How Would The $1.2 Trillion Infrastructure Bill Impact U.S. Energy?

Last month, the unthinkable happened: the United States Senate agreed on a bipartisan spending deal. The new infrastructure deal, arrived at and agreed to (although not yet voted in) by both sides of the aisle, would mark out $1.2 trillion in new spending to go toward infrastructure investments over the next eight years. If this new deal does in fact make it through the House of Representatives as well as the Senate, it will have some high-impact implications for the national energy landscape.

Most of the first round of spending is slated to go to basic repairs and updates such as fixing roads, bridges, and getting rid of lead pipes, but it also includes a $73 billion line item which will take on the long-overdue project of bringing the nation's power grids into the 21st century. Modernizing the U.S. power grid is a monumentally important step on a number of levels. The country's aging infrastructure is making its residents vulnerable. As we saw in Texas this winter, grid failures are not just an inconvenience -- they can have serious, and even deadly, consequences. As the climate changes, weather patterns will begin to fluctuate even more wildly, making the nation's grid reliability paramount. In fact, Texas has already experienced yet another grid catastrophe in the last month, this time due to searing summer heat. As Oilprice reported back in May, "In the case of Texas, the issue was a problem of deregulation and lack of oversight rather than one of aging infrastructure, but the incident brought the very real and very important need for nationwide grid scrutiny to the fore." Aging grids are not only imperiling United States residents' lives directly in severe heat and cold snaps, but they are also making us far more vulnerable to cyberattacks, which could be deadly on a much larger scale. And, perhaps not as dramatically but just as importantly, our stone-age power grids are also holding us back from a mass-scale green energy transition. Smart grids with greater capacities will be crucial to power increasing fleets of electric vehicles and to contend with the in- and outflows of energy from variable renewable energy sources like wind and solar. 

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All of which is to say that $73 billion dollars toward modernizing the power grid is sorely needed, and will make a serious dent in the necessary infrastructure ramp-up to meet ever-more pressing clean energy needs. But that all hinges on whether the bill is passed at all. 

In order to pass Joe Biden's much-debated infrastructure plan, Democrat lawmakers in Congress have bisected the bill into a two-track infrastructure policy that mirrors Congress' own partisan bifurcation. In the infrastructure deal struck between Democrats and Republicans late last month, bipartisan priorities such as repairing the nation's roads, rails and bridges will receive $579 billion in new federal spending. In the meantime, the more liberal and climate-focused infrastructure goals which Biden has previously espoused have been put on the back burner, much to the chagrin of environmental activists and other climate advocates who see this kind of compromise as a dangerous precedent when lowering emissions is more important and more urgent than ever before.

With support from both sides of the aisle, the $1.2 trillion infrastructure deal will soon come to a final vote to officially greenlight the framework to be set into motion over the next eight years. However, that vote may never happen as the deal already appears to be facing resistance. Democrats have hinged their climate hopes on a process called reconciliation, which would allow them to pass Biden's "human infrastructure" and climate priorities such as clean energy tax incentives and a national clean electricity standard in a later, separate infrastructure bill that could be fast-tracked and passed with a simple majority. 

This tactic has Republicans threatening to withdraw support from the bipartisan infrastructure deal while Speaker of the House Nancy Pelosi takes an equally hard line of reconciliation or bust.

By Haley Zaremba for Oilprice.com

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