How will Biden handle his first major climate decision after Inflation Reduction Act?

With the passage of the Inflation Reduction Act, the U.S. has finally put a substantial down payment toward the clean energy transition needed to address the climate crisis. But like a 30-year home mortgage, even a hefty down payment doesn’t settle the debt. Every month over the course of decades, you have to keep paying down that mortgage.

The Inflation Reduction Act makes a hefty commitment of resources toward building clean energy, but unless we stop burning fossil fuels, our carbon debt will continue to grow. That’s why impending decisions about federal subsidies for fossil fuel-burning power plants are so important.

A proposed combined-cycle gas power plant in Superior, Wisconsin, known as the Nemadji Trail Energy Center (NTEC), will be one of the first major climate decisions faced by President Biden after the passage of the Inflation Reduction Act.

If built, NTEC would emit up to 2.7 million tons of carbon dioxide equivalent every year, equal to putting over 500,000 new gas-powered cars on the road. It would be jointly owned by three utility companies: Dairyland Power Cooperative, Basin Electric Cooperative and Minnesota Power. Dairyland would own the largest piece of the plant and seeks hundreds of millions in federally subsidized loan money for its share.

In 2021, Biden ordered federal agencies to eliminate federal fossil fuel subsidies and prioritize implementation of clean energy. Nonetheless, the U.S. Department of Agriculture (USDA) Rural Utilities Service loan program is considering loaning hundreds of millions of dollars to build this new fossil fuel power plant. A flawed Trump administration analysis completely ignored its climate impacts. Fortunately, USDA has agreed that a new environmental study must address the plant’s projected climate impacts before deciding whether to greenlight the loan. Now that the results are in, it should go further and reject the federally backed loan altogether.

Six years ago, when NTEC was first proposed, the industry notion that gas power plants were a necessary “bridge” to renewable energy was widespread. Since then, the cost of wind and solar power has plummeted, battery storage has become affordable and feasible, and our scientific understanding of the urgency of the climate crisis has grown. We do not have time or resources to waste on 30-year commitments to fossil fuels, especially when better and less expensive alternatives are ready to be deployed.

NTEC is an unnecessary and expensive proposal that makes even less sense now than it did when it was originally proposed in 2016. Recent regulatory filings by Dairyland and Minnesota Power show that neither utility has electricity demands that justify spending $700 million to build this plant.Using the same models as the power companies, clean energy advocates have repeatedly shown that power demands can be met with solar and wind energy and battery storage while saving money for ratepayers.

In August, the U.S. Environmental Protection Agency (EPA) weighed in on the NTEC proposal. It found that using the “social cost of carbon” that assigns monetary costs to carbon pollution, NTEC would cause $2.15 billion in climate damage in the first 15 years of operation. Noting the international scientific consensus that “we have less than a decade to transition from fossil fuel to clean energy” in order to avoid the worst impacts of climate change, the EPA called for significant changes to the proposed power plant and additional environmental study.

The Rural Utilities Service loan program is a valuable and important function of the USDA and has funded a host of clean energy projects over the past decade. These loans should be targeted at building out a 21st-century electric grid for rural communities. It makes no sense to spend billions to clean up our energy system while continuing to fund climate-polluting projects that make the problem worse. NTEC is expensive, unnecessary and would shatter the commitments to shift from fossil fuels to clean, renewable energy made by Biden and Agricultural Secretary Tom Vilsack.

At the 2021 international climate conference, Vilsack was clear and direct. Climate change “is not a future threat; it’s here … We cannot continue on this dire trajectory.” These words echoed those of Biden, who said upon taking office, “In my view, we’ve already waited too long to deal with this climate crisis, and we can’t wait any longer. We see it with our own eyes, we feel it, we know it in our bones, and it’s time to act.”

These words are appropriately urgent. Now it’s up to Vilsack and Biden to heed them and deny a federal subsidy for the NTEC gas power plant.

Aaron Klemz is chief strategy fficer for the Minnesota Center for Environmental Advocacy (MCEA), a nonpartisan and nonprofit organization with offices in Duluth and St. Paul, Minnesota. MCEA has lobbied against the federal loan for NTEC and opposed NTEC at the Minnesota Utilities Commission and in state court.  

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