Behind Manchin's opposition of Biden's Build Back Better, a long history of fighting climate measures

WASHINGTON (NYTIMES) - United States Senator Joe Manchin, member of the Democratic Party and governor of West Virginia, on Monday (Dec 20) cited a litany of issues that drove him to oppose President Joe Biden's US$2 trillion (S$2.73 trillion) Build Back Better Bill, from Democrats' refusal to attach work requirements to social benefits to their failure to raise tax rates on the rich.

But left almost unsaid was the issue that has always propelled his political career as a Democratic maverick: climate change.

The version of the Bill that passed the House last month devoted US$555 billion to shifting the nation to renewable sources of energy, such as wind and solar power, and away from fossil fuels like West Virginia coal.

Mr Manchin, who defied gale-force political headwinds in 2010 by running for the Senate on his opposition to president Barack Obama's climate change legislation, killed a provision in Build Back Better that would have imposed stiff penalties on electric utilities that continued to burn coal and natural gas.

But even with the stick dropped from the House's Bill, West Virginia's coal interests were working hard to kill off the measure's carrot, a package of tax credits to make clean energy more financially competitive, and, by extension, struggling coal even less so. Their lobbyists talked frequently to Mr Manchin.

With every Republican opposing the Bill in the evenly divided Senate, Democratic leaders could not afford to lose a single vote, and Mr Manchin has said he had concerns about energy issues from the start.

"I said, this is absolutely a very, very far-reaching piece of legislation which changes so many categories in American culture and American society, revamping the entire tax code and revamping the entire energy policies for our country - and the social platforms that we use to support people," he told a West Virginia broadcaster on Monday.

West Virginia coal and gas, and policies designed to stop their burning, have always had a special place in Mr Manchin's politics. A Manchin family-owned business has made a small fortune selling waste coal from abandoned mines to a heavily polluting power plant in the state.

The blind trust in which Mr Manchin's interests lie held between US$500,000 and US$1 million last year, according to his most recent disclosure form. The company, Enersystems, valued at between US$1 million and US$5 million, delivered the senator US$492,000 in dividends, interest and business income in 2020, the May disclosure states.

He received more campaign donations from the oil, coal and gas industries than any other senator in the current election cycle.

His first run for the Senate featured an advertisement in which he promised, "I'll take dead aim at the cap and trade Bill because it's bad for West Virginia", as he shoots a copy of Mr Obama's climate legislation with a rifle.

Six years later, he reprised his performance for his re-election, saying: "Hey, I haven't changed. I might be a few years older, but I'll still take on anyone that messes with West Virginia."

Democrats thought that the substantial weakening of the climate provisions in the House Bill had got Mr Manchin within shouting distance of yes.

"We were close," Democrat Senator Tina Smith of Minnesota, said of her last conversation with Mr Manchin, which she said occurred early last week.

Mr Gregory Wetstone, president and chief executive of the American Council on Renewable Energy, a nonprofit group that supports green power, added: "We had good conversations directly with him and with his staff."

"All of the prior conversations had been along the lines that he did not want to penalise fossil fuel but was fine incentivising clean power," Mr Wetstone said. "We had not seen indications of pushback from Manchin or elsewhere from the clean energy provisions."

The Bill, as passed by the House, includes about US$320 billion in tax incentives for producers and buyers of wind, solar and nuclear power. Electric vehicle customers would receive up to US$12,500 in tax credits.

Also included are US$6 billion to make buildings more efficient and burn less fuel, US$6 billion to replace gas-powered furnaces and appliances with electric versions, and billions more for research and development of new technologies to capture carbon dioxide from the air.

Existing tax credits to lower the costs for homeowners of installing solar panels, would be extended, as would credits for geothermal pumps and small wind turbines, covering up to 30 per cent of the costs.

Though Mr Manchin has always said his share of the coal brokerage is hidden in a blind trust, any general threat to coal power would affect that business.

A counteroffer that Mr Manchin gave the White House last week did include scaled-back climate-related tax provisions, according to a congressional official familiar with it. But beyond scope, outstanding issues remained, such as a fee on oil and gas producers that emit methane, a potent greenhouse gas.

Mr Manchin on Monday mentioned tax credits for electric vehicles, which he said should not be available to higher-income families, and in a statement on Sunday, he said the House-passed Bill would jeopardise the reliability of the electricity grid while increasing dependence on foreign supply chains.

Behind the scenes, coal interests were hard at work making the case against the clean energy provisions, and specifically the approximately US$320 billion in tax incentives for producers and buyers of wind, solar and nuclear power.

Mr Chris Hamilton, president of the West Virginia Coal Association, said he had conveyed to Manchin that the clean energy tax credits would be a death knell for the state's coal industry. Even though the clean electricity standard was stripped from the Bill, Mr Hamilton said the coal industry still saw the tax incentives as a threat to the state.

"The credits that were in the Bill would have resulted in an almost total displacement of coal generation within a relatively short period of time," Mr Hamilton said.

"Those provisions were more onerous and more likely to displace coal-fired generation than the clean energy standard," he said.

Beginning in October, documents from America's Power, a coal industry trade organisation, began circulating among members of Congress, including Mr Manchin, outlining arguments against the tax incentives, according to industry and congressional officials.

The analyses argued that tax credits for renewable energy would be a waste of taxpayer money and that China "will be the biggest winner" from the expansion of solar power in the United States resulting from the tax credits.

Ms Michelle Bloodworth, chief executive of America's Power, said its main concern was that the tax credits would endanger reliability of the grid by speeding the retirement of coal and natural gas plants.

Mr Manchin echoed those arguments on Sunday when he rejected the Build Back Better Act. In a statement he warned that the Bill's clean energy provisions could cause widespread blackouts like the ones Texas endured in February and which California suffered in 2020.

"We have invested billions of dollars into clean energy technologies so we can continue to lead the world in reducing emissions through innovation," he wrote on Sunday. "But to do so at a rate that is faster than technology or the markets allow will have catastrophic consequences for the American people like we have seen in both Texas and California in the last two years."

He also recalled a 2011 warning from the chairman of the Joint Chiefs of Staff that the greatest threat facing the nation was its debt.

Energy experts said Mr Manchin's stated reasons for opposing the Bill's climate provisions did not stand up to scrutiny.

In October, the Pentagon and the intelligence community flagged climate change as a growing threat to national security.

The main cause of Texas' blackouts this year was frigid temperatures that stalled natural gas production, which is responsible for the majority of the state's power supply. In contrast, wind makes up just a small part - 7 per cent or so, by some estimates - of its overall mix of power generation in winter.

California's rolling blackouts in August 2020 were caused by a heat wave linked to climate change and poor planning by energy regulators, who, for instance, did not take into account how much the state's drought would diminish hydroelectric power output by ageing dams.

Mr Manchin on Sunday argued that "the energy transition my colleagues seek is already well under way", as the price of wind and solar energy drops, easing the utility and transportation sectors away from oil, gas and coal.

But scientists say the pace must happen much more quickly if the world is to stave off the most catastrophic effects from climate change and that's what the incentives in the Bill were designed to achieve.

"These were exactly the same arguments he made when he opposed the clean electricity plan yet now he's using them to oppose what are just sensible clean energy tax credits," Ms Smith said. She called them "wrong" on both counts.

In some sense, the current standoff between most Democrats and Mr Manchin is a drama foretold. In 2018, when the ranking Democrat on the Senate Energy and Natural Resources Committee, Senator Maria Cantwell of Washington, used her seniority to jump to the top of the Senate Commerce Committee, environmentalist Democrats pleaded with the next most senior liberal, Senator Bernie Sanders representing Vermont, to take the gavel - and keep it from Mr Manchin.

But Mr Sanders, an independent with national ambitions, chose instead to take the top post on the Senate Budget Committee. That, under strict rules of seniority, left the energy committee open for Mr Manchin's taking. As chairman, Mr Manchin was responsible for writing several of the climate provisions in the Senate's version of the Build Back Better Act.

Democrats said on Monday they are just starting to discuss how to salvage the Bill's climate change provisions.

Senator Brian Schatz of Hawaii, said he could see some parts, like the clean energy incentives, moving in smaller "chunks".

"There's a lot of conversation about the politics of this, and what it means for the specific Bill," Mr Schatz said. "But I feel like the fundamentals are in our favour on the climate side. The science is more ruthless than the politics, and on climate there's broad agreement that we have to do something big and bold."