House Proposes Strong Clean Electricity Performance Program

The House Energy & Commerce Committee is marking up legislation today that will make significant progress toward achieving President Biden’s 100% clean electricity by 2035 goal, by investing federal money to help utilities accelerate clean electricity development. The ambitious Clean Electricity Performance Program (CEPP) will drive investment that reduces emissions, creates jobs and grows the economy. The Congress and the President now need to ensure it remains strong through final passage to deliver a transformed power sector.

The science is clear: we’ve got to cut the carbon pollution from burning fossil fuels in half by 2030, and stop adding it to the atmosphere altogether by 2050, to keep the climate crisis from blowing into a full-on catastrophe. That starts with cleaning up the dirty power plants that account for a third of our carbon footprint. 

The Clean Electricity Performance Program is designed to help support and accelerate this broad shift, by making a $150 billion public investment over the coming decade in power companies that meet annual targets for expanding clean electricity. To ensure proper incentives and a level playing field, the CEPP also collects a payment from power companies that fail to meet those targets.

The CEPP is a critical part of the broader federal investments in the Build Back Better Act to transform the electric sector, with portions of the act moving through the Energy & Commerce, Ways and Means and other committees.

A Clean Electricity Performance Program Is Popular and Delivers Massive Benefits

A broad majority of the country, 62 percent (only 30 percent oppose), supports President Biden’s goal of moving the country to 100-percent clean electricity by 2035, to confront the climate crisis and cut pollution. And the appeal extends to every region of the nation—a majority in all 50 states and 429 of the 435 Congressional districts support federal action to achieve 100 percent clean electricity by 2035. The CEPP, a key part of Biden’s Build Back Better agenda, will make investments that set us on course to achieve that goal, getting us to 80 percent clean power by 2030.

The House bill provides an incentive and fee structure to ensure that each power company—no matter where they are today— will increase their proportion of clean energy at a steady, four percent per year rate. This means that companies that are just getting started and those that are already well on their way will all have an incentive to keep going.

Accelerating the deployment of clean electricity and getting on the pathway to 80% clean by 2030 delivers massive benefits. A CEPP program that results in at least 80% zero-emission electricity by 2030 will reduce overall power sector CO₂ emission by more than 80% from their high point in 2005. It will also reduce the power sector’s SO₂ emissions by 88-98% and its NO_x emissions by 71-91% compared to levels expected under business as usual.

A CEPP like the one under consideration in Congress right now would expand the workforce by nearly 8 million jobs and generate $1 trillion in economic benefits over the next 10 years, according to a report from Analysis Group.

Key CEPP Design Elements & Keeping Them Strong

NRDC is focused on a few key design elements in a CEPP. The legislation released last week by the House Energy and Commerce Committee is strong and would make investments in line with the President’s 80% clean electricity by 2030 goal. But any weakening of these essential design elements could risk missing that goal.

• Strong Clean Electricity Trajectory: The House Energy & Commerce CEPP proposal requires a minimum of 4% per year expansion of clean electricity supplied for utilities to receive grants and make no payments to the federal government. This annual increase should be thought of as the floor. On average this is aligned with about a 72% clean electricity rate for the country in 2030, and this investment, combined with federal tax credits and other programs, should enable the sector to achieve 80% clean energy or more by 2030.
• Robust Grants to Benefit Electric Customers: The CEPP envisions investing $150 billion over ten years, by providing $150/MWh for annual increases in clean electricity deployment. This lifts the cost of clean electricity deployment off consumers’ electric bills, protecting low and middle-income families.
• Robust Penalty Payments to Support Clean Energy Benefits Everywhere: Both grants and penalties are essential elements of the CEPP. Electric suppliers that do not achieve their targets must pay a penalty of $40/MWh based on their shortfall. While our modeling suggests that electricity suppliers will be able to meet the targets and will thus receive grants, rather than have to make payments to the federal government, the existence of the penalty is key to both the integrity of the program and the successful achievement of the targets.
• Definition of Clean: The definition of clean electricity is critical to the success of the program. Qualifying clean electricity resources must not emit more than 0.1 tons carbon dioxide equivalent per MWh emissions threshold. This performance-based standard is strong, meaning non-emitting resources like solar and wind will qualify, as well as hydro and nuclear, but fossil generators that run on coal or gas would need to achieve about 90% and 80% carbon capture and sequestration respectively of their carbon to qualify.

The Clean Electricity Performance Program will help set us on course, as a nation, to cut our carbon footprint in half, just as the science says we must, to confront the environmental challenge of our time, by keeping the climate crisis from becoming a global catastrophe.

Now is the time for the House and Senate to work together to pass this strong CEPP without watering it down and get it to the President’s desk as an essential part of the Build Back Better Act.