would receive a tax credit or grant to cover 40 percent of the cost of the generation and for those that do so before 2038, they would receive a tax credit or grant to cover 30 percent of the cost of the generation.

The legislation would amend the Internal Revenue Code to create a Section 45U zero-emission electricity investment credit.

It defines a “qualified zero-emission electricity taxpayer” for a taxable year, as a taxpayer who “does not own a generating unit that emits…[CO2] at any point during the taxable year, and for such taxable year, owns non-emitting electricity generating units with a generating capacity of generating units owned by such taxpayer during the 5-year period ending on the date of enactment of this section.”

A qualified zero-emission electricity taxpayer would be able to transfer the zero-emission electricity acceleration tax credit to an eligible project partner.

Eligible project partners would include any person who:

  • Has an ownership interest in the qualified facility;
  • Provided equipment for or services in the construction of the qualified facility;
  • Purchases electricity from the qualified facility; or
  • Provides financing for such qualified facility

Low-income ratepayer protection

The bill also seeks to protect low-income ratepayers through an expansion of the WAP and reauthorization of LIHEAP.

The bill would amend the Energy Conservation and Production Act to reauthorize WAP at $350 million through fiscal year 2024. It would also expand the program to allow support for renewable energy technologies and other advanced energy technologies.

It would also amend the Low Income Home Energy Assistance Act to authorize LIHEAP through fiscal year 2030.

Bill includes language that APPA had recommended

The bill includes language that that APPA had recommended including language to:

  • Provide public power utilities with comparable incentives for energy-related tax credits;
  • Allow joint action agencies to take on the ZEES on behalf of their distribution utility members, and
  • Modify language in an earlier version of the bill that would have required credits derived from hydropower generation to take into consideration methane emissions from hydropower reservoirs.

Joy Ditto, President and CEO of APPA, said that APPA appreciates the effort by DeGette to draft climate legislation that recognizes the importance of all non-emitting resources, including hydropower and nuclear.

“Both resources will be needed as the electric sector continues its transition to cleaner generation,” Ditto said.

“APPA also appreciates that the legislation would ensure that public power utilities can benefit from energy-related tax credits. This important policy change would put public power utilities on a level-playing field with others in the sector and enable them to invest in renewable resources,” said Ditto.

“We thank Representative DeGette and her staff for their early outreach to APPA on the development of the Clean Energy Innovation and Deployment Act and their willingness to incorporate public power’s feedback into the legislation. APPA looks forward to continuing to work with the congresswoman on the development of climate policy,” she went on to say.