Democrats Hope to Pass Climate Bill After Failing a Decade Ago
In the face of GOP opposition, the Democratic Party emphasizes green investments as it seeks to avoid past pitfalls

WASHINGTON—The last time Democrats controlled the federal government, the party put forward a wide-ranging plan to put a price on carbon emissions, pushing to require companies to buy permits to emit carbon dioxide and other greenhouse gases under a so-called “cap-and-trade” program.

But the effort failed, with the bill foundering in the Senate after passing the House, and Democrats lost their majority in the House in the 2010 midterms.

More than a decade later, Democrats are once again hoping to use their control of the House, Senate, and White House to pass a major climate bill—and warning that they need to avoid the pitfalls of their last effort.

“The last time Democrats were in power in Washington, I watched as climate action took a back seat to other legislative priorities, wasting precious time and political power,” Sen. Ed Markey (D., Mass.), one of the authors of the House bill, said in a recent advocacy video. “We are in danger of making the same mistake.”

With narrower control of the House and Senate, more private-sector investment in clean energy, and a greater sense of urgency on climate change than in 2009, Democrats are taking a different tack in 2021.

Instead of an economywide cap on carbon emissions, many Democrats are emphasizing new investments in and incentives for clean energy, measures they hope to pass through a budget process called reconciliation. Using reconciliation will allow Democrats to avoid the 60-vote threshold for most bills in the Senate, but is also set to confine the policy they adopt to measures directly related to taxes and spending.

Democrats are “going to have to rely very heavily on spending and tax areas for a lot of what we need to do this year, it’s hard to imagine a regulatory program being enacted in this Congress, so we’ll have to use a lot of other tools,” said former Rep. Henry Waxman (D., Calif.), who was chairman of the House Energy and Commerce Committee and wrote the 2009 House bill with Mr. Markey. He is now chairman of a lobbying firm.

As part of a roughly $1 trillion bipartisan infrastructure agreement, lawmakers and the White House have proposed spending $7.5 billion on electric-vehicle infrastructure, $73 billion in overhauling the electrical grid, and nearly $50 billion in making infrastructure resilient to climate change. But some Democrats have called those measures insufficient, saying they will vote against the infrastructure proposal if it isn’t accompanied by a broader package that includes additional climate-change provisions.

Republicans have lined up in opposition to that broader package, which could also include spending on education, healthcare, and antipoverty programs. Senate Minority Leader Mitch McConnell (R., Ky.) has dismissed Democrats’ plans as “radical climate demands” that would harm the economy.

With no expected GOP support for the bill, any single Democrat in the Senate and any group of five Democrats in the House could block the legislation, meaning lawmakers from states with fossil-fuel interests such as Sen. Joe Manchin (D., W.Va.) will need to ultimately be on board. Mr. Manchin, who opposed his party’s cap-and-trade climate plans when he was running for Senate in 2010, has backed legislation that supports the development of clean-energy sources.

While the reconciliation package is still under construction, Democratic aides and lawmakers expect that it will include hundreds of billions worth of tax incentives for purchasing electric vehicles, conserving energy in buildings and producing clean electricity. Sen. Ron Wyden (D., Ore.), the chairman of the Senate Finance Committee, has proposed legislation overhauling existing tax incentives, making them long term and tying some of them directly to emissions reductions.

The White House and Democrats are also seeking to implement a clean-electricity standard, a requirement that utilities derive energy from carbon-free sources. In its original $2.3 trillion infrastructure plan, the White House said it would push for a standard requiring utilities use 100% clean power sources by 2035.

But lawmakers are anticipating they will have to make changes to the White House plan to comply with the rules of the reconciliation process. Sen. Tina Smith (D., Minn.) has been working to design a version of a clean-electricity standard that would create a system of penalties and incentives for utilities to move toward clean power over time. Lawmakers will likely be limited to setting a clean-electricity program for 10 years because of reconciliation, falling short of the White House’s 2035 timeline for all electricity coming from clean sources.

In a recent memo circulated in the Biden administration, Gina McCarthy, the national climate adviser, and Anita Dunn, a senior White House adviser, listed tax incentives, a clean-electricity standard and a $10 billion conservation effort as climate priorities to tackle under reconciliation.

Some lawmakers and climate advocates see a political advantage in exploring a variety of different options on climate policy—as well as pairing it with measures focused on education, healthcare and antipoverty programs—as they try to build unanimous Democratic support in the Senate. Focusing on new investments could also help Democrats head off attacks from Republicans that new regulations on emissions will drive up prices and harm the economy.

“We need to have a process that can get 50 votes and so we have been very focused not on a particular formulation but one that meets the ambition and meets the politics of the moment,” said Elizabeth Gore, the senior vice president for political affairs at the Environmental Defense Fund.

In 2009 and 2010, Democrats were muscling an economic stimulus bill and the Affordable Care Act through Congress—major projects that some Democrats say overshadowed the climate bill. Now, Democrats are watching closely to make sure the White House continues to advocate for climate policy in legislation this summer.

White House press secretary Jen Psaki said in a press briefing last week that the $1 trillion infrastructure bill would serve as a down payment on climate.

“The president will continue to advocate for, press for, work for even more on the climate, as he will in the reconciliation bill and process, moving forward,” she said.

As the White House and much of the party focuses on tax incentives and a clean-electricity standard, some lawmakers are hoping to revive a central idea from the 2009 bill: putting a price on carbon emissions. Some economists favor a carbon price as the most efficient method of driving down emissions.

“There’s a pretty strong phalanx of us in the Senate who don’t see how you can get there if you don’t include a price on carbon in the mix,” said Sen. Sheldon Whitehouse (D., R.I.), a member of the Senate Budget Committee, which will shape the contours of the package.

Mr. Whitehouse’s proposal, which a group of six other Senate Democrats have endorsed, would assess fees on emissions by large corporations, charging $54 per ton of carbon dioxide. He estimates it would raise roughly $2.4 trillion over 10 years; Democrats are considering a range of tax increases to pay for their agenda.

While Mr. Whitehouses’s plan puts a price on carbon, it differs from the 2009 effort, which would have granted permits to companies for emissions under the cap-and-trade system. Some environmentalists and activists have come to oppose cap-and-trade systems, arguing that they expose low-income and nonwhite Americans to more pollution.

Mr. Waxman, the former lawmaker and author of the 2009 effort, said that he doesn’t expect Congress will be able to adopt carbon pricing during the legislative push—even if he thinks it will be ultimately necessary to reduce emissions enough to avoid the worst consequences of climate change.

“We’re not going to spend our way out of this crisis,” he said.