On November 15, 2021, President Biden signed into law the Infrastructure Investment and Jobs Act, a monumental $1.2 trillion bipartisan infrastructure bill. Given its wide scope, the bill will drive remarkable activity and long-term investment in a wide variety of infrastructure sectors. The infrastructure bill takes an expansive view on what constitutes infrastructure and includes significant funding for the electric power system, clean energy technologies, and oil and gas infrastructure.
Historic authorizations and federal spending appropriations will be delivered to states for disbursement and project deployment. The speed at which industry responds to these provisions depends on whether applicants and vendors are able to satisfy the bill’s eligibility criteria including union participation, prevailing wage rates, domestic manufacturing requirements, and other obligations.
As state and local governments prepare to comply with federal requirements and maximize opportunities for infrastructure projects to get underway (see Husch Blackwell’s Legal Alert summarizing the bill more broadly), electric industry developers and stakeholders should also prepare to participate in the opportunities afforded by this bill. Husch Blackwell attorneys are working to decipher the bill and assess its impacts on our energy clients’ current and proposed infrastructure projects. Below are some of the highlights of this bill’s impact on technologies in the energy sector.
The bill provides $11 billion in grants for states, tribes, and utilities to enhance the resilience of the electric infrastructure. The bill authorizes and appropriates $5 billion to participate in new competitive grant program named the “Program Upgrading Our Electric Grid and Ensuring Reliability and Resiliency.” Under this program, the Secretary of Energy is able to award grants through a competitive process to eligible entities that can demonstrate innovative approaches to transmission, storage, and distribution infrastructure. These programs are intended to improve grid reliability and demonstrate new approaches to enhance regional grid resilience.
The bill authorizes and appropriates $1 billion for a new program to provide financial assistance to improve the power grid in rural and remote areas. The program encourages resilience, safety, reliability and availability of energy in rural areas. The bill also appropriates $50 million and authorizes the Secretary of Energy to establish a Transmission Facilitation Program that encourages construction of electric power transmission lines and related facilities. The program facilitates projects by entering into contracts and provide loans for carrying out projects. This program also authorizes the Secretary of Energy to participate in public-private partnerships under limited circumstances.
The bill supports the President’s goal of building a nationwide network of chargers to accelerate the adoption of EVs and reduce carbon emissions. The bill directs states to consider measures to promote greater electrification of the transportation sector including the establishment of rates that promote affordable and equitable electric vehicle charging options. The bill also authorizes $5 billion in new funding to transition school buses to clean and electric buses.
The bill allocates $6 billion for a Civil Nuclear Credit program to help prevent retirement of existing nuclear generation plants.
The bill authorizes more than $7 billion to improving the supply chain for batteries, including production of critical minerals, manufacturing material sourcing, and recycling processes. The bill authorizes and appropriates $3 billion and directs the Secretary of Energy to establish a Battery Material Processing Grant program. Grants may be awarded to eligible entities to demonstrate battery materials and processes, construct new commercial-scale battery production facilities, and to expand existing battery material production facilities. The Secretary must prioritize grants to entities that are located in the U.S. and promote U.S. jobs and technologies (in several capacities). The Secretary must also consider whether a project will provide job opportunities in low-income communities, engage with Indian tribes, and reduce greenhouse gas emissions.
The bill also authorizes $60 million for research, development, and demonstration projects to create innovative and practical approaches for the reuse and recycling of batteries.
The bill authorizes funding for research, development, demonstration and deployment of hydrogen from clean energy sources, and establishes a clean hydrogen strategy for the U.S. The bill authorizes and appropriates $8 billion for the Secretary of Energy to support the development of at least four regional clean hydrogen hubs toward the development of a national clean hydrogen network.
The bill also appropriates $1 billion to implement a program to create a clean hydrogen electrolysis program to demonstrate the commercial potential of this technology. The program aims to reduce the cost of hydrogen produced through electrolysis to less than $2 per kilogram of hydrogen by 2026.
Energy Technology Manufacturing
The bill appropriates $750 million for a new grant program to fund projects to re-equip, expand or establish advanced energy manufacturing in low-income areas and create jobs for persons previously employed in coal power plants or coal mining.
The bill authorizes more than $700 million to improve efficiency of existing hydropower facilities, maintain dam safety, and reduce environmental impacts. For instance, the bill authorizes and appropriates $10 million for this program over five years and directs the Secretary of Energy to establish a demonstration project to show the capability for pumped storage to provide long-duration storage services for intermittent renewable electricity.
Carbon Capture and Sequestration
The bill provides $100 million in authorizations and appropriations for Department of Energy engineering and design programs for carbon capture technologies, and also provides $2.5 billion in authorizations and appropriations for a new program to fund the development of large-scale commercial carbon sequestration projects and associated transport infrastructure.
Advanced Energy Research
The bill authorizes $21.5 billion in funding for clean energy demonstrations and research hubs to promote the development of next generation technologies. Specifically, the bill provides $355 million for energy storage demonstration pilot grant program, $937 million to create a pilot projects for carbon capture technologies that were previously authorized in the Energy Policy Act of 2005, $2.5 billion for the creation of a carbon capture demonstration projects program, and $80 million for research on solar energy technologies.