President Joe Biden is calling for sweeping investment in electric vehicles, renewable power and the electric grid as part of a broad blueprint to bolster the U.S. economy while combating climate change.
The president’s plans, part of a $2.25 trillion infrastructure and stimulus blueprint unveiled in Pittsburgh on Wednesday, are meant to catalyze investments in a clean energy economy and encourage low-emission technology necessary to constrain global warming.
"It's a once-in-a-generation investment in America, unlike anything we've seen or done," Biden said in Pittsburgh. "It's big, yes. It's bold, yes. And we can get it done."
Biden is asking Congress to dedicate spending to electric vehicle rebates, charging ports and electric school buses in a quest to drive motorists away from conventional, gasoline-powered automobiles. Some $174 billion in government funding would go to the electric-vehicle initiatives, according to a White House fact sheet summarizing the Biden plan.
Under Biden’s blueprint, Congress is also being asked to sustain tax incentives that encourage more motorists to buy electric vehicles. Those tax credits are currently valued at as much as $7,500 for the purchase of an electric vehicle. But Tesla Inc. and General Motors have already passed an existing 200,000-per-manufacturer ceiling at which the value of those credits phases down.
Biden is asking Congress to “give consumers point-of-sale rebates and tax incentives to buy American-made EVs, while ensuring that these vehicles are affordable for all families and manufactured by workers with good jobs,” the White House said.
Sen. Debbie Stabenow and Rep. Dan Kildee, both Michigan Democrats, are working with the White House and Democratic leadership on a plan to do away with the 200,000-vehicle ceiling. Another possible change includes better targeting the credit to middle- and lower-income motorists -- a shift that was part of the Biden campaign’s tax plans, according to the Tax Policy Center, which analyzed them last year.
The Alliance for Automotive Innovation, a trade association that represents General Motors, Ford, Toyota, Volkswagen and other major automakers, said it is committed to working toward a net-zero carbon future that includes a shift to EVs. Its members, which also include some suppliers and tech companies, plan to invest $250 billion in vehicle electrification by 2023.
The group — joined by the Motor & Equipment Manufacturers Association and the UAW — sent a letter on Monday to the president, outlining a “comprehensive approach” to accelerate the adoption of EVs while maintaining U.S. competitiveness in developing and deploying those technologies.
“The nations that lead the development and adoption of these types of technologies are also going to shape the supply chains and the job creation and define global standards and potentially reshape international markets,” John Bozzella, CEO of the alliance, said during a call with reporters. “This is an opportunity to assert American leadership, to win in the marketplace and to support American workers, and so that's really what we want to continue to work with the Biden administration and in Congress to do.”
No ICE phase out
Biden's plan does not call for phasing out gasoline-powered vehicles, a White House official told Reuters on Wednesday.
A number of U.S. lawmakers have called on Biden to follow the lead of California, which announced last year that it planned to end the sale of new gas-powered passenger vehicles in 2035. A White House official confirmed the plan has "no phase-out and no specific date at the moment."
Many lawmakers and union officials are worried that phasing out gas-powered vehicles could decimate auto jobs.
Rory Gamble, the president of the UAW, said in a statement on Wednesday that "workers will disproportionately suffer if we do not make the transition to a green economy in the right way."
He added that "the reality is that we have a long way to go in terms of battery technology, refueling infrastructure and, importantly, market demand in order to successfully make this transition to electric vehicles."
White House climate adviser Gina McCarthy held a call on Wednesday with senior auto executives to discuss the plan.
The president's proposal was greeted icily by conservatives and major business groups.
"If it’s going to have massive tax increases and trillions more added to the national debt, it’s not likely," said Republican Senator Mitch McConnell of Kentucky, the minority leader, one day after Biden called to brief him on the proposal.
Paying for it
Biden is ignoring a campaign promise to raise taxes on wealthy individuals, at least for now, with none of the expected increases in the top marginal rate or capital gains tax.
The plan would instead increase the corporate tax rate to 28 percent from 21 percent and change the tax code to close loopholes that allow companies to move profits overseas, according to a 25-page briefing paper released by the White House.
Biden said the goal was not to "target" the wealthy but to address divisions and inequality worsened by the pandemic.
The plan would spread the cost for projects over an eight-year period and aims to pay for it all over 15 years, without adding to the country's debt in the long run, a senior administration official said.
Neil Bradley, executive vice president and chief policy officer at the nation's largest trade group, the U.S. Chamber of Commerce, said while the organization shares Biden's sense of urgency on infrastructure, his plan is "dangerously misguided."
"We strongly oppose the general tax increases proposed by the administration which will slow the economic recovery and make the U.S. less competitive globally – the exact opposite of the goals of the infrastructure plan," Bradley said.
Biden’s initiative also would give a 10-year extension to tax credits that have been a boon to wind, solar and other renewable energy projects. His plan, which requires congressional approval, would also make those clean energy tax credits refundable -- a so-called direct-pay option that developers have sought as tax equity financing has dried up.
Backers of the extension argue the historically unpredictable nature of the tax credits have rendered them less effective and insisted that consistency is necessary to propel renewable power projects.
“It’s that type of long-term reliability that we need as industry,” Suzanne Leta, head of policy and strategy at SunPower Corp., said in an interview Tuesday. “The stops and starts of the past should not be the way forward for this administration or Congress.”
Biden is also seeking an expansion of a tax credit that supports the underground storage of carbon dioxide, which is popular with both environmentalists and oil companies. According to the White House summary, Biden’s plan would revamp the carbon-capture tax credit so it benefits retrofits of existing power plants, technology directly capturing greenhouse gas emissions from the air and hard-to-decarbonize industrial sectors, such as steel and cement making.
Electric grid improvements are also on Biden’s agenda, which envisions the creation of an investment tax credit focused on electric transmission, as well as permitting changes to promote the siting of new power lines along roads and railways. The tax credit would help encourage the buildout of some 20 gigawatts of high-voltage capacity power lines, according to the White House.
Audrey LaForest of Automotive News and Reuters contributed to this report.