Democrats say they have path to deal on climate provisions in spending bill

Senate Democrats working on the climate provisions of the budget reconciliation package think they have a path to a deal that will include a methane fee and believe they will get buy-in from centrist Sen. Joe Manchin (D-W.Va.).

Democratic senators on Tuesday expressed optimism about nailing down an agreement on the bill’s climate provisions after several Democratic committee chairmen held a meeting on the issue at the Capitol on Monday evening. 

But while the methane fee is expected to be a part of the final package, a proposal to tax carbon emissions is viewed as much less likely.

Senate Majority Leader Charles Schumer (D-N.Y.) on Tuesday announced he feels confident that negotiators will be able to put together a “robust” package of climate proposals.

“There’s going to be a very strong, robust climate package. And our goal is to meet the president’s goal, and there are different ways to get there,” he said. 

Democrats involved in the climate talks say the provisions will focus on investing in clean energy instead of punishing polluters, though the methane fee will be included as well. 

“There’s an amount of money that the administration thinks will reduce emissions to a level they think is important for us to achieve and a level of investment in infrastructure and [research and development],” said a senator who attended Monday’s meeting. 

The senator said money for energy efficient infrastructure, research and development, and tax credits for clean and renewable energy production would be packaged along with the methane fee.

The carbon fee will be negotiated at a later date, possibly on the basis of legislation that passes the House, although House Democrats have so far shown less appetite for passing a carbon pricing plan than some key players in the Senate such as Finance Committee Chairman Ron Wyden (D-Ore.).

Senate Homeland Security Committee Chairman Gary Peters (D-Mich.), who attended Monday’s climate negotiations, said he feels optimistic about the methane fee being included.

“We had a very good conversation about it. It’s still in the mix,” he said. “We talked through it yesterday.”

Peters said Manchin, a key vote, was “very open to the conversation.” 

Senate Environment and Public Works Committee Chairman Tom Carper (D-Del.), who also attended the climate meeting, said that “we’ve had an ongoing conversation with a number of our colleagues, including with Sen. Manchin’s staff,” about the methane fee.

“There’s a strong interest in doing it, to figure out the smart way to do it,” he added.

Carper argued a methane fee would take a major step toward meeting President Biden’s climate goals.

Senate Commerce Committee Chairwoman Maria Cantwell (D-Wash.) said she expects “there will be something there” on a methane fee. 

Another Democratic senator briefed on the negotiations said the climate provisions are moving ahead on two tracks with the methane fee on a trajectory to being included in the final package and a carbon tax on a much less certain path. 

“The thing to pay attention to is we’ve been told is there will be two iterations. One is the climate spending piece, which is going on right now. … And once that’s settled, there will be a separate emissions review,” and that will be the chance to add a carbon tax, said the lawmaker. 

The senator said negotiators are already counting revenue produced by the methane fee to pay for spending the Environment and Public Works Committee is counting on being included in the package to incentivize renewable energy production. 

If the methane fee is yanked out of the package at the last moment, the Environment and Public Works (EPW) panel “would have to find other revenues.” 

“EPW has baked the money into its spending,” said the source.

A third Democratic senator briefed on the talks confirmed that the methane fee is expected to be part of the final package.

“It’s already baked,” the lawmaker said.

The source also said the climate provisions are going to be separated into two buckets, with the first package focused on tax breaks for clean and renewable energy sources, investments in clean energy infrastructure and research and development, and the methane fee.

The first bucket will also include legislation to establish the Civilian Climate Corps, a priority of Sens. Chris Coons (D-Del.) and Ed Markey (D-Mass.).

The second bucket will include more controversial proposals that have yet to be worked out — such as carbon pricing and a border adjustment fee for carbon intensive imports — and its future is much less certain.

Manchin confirmed to The Hill on Tuesday that he is working with Democratic colleagues in good faith on the methane fee. 

“I haven’t seen the text,” he said, cautioning that he would need to review the details before signing off on anything. “I think everybody’s being considerate, and we’re all moving in a positive direction.” 

He said that a lot would depend on the wording of the methane pricing proposal.

“You can’t use things as a hammer,” he warned. “You’ve got to give an incentive to do the right thing. … Methane pricing done wrong is very detrimental. It won’t happen.”

“Incentivize or penalize. Penalize doesn’t work. Incentivize does work,” he added.