Post-Election Clean Tech Policy Outlook

This Holland & Knight Post-Election Clean Tech Outlook will build upon Holland & Knight's previous alert (see "Post-Election Energy and Environment Policy Outlook," Nov. 20, 2020) and provide more insight on what President-Elect Joe Biden's victory means for clean tech as part of the new administration's energy and climate agenda, how much can be achieved with a divided Congress, and a summary of what these developments mean for clean technology companies and investors in 2021.

The current political landscape is slightly more certain as compared with three weeks ago. President-Elect Biden has amassed an election victory with decisive electoral and popular vote totals, even as President Donald Trump endeavors with legal challenges that so far have been rejected in state courts. A seamless transition of power seems unlikely as cases of COVID-19 continue to surge across the country. In light of a diminished Democratic majority in the U.S. House of Representatives and a narrowly divided Senate, lawmakers will have a difficult landscape to navigate in the lame-duck and 117th Congress.

Nevertheless, action on energy and climate change will continue to advance in 2021. Climate change was at the forefront of the Biden/Harris campaign messaging, and as the President-Elect announces key members of his transition team and administration, it is likely that investments in clean energy technologies will be ample and far-reaching over the next four years, as such efforts will be critical to reaching net-zero carbon emissions by 2050 and rebuilding the economy in the wake of COVID-19.

Today's Political Landscape and Implications for Energy Innovation

President-Elect Biden continues to place clean energy and tackling climate change at the forefront of his plans for economic recovery. Further, in Congress, there has been growing bipartisan and bicameral consensus that the U.S. should chart a path to lower carbon emissions, with many legislators calling for a trajectory to reach net-zero by 2050.

However, uncertainties remain. Republicans, who need to win at least one of two Senate runoff elections in Georgia on Jan. 5, 2020 to hold their slim majority, have not been willing to include provisions supporting the clean energy industry in the COVID relief packages developed to date. Although there is an appetite for innovative energy support through tax incentives and stimulus measures on both sides of the aisle, congressional attention continues to focus on the immediate public health and economic needs of individuals and families.

Lame-Duck Session Possibilities

Pre-conference activity is underway between the House's Clean Economy and Jobs Innovation Act (H.R. 4447) and Sens. Lisa Murkowski (R-Alaska) and Joe Manchin's (D-W.Va.) American Energy Innovation Act (S. 2657). If an agreed-upon bill emerges from these negotiations, passage of such a measure would be the first energy authorization bill from Congress in more than a decade.

However, with a limited number of days remaining in the lame-duck congressional session, and must-pass pieces of legislation such as annual appropriations and the National Defense Authorization Act still pending, it is still unclear what the path forward may be for comprehensive energy legislation this year.

Lawmakers have prioritized negotiating spending bills to avert a government shutdown and provide coronavirus relief. The current stopgap measures, which have kept the government running at Fiscal Year (FY) 2020 levels, expire on Dec. 11, 2020. The target adjournment date is Dec. 10 for the House and Dec. 21 for the Senate.

Appropriations discussions are on a separate track from stalled negotiations on a COVID-19 relief bill. Senate Republicans support $500 billion in stimulus, while Democrats have sought a $2.4 trillion rescue package. Some lawmakers in both parties have suggested using the spending measure to include limited pandemic relief provisions, which may provide an opening for energy authorizations and support for onshoring of U.S. manufacturing.

Holland & Knight Insights

As the end of 2020 approaches, opportunities for Congress to pass a COVID relief and stimulus bill become increasingly limited. With committed leadership in the House and Senate, the possibility remains that a negotiated energy package finds its place on an FY 2021 omnibus appropriations bill in mid-December. However, this is not likely to be a significant package but instead a bipartisan "skinny" package that includes limited measures on nuclear, carbon capture, loan guarantee improvements and a few others. With regard to a stimulus package that includes clean technology, it remains very likely – but not until into the first six months of the Biden Administration.

The Transition and First 100 Days

Much like the rest of 2020, the Biden transition has been unprecedented. After more than two weeks, the President-Elect and his team are now being provided access to federal agencies and information that are historically and customarily granted within days. In the interim, many of Biden's transition teams had held briefings with former Obama Administration officials and other former career civil servants. Now that the transition teams are able to formally begin their work, they will need to ramp up quickly and diligently to make up for lost time.

DOE Transition Team

The U.S. Department of Energy (DOE) transition team is full of familiar faces from the Obama Administration and Washington, D.C.-based non-governmental organizations (NGOs). The first director of the Advanced Research Projects Agency-Energy (ARPA-E), Dr. Arun Majumdar, is leading the DOE transition alongside notable colleagues that include John MacWilliams, former DOE associate deputy secretary; Kathleen Hogan, former deputy assistant secretary for energy efficiency in the Office of Energy Efficiency and Renewable Energy; Jonathan Elkind, who worked on international energy and climate issues at DOE, including as assistant secretary for international affairs; longtime Biden energy advisor Kerry Duggan; and Dan Arvizu, director of the National Renewable Energy Laboratory. The new administration should benefit from the team's existing knowledge of the agency, its core functions and weaknesses, especially due to the truncated timeline that team members have to complete their work.

The Cabinet… So Far

One of the first appointments announced by President-Elect Biden was naming former Secretary of State John Kerry as Special Envoy for Climate Change, a Cabinet-level position where he will also serve on the National Security Council. This demonstrates a significant step in the White House's approach to the climate crisis and Biden's commitment to keeping the issue at the forefront when he takes office and regaining a global leadership role on the issue. So far, Biden's announced nominations and appointments have shown a commitment to diversity, experience and loyalty.

More cabinet nominations are anticipated in the coming weeks, including Secretary of Energy.

Potential Executive Actions in the First 100 Days

A key trend of the modern presidency has been the increased use of executive orders (EOs). This is likely to become a favored approach of the Biden Administration, particularly if Senate control remains in Republican hands. A number of actions that can be taken within federal agencies to also advance and support the new administration's agenda.

As the President-Elect seeks to set and attain ambitious clean-energy goals, expect the Biden White House to resume federal leadership in shaping energy and climate policy, strongly resembling the executive branch's role during the Obama presidency.

Many components of Biden's proposed Sustainable Infrastructure and Clean Energy Plan could be accomplished through executive actions within the first 100 days of the Biden presidency.

• Rejoin the United States to the Paris Climate Accord. President-Elect Biden has stated that one of his first actions in office would be sending a letter to the United Nations to rejoin the U.S. to the Paris agreement. Biden has laid out ambitious goals for the U.S. power sector to reach net-zero carbon emissions by 2030 and the economy to reach net-zero by 2050.
• Roll back a large number of President Trump's EOs on energy and climate, replacing them with ambitious orders focused on reducing greenhouse gas emissions with an emphasis on environmental justice. Biden has already indicated that he will sign EOs instructing agencies to develop new methane limits for oil and gas wells, reinstate and strengthen fuel economy standards, and tighten efficiency standards for appliances and buildings.
• New orders for federal sustainability that expand EO 13693, signed by former President Barack Obama in 2015, will be aimed at "greening" the government to the greatest degree possible without Congress. Look for action on renewable energy procurement, efficiency, fleet management, and water and waste sustainability targets for federal agencies.
• EOs to enact the Defense Production Act, with the simultaneous goals of rebuilding in the wake of COVID-19 and addressing climate change, also could be utilized.

Agency Action

In addition to executive actions from the White House, the implementation of which will be delegated to federal agencies, there are a number of measures that can be taken within agencies such as DOE and the U.S. Department of Defense (DoD) to support the Biden Administration in carrying out its climate and energy agenda.

• Building back the federal workforce: During the past four years of deregulation by the Trump Administration, many career bureaucrats were separated from public service and federal hiring practices within DOE programs such as the Office of Energy Efficiency and Renewable Energy have been the focus of congressional hearings. The Biden Administration will want to expedite hiring to rebuild the federal workforce, especially the senior executive workforce, which will be essential to achieving ambitious innovation and net-zero goals.
• Timely release of funding: Expect a faster release of funding opportunities for research, development, deployment and even demonstration programs out of DOE at the beginning of the Biden Administration. Without a major energy stimulus, there will be an urgency to make annual appropriations available quickly for the private sector, academic and research institutions to apply for competitively.
• Return of DoD leadership on climate and energy: The Obama Administration used the power of the DoD, the largest employer in the world, to push his climate and energy agenda, and the incoming administration will likely follow suit. Continued use of the Defense Production Act to lead federal procurement of clean energy technologies and materials would be instrumental to onshoring industries that have been lost to overseas competitors, such as battery and materials manufacturing.

Holland & Knight Insights

Expect the White House to resume shaping energy and climate policy under the new Biden/Harris Administration, strongly resembling its position during the Obama presidency.  There already has been unprecedented action with regard to clean technology in two respects: 1) the creation of a Cabinet-level position for John Kerry as well as the stated intention of nominating a domestic climate leader; and 2) placing individuals with clean energy expertise across numerous agency teams – not just in the White House and within the DOE. Finally, it is critical to note that the Trump Administration did not take the actions needed to formally roll back the sustainability EOs referenced above and actually did significantly expand Defense Production Act authority to address the COVID-19 crisis. Accordingly, it is expected that the Biden Administration will utilize these measures as a foundation for achieving some of the goals set forth in President-Elect Biden's Sustainable Infrastructure and Clean Energy Plan.

Expectations for the 117th Congress

As stated above, COVID-19 rescue, recovery and stimulus will undoubtedly be the primary focus of the Biden Administration's work with the 117th Congress beginning in January 2021. The fate of much of Biden's legislative agenda for the first 100 days and beyond will hinge on whether he and Senate Majority Leader Mitch McConnell (R-Ky.) can negotiate compromises on variety of issues, including energy and climate.

The notable amount of energy and climate-related legislative activity during the 116th Congress seems likely to pave the way for bipartisan action in the first part of 2021, but the need for collaboration and bipartisanship in the 117th Congress will be even greater due to the narrow majorities in the House and Senate. Expectations for sweeping reforms to energy, environment and climate policy have been tempered, but history has shown that incremental change often leads to the most sustainable policies.

House Committee Leadership (Expected)

Senate Committee Leadership (Expected)

Final Holland & Knight Insights

The future under the Biden Administration is starting to become clearer, replacing the uncertainty that's been looming in Washington and the country for months.

Viable funding options for innovative energy financing programs should increase and expanded executive branch authority and action beyond what was done during the Obama Administration will occur. Although this seems like a significant amount of potential action, it's actually not when compared with other countries and when considering the limited authorities of the executive branch without congressional funding.

With respect to agencies, federal financing and funding programs beyond what was available during the Obama Administration will continue to be available for energy companies and other entities working to be a part of the solution on Day 1 of the new administration. This is due to the significant amount of bipartisan work that has been done on Capitol Hill during the past five years, which has often gone unrecognized.

Momentum for COVID-19 stimulus and new energy legislation will not subside, especially as the U.S. reenters the Paris Climate Accord and begins charting a path to net-zero by 2050 for the entire economy. In sum, under the Biden Administration, it is expected to be no longer if but when and how much.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.