The Daily - How a Single Senator Derailed Biden’s Climate Plan

Episode Date: October 20, 2021

The Clean Electricity Program has been at the heart of President Biden’s climate agenda since he took office.But passage was always going to come down to a single senator: Joe Manchin of West Virginia.With Mr. Manchin’s support now extremely unlikely, where does that leave American climate policy?Guest: Coral Davenport, a correspondent covering energy and environmental policy for The New York Times. Love listening to New York Times podcasts? Help us test a new audio product in beta and give us your thoughts to shape what it becomes. Visit nytimes.com/audio to join the beta.Sign up here to get The Daily in your inbox each morning. And for an exclusive look at how the biggest stories on our show come together, subscribe to our newsletter. Background reading: Senator Joe Manchin, a Democrat from coal-rich West Virginia, has told the White House that he is firmly against one of the most powerful parts of President Biden’s climate agenda.Faced with the likely demise of the program, the White House and outraged lawmakers are scrambling to find alternatives.For more information on today’s episode, visit nytimes.com/thedaily. Transcripts of each episode will be made available by the next workday.

From The New York Times, I'm Michael Barbaro. This is The Daily. Today, to win over a single Democratic senator, President Biden is planning to drop the most powerful plan to confront climate change from his congressional agenda. I spoke with my colleague, Coral Davenport, about why that is, the blowback it has unleashed, and what it means for the future of U.S. climate policy. It's Wednesday, October 20th.

Coral, the last time you were on the show back in April, you described to our colleague, Aset Herndon, the Biden administration's plan to tackle climate change and how the president and congressional Democrats were betting that they could incorporate this plan into their sweeping social safety net and infrastructure bill. So remind us about that proposal. Sure. So this plan really has been at the heart of President Biden's climate agenda since he came into office. So this program, it's called the Clean Electricity Program. It's targeted at the generation of electricity, which is the second largest source of greenhouse gas pollution

in the U.S. First largest source is vehicles. So you have thousands and thousands of electric power plants all across the country. Most of them are powered by coal and natural gas. These are two very heavily polluting fossil fuels. So what this program would do is it targets the electric utilities that own all these polluting power plants, and it would pay them to shut down these power plants, these coal and gas fossil fuel polluting power plants, and replace that electricity with zero carbon sources of electricity, which would be wind or solar or nuclear. It would pay them to do this at a rate of 4% of their electricity generation per year. So every year, if I'm a company and I want to get this money and I'm generating, say, you know, 20,000 megawatts of electricity a year,

then I would shut down 4% of that fossil fuel generation and replace it with clean carbon sources. And once I did that, the federal government would pay me lots of money. So that's the incentive. That's kind of the carrot part that makes it sweet and delicious for companies to want to do this. And then the other part, and this is very important and part of why this program would be very strong, is the penalty, the stick. Companies that don't do it have to pay a fine. So if you do any less than that, you actually have to pay a fine to the federal government. So there's a carrot and a stick. And so if that turnover is happening at the rate of 4% a year, then that pretty quickly adds up to a pretty transformational change in where our electricity is coming from. How transformational? of that program is that we would actually get to about 80% of our electricity coming from

renewable sources, clean, zero carbon renewable sources by 2030. That's less than a decade. So that would be a very dramatic drop in U.S. carbon emissions. It would shut down most of the coal and natural gas plants, most of the fossil fuel polluting power plants, so that that really takes you a very long way toward meeting President Biden's extremely ambitious goal of cutting all U.S. emissions 50 percent by 2030, which would be huge. So this would be the government saying that this transition is so important that the government is going to introduce payments and penalties to force electric companies to make the transition faster than they ordinarily would in the private market.

Yes, that transition is already starting to naturally happen in the market, but it would probably more than double the pace. Wow. And that's really important because of what scientists are telling us now about how rapidly fossil fuel emissions need to come down. You know, the science is telling us again and again, we're pretty much out of time if we want to avoid the worst impacts of climate change. So this would accelerate that and actually allow the U.S. to cut emissions at pretty close to the speed that scientists say is necessary. And what would be the cost? The cost of the program is $150 billion, you know, which in normal times is like a pretty giant price tag. Mm-hmm. Interestingly, in this moment,

that's kind of a drop in the bucket of this giant, multi-trillion dollar spending bill that the Democrats are trying to push across the finish line. So given just how important this program is to the Biden administration's climate agenda, how confident has the White House been that this program has sufficient support

to pass within this mammoth piece of legislation? Well, they have gone into it with full-throated support. They have pushed it as much as they can. But honestly, behind the scenes, I think they have always known that at the end of the day, it would come down to one single senator, Joe Manchin of West Virginia. Which is a familiar sentence to be uttered by guests on The Daily. Joe Manchin is always the swing vote in the Biden era. So where did he seem to be on this program? He absolutely is.

I mean, he's the swing vote on this whole entire package. But arguably, this one particular piece matters so intensely to him. And the reason is that, of course, West Virginia is a coal and natural gas producing state. And at the end of the day, this program is about shutting down coal and natural gas. So in some ways, the question was, how do we even get Joe Manchin at all for the White House? But for many, many months, he absolutely was engaged on this. He was not a no. We saw that there was a memo that Senator Manchin wrote to the Senate Majority Leader Chuck Schumer in August, where he kind of laid out a lot of basically his demands for this whole entire bill. And one of those demands specifically was that he got control,

he got jurisdiction of this program. He got to write it. So the thinking is, if he writes it, how could he possibly not like it? Yes, it was understood as well. If he writes it, he's going to write it in a way, it's not going to be as aggressive as progressives wanted it. It would probably have like less ambitious goals,

a longer timeline, more giveaways. It would be designed to be kind of a lifeline to natural gas and maybe to coal. But the thinking was, if a program like this exists at all and is written into law, it absolutely will still lower emissions more than business as usual, and you get Joe Manchin's vote. Okay, so what happens? So what has happened for

the last several months is that Senator Manchin's staff has been very engaged in trying to come up with a version of this legislation. They have been meeting with other members of the caucus. They have been meeting with the White House. They have been meeting with lobbyists upon lobbyists upon lobbyists. They have been talking to constituents in West Virginia. And that was sort of where we were until about a week ago. And what happened a week ago?

I had been talking to these sources, you know, for months and weeks on what does this bill look like and when is it going to come out and when are we going to see it? And my sources started saying one word, which was dead. It's dead. It's dead. I had one source tell me it is dead, dead, dead, dead, dead, dead, dead. Wow. That is so dead, I don't think I can count the number of deaths. Right.

Finally, I understood what had happened, which is what Senator Manchin had done is he had had a call with White House officials where he basically said, you know what, there is no version of this that I will accept. Huh. There is no Joe Manchin-friendly version. There is no West Virginia-friendly version.

There is no way to write this program at all that I will support. There's no way you can have the larger bill with this centerpiece climate program in it. Because Joe Manchin won't accept it. Yes. So what exactly were Joe Manchin's objections, especially given the fact that he has been given the power to write this bill, and yet he still can't find an acceptable version of it. So an objection that he has made publicly to this is he says, well, companies are already doing this. They already are building more wind and solar and clean sources of electricity. So

why should the federal government be paying them to do something that they're already doing? Which, you know, as I said earlier, that is kind of true, but it's not entirely true. Right now, electric utilities are making that transition and are building new wind and solar at the rate of about 2% a year. But what this bill would do is incent them to do it at the rate of 4% a year. Right. That is doubling the rate at which it's happening. And another super important part about this bill is not what it would pay the companies to do, but rather what it would force the companies to pay to the government. So that stick, it will force this transition all across the entire power sector, no matter where the company is, no matter what kind of company it is, and force it to happen twice as fast. And how central is that penalty and its consequences to Joe Manchin's objections? Pretty central. He has not spoken specifically

and publicly about the penalty. But at the end of the day, what the penalty does is it pays companies to shut down fossil fuel plants. It pays companies to shut down coal and natural gas. It pays companies to shut down facilities that are powered by the fuel that is mined and fracked from the mountains of West Virginia. So he has a philosophical objection and a parochial in my backyard objection, which is this is going to destroy an industry and its jobs in my home state for which I am a United States senator. Absolutely. I mean, and that's a legitimate objection as well. But there's something else, which is Senator Manchin does also make a lot of money off the coal industry himself.

Back before he was Senator Manchin, when he was Joe Manchin of Farmington, West Virginia, he founded a coal brokerage company, which he turned over to his son when he first ran for state office in West Virginia. So it is not his company anymore, but he's still a stockholder in that. And last year alone, he made almost $500,000 in dividends from this coal brokerage. So it's absolutely true that he has a personal financial investment in which he profits quite handsomely in this same industry that would be shut down by this policy. Hmm.

So a senator with a significant and lucrative personal financial stake in sparing the coal industry the repercussions of this climate change program is able to single-handedly knock that program out of this bill, which is exactly what Joe Manchin has just done. Isn't American democracy great? But to be very clear and to be fair to Senator Manchin, he absolutely is in compliance with Senate ethics requirements. He's very open about this.

He has filed all of his financial disclosures. Nothing is concealed. He himself does not own this company. He's been subject to a lot of criticism for essentially making personal profit on the coal industry. But senators are allowed to have these investments and he complies with a letter of the law of the ethics requirements. So what has been the reaction to Joe Manchin's decision to essentially kill off this program? to essentially kill off this program? Well, as you can imagine, there are progressive Democrats,

Democrats who have built their whole political careers around climate change who are furious. They're furious, of course, not only at Manchin, but they're furious at the idea that this piece could be taken out of the bill at all. And almost immediately when this happened last week, I talked to the staff of Senator Tina Smith of Minnesota, who has been central in writing this program, who said, essentially, if they don't have a strong climate program, if they don't have a program that cuts carbon emissions, they should not count on our vote. And that's a huge problem because they need every single Democratic vote to pass this thing. So in changing the bill in order to secure Senator Manchin's vote on climate,

I think they do risk losing even just a handful of progressive Democrats, and that could tank the whole bill as well. And so what is happening now is they're scrambling at the White House and in the leadership offices on Capitol Hill to come up with something that could credibly cut carbon emissions, please progressives and also be OK with Joe Manchin, which is an incredibly difficult thing to do. which is an incredibly difficult thing to do. We'll be right back. So, Coral, what might stand in as a substitute for this very ambitious program that Manchin has knocked out of the bill? What are the options for Democrats? Well, I should first say there is still one strong climate piece in the bill. It's about $300 billion in tax incentives for wind and solar and renewable energy and electric vehicles that Manchin has basically blessed and said he's mostly okay with. But without this other program, what the bill

lacks is any kind of stick, any kind of penalty, anything that compels industry to shut down the polluting part of itself. And so that is what Democrats are scrambling and trying to find right now. They're looking at a couple of different options. One would be some kind of cap and trade program, basically a program where polluting industries like steel and cement and concrete makers would kind of have to pay a fine for their carbon pollution. They would buy permits to pollute and they would be able to buy and sell them amongst each other. It would start out voluntary, but it would put some kind of a price on pollution. It would be weaker. It would be voluntary. But because it doesn't put a bullseye on his home state industries,

it is seen as something that Manchin could support. And then the other thing that Democrats are definitely talking about that could be incredibly powerful, in fact, even more powerful than this program that dropped out, is the giant holy grail of climate policy that climate activists and economists have been trying to get the U.S. government to pass for decades, and that would be a carbon tax. A tax that would basically force polluting companies to pay a price for the pollution that they put into the atmosphere. You put a tax on it, and you make industries pay for it. You basically set the market loose to solve climate change. It's also politically explosive. I mean, Republicans would go after that in a minute.

They would call it an energy tax. The White House is very nervous about a carbon tax. They fear that some kind of carbon tax would put President Biden in a position of appearing to violate his pledge not to raise taxes on the middle class. But it could potentially be in there. Senator Ron Wyden, the chairman of the Senate Finance Committee, has a carbon tax bill ready to roll. They're looking at it at the White House. They are talking to Joe Manchin about it. And where is Joe Manchin on it? So officially, Joe Manchin is not a no. You know, he has not come out and publicly said no on it the way that he has on this other program. But he was actually asked about this in the Capitol just this morning, and his response was,

it's not on the board. Hmm. That doesn't sound very promising if you're a senator hoping to see a carbon tax. Yeah, I really have a hard time seeing how Joe Manchin would ever get to yes on a carbon tax. You know, what I think right now is what they're looking at probably the most closely is this voluntary cap and trade program, which could get them a little bit closer to their goals. But, you know, if it's voluntary, it's hard to see how how it really has teeth. It occurs to me, Coral, that this is just the political reality for congressional Democrats. They didn't win enough seats in this past election to have the kind of majority required to pass these ambitious programs. Manchin himself likes to remind his Democratic colleagues of that.

And he says, if you want progressive legislation, go elect more progressives. I'm not that person. And so is this just something that Democrats will have to put off until some later date when they control more seats in Congress? And can they make peace with that? So the political reality, Michael, is absolutely it is looking like this might be something

that they would have to make peace with. And Joe Manchin is not wrong. They don't really have the seats to do this. But I think one reason you are seeing such outrage and such intensity and such a push on this is if they are not able to pass strong climate change legislation now, there very likely won't be an opportunity for legislation like this for many, many years. And I think that the last time Democrats failed to pass a climate change bill, which was in 2010, the science was very different. In 2010, the science still told us climate change is something that is coming. Ten years later, the science is telling us that it's already started now, that we're basically out of time, that we don't have 10 more years to start these

policies. And, you know, one of the most important things to know about the impact of climate change that's happening right now is it really doesn't spare anyone, including, most importantly, West Virginia. It is absolutely true. Joe Manchin is right to be concerned for the impact on climate change policy to his home state economy. What we don't hear him saying anything about is the scientific evidence that shows that West Virginia is actually the state of the nation that is most vulnerable to damages, to economic damages, from extreme flooding. Huh. Can you describe that? Because I don't think of West Virginia as a prominent victim of the

effects of climate change. I think of coastal Florida, North Carolina, California. I don't think of West Virginia. Sure. Well, so when you think of the coasts, you think of sea level rise, you think of hurricanes, but climate change takes many forms. And one of the ways that we do see climate change already manifested in our experience is much, much, much stronger, heavier rainfalls. And interestingly, West Virginia is the state of the nation that is most vulnerable in experiencing the worst impacts of flooding. It doesn't really have the best infrastructure. So when a lot of that water comes, there's more water than before,

there's more flooding before, and the state is less prepared to deal with the impacts of that flooding. And so, yeah, West Virginia is right up in there on the front lines of experiencing climate change now. Hmm. So while Senator Manchin has framed this as, above all, an economic crisis for his state,

the idea of shutting down the coal industry, what you're describing is a much more complicated reality, which is that not acting will worsen a climate crisis in West Virginia, which, of course, could represent its own economic crisis over time. And so this gets at the heart of that central tension when we talk about climate change, which is short-term versus long-term. Economics versus a change in climate. It's really economics versus economics.

You know, I mean, the economy is already taking a hit from the impacts of climate change. And we have studies that show that if we continue business as usual and the emissions keep going, we could see a 10% loss to GDP by the end of this century in the U.S. just as a result of climate change. On the other hand, in order to avoid that, then it is absolutely true that there will be short-term economic losses to specific industries. Well, given how big this threat is and the obstacles the White House faces to really addressing them, what is the president saying at this point about all this? So publicly, what the White House is doing is fighting like hell. It's looking more and more likely like this signature law, which would have been the most powerful climate change law ever passed in the U.S., is going to slip away. And so they are looking to use the executive authority that they have in any other way. I absolutely expect to see the White House use the authority of the EPA and other federal agencies to do a bunch of big regulations.

Like, I think that they'll try to regulate the emissions from the electricity sector. I think they're going to do a big regulation to try to force a move to electric vehicles. And regulations like that can be very powerful. And in fact, the Obama administration tried to do the same thing when President Obama failed to pass a climate change law. The problem is then the next administration, the Trump administration, came in and basically undid them all. And so they could probably do some very powerful climate regulations, but the question is how permanent they would be. Right. As we talked with you and many of our colleagues about, there's no substitute for a law which is permanent. So if you are

President Biden and you proclaim that the climate is a major priority of your presidency, and this centerpiece has now fallen away, where does this really leave you on the question of the climate? Well, it leaves him in a tough, hard place. The timing of this for President Biden couldn't be worse. The timing of this for President Biden couldn't be worse. In two weeks, he is preparing to leave for one of these major UN climate change conferences in Glasgow, Scotland. And it's going to be very hard for the U.S. to have credibility in this space.

And even harder for them to have any kind of leverage to get cuts from other major polluters because he's going to go in as the leader of the world's largest economy of its largest superpower and going to be in a position showing where even though his party is in power, it controls the White House, it controls both chambers of Congress, the U.S. still is not able to pass a single strong climate change law. Well, Coral, thank you very much, as always. We appreciate your time. It's always great to be with you, Michael. Thank you. We'll be right back. To be continued... Christian missionaries there, most of them American, is demanding a ransom of $1 million for each person. The gang abducted the missionaries over the weekend as they drove through a suburb of

Port-au-Prince in the latest sign of how chaotic Haiti has become since the assassination of its president over the summer. Today's episode was produced by Muj Zaydi, Soraya Shockley, and Claire Tennis-Getter. It was edited by Dave Shaw, contains original music by Dan Powell and Marian Lozano, and was engineered by Chris Wood. Our theme music is by Jim Brunberg and Ben Landsberg of Wonderly. That's it for The Daily.

I'm Michael Barbaro. See you tomorrow.