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Infrastructure Bill Paves the Way for New Energy Investments and Technology | King & Spalding

Infrastructure Bill Paves the Way for New Energy Investments and Technology | King & Spalding
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In November 2021,”[t]The U.S. House of Representatives has passed the Infrastructure and Jobs Investment Act, a once-in-a-generation bipartisan infrastructure bill that will create millions of jobs, turn the climate crisis into an opportunity, and set us on a path to winning the economic competition for the twenty-first century.” White House Briefing Room, Statement from President Joe Biden on the House Passage of the Bipartisan Investment and Jobs in Infrastructure Act (November 6, 2021). The Infrastructure Investments and Jobs Act, also known as the bipartisan Infrastructure Bill, (the “Infrastructure Act”) allocates $550 billion for projects across the country, ranging from new rainwater projects to ensuring universal access to high-speed Internet. pub. No. 117-58 (2021). Distribution of more than $62 billion directly allocated to the Department of Energy (“DOE”) will be of particular interest. The bill directs investment toward specific areas, many of which focus on facilitating the energy transition in furtherance of the Biden administration’s pledge to combat climate change.

Carbon capture, use, storage and transfer

The Infrastructure Act allocates more than $10 billion to fund research on carbon capture, direct air capture, carbon use, and industrial emissions reductions. Department of Energy fact sheet, above; see also Infrastructure Bill, § 40301-04 (Outline of Programs). Significantly, the CO2 Transport Infrastructure Financing and Innovation Program will provide eligible projects with either federal credit instruments or a grant. Priority will be given to projects that: (a) consist of a large capacity shared transport infrastructure; (b) demonstrated the demand for infrastructure use through associated projects that capture carbon dioxide from anthropogenic sources or from ambient air; (c) Enabling geographic diversity in relevant projects that capture CO2 from human sources or ambient air, with a view to supporting projects in all major CO2 emitting regions of the United States; and (d) are located within or adjacent to the existing pipeline or other linear infrastructure corridors, in a manner that minimizes environmental disturbances and other siting concerns.

The bill also allocates $3.5 billion to four regional direct air capture centers, which must have the capacity to sequester and use at least one million tons of carbon dioxide annually. The bill would allocate another $2.5 billion to validate and test commercialization of large-scale CO2 storage. The bill also allocates $3.47 billion to find large-scale pilot projects in carbon sequestration. King & Spalding previously wrote about these programs before the Infrastructure Act was passed. We see Client Alert, Bipartisan Senate Infrastructure Bill Promotes Carbon Capture, Use and Sequestration (August 27, 2021).

hydrogen

Under the Infrastructure Act, the Department of Energy will distribute $8 billion to support the development of clean hydrogen centers across the country. This will increase the production, processing, delivery, storage and use of clean hydrogen. Department of Energy fact sheet, above; see also Infrastructure Bill, §§ 40313, 40314. Notably, Congress has directed the Department of Energy to act quickly and solicit proposals for these hubs within 180 days of the bill’s passage, or on May 14, 2022. Infrastructure Bill, § 40313.

The Infrastructure Act also directs $1 billion to the Clean Hydrogen Electrolysis Program, which aims to support the supply, marketing, and deployment of electrolyzer systems, in order to reduce the cost of producing clean hydrogen from the electrolyzer. Infrastructure Bill, § 40314.

The Infrastructure Act also directs $700 million toward modernizing hydrogen facilities with the goal of improving dam safety, increasing efficiency, reducing environmental impacts, and maintaining generators that produce zero-emissions electricity. Department of Energy fact sheet, above.

Electric Vehicles (EVS)

The infrastructure bill allocates $7.5 billion to build electric charging stations for electric vehicles. Infrastructure Bill, §§ 11101(b)(1)(C), 11401. The new charging stations will support President Biden’s goal of making all new vehicle sales for electric vehicles by 2030 with a nationwide network of 500,000 EV chargers. The Department of Energy will manage these funds along with the Department of Transportation.

Network infrastructure and resilience

The Infrastructure Act directs the Department of Energy to distribute $11 billion to states, tribes, and utilities to improve the resilience of electrical infrastructure in the face of both extreme weather and cybersecurity concerns. Identification card.

The Infrastructure Act directs the Department of Energy to direct $2.5 billion toward a Transportation Facility Program to develop new national clean energy transmission lines. Identification card.; see also Infrastructure Bill, § 40106(d)(2) (setting objectives of the transportation program).

The infrastructure bill directs $3 billion toward expanding the Smart Grid Investment Matching Grant Program, which will focus on flexibility in energy transmission and distribution. Infrastructure Bill, § 40107(b) (discussion of program implementation).

lithium batteries

The Infrastructure Act allocates $3 billion to develop a new Battery Materials Processing Grant Program administered by the Department of Energy’s Office of Fossil Energy and Carbon Management. Infrastructure Bill, § 40207(b)(4). This program aims to support the construction of a new facility and demonstration of the battery processing.

Similarly, the Infrastructure Act allocated $3 billion to the Department of Energy’s Office of Energy Efficiency and Renewable Energy for battery manufacturing and recycling grants, which will assist in battery manufacturing and recycling. Infrastructure Bill, § 40207(c)(4).

The Infrastructure Act also allocates $140 million to develop a demonstration facility and refinery for rare earths. Infrastructure Bill, § 40207(e). To be managed by the Department of Energy, this facility will help develop lithium-ion batteries for electric vehicles, ensuring that US manufacturers have direct access to these materials.

nuclear

The Infrastructure Act allocates $6 billion to be distributed to the Civil Nuclear Credit Program, with the goal of preventing the retirement of carbon-neutral nuclear plants. Infrastructure Bill, § 40323(i); DOE Fact Sheet: A Bipartisan Infrastructure Deal Will Save American Workers, Families, and Enter a Clean Energy Future (November 9, 2021).

The infrastructure bill also allocates $2.5 billion to the Department of Energy’s Advanced Reactor Demonstration Program, which encourages research and development in advanced nuclear reactor technologies. Infrastructure Bill, 41002(a).

These rulings indicate that the Biden administration may view advanced nuclear power as a viable form of clean energy.

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For all of these programs under the Infrastructure Act, the Department of Energy and other federal agencies with executive authority will likely issue guidelines or regulations that provide more detail about how companies can present and qualify for funding opportunities. In doing so, federal agencies may invite public comment, so interested stakeholders should monitor ongoing implementation efforts and take advantage of any opportunities to provide input to regulatory agencies.

In terms of how these programs are managed, it is reasonable to expect that the Department of Energy (and other agencies) may seek guidance for a Title 17 loan guarantee program that covers a broad range of clean and renewable energy projects. We see 42 USC §§ 16511, and what comes next. Prior to the passage of the Infrastructure Act, this multi-billion dollar program represented the largest single financial investment by the federal government in the commercialization of clean and renewable energy projects.

Nikesh Jindal was at the Department of Energy when the Loan Guarantee Program was created and initial guidelines for its implementation were drafted. In response to the renewed focus on the loan guarantee program under the current administration, Nikesh and other colleagues at King & Spalding have advised clients on how to navigate the process, including setting up applications, engaging third-party stakeholders to support projects, obtaining necessary permits and defending against any legal challenges to those permits, helping to structure project funding, and other related efforts to ensure successful procurement of federal funding.

Marcella Burke worked for the Environmental Protection Agency (EPA) as Deputy General Counsel. She has also worked for the Department of the Interior (DOI) as Deputy Attorney for Energy and Natural Resources, and Senior Adviser to the Assistant Minister for Lands and Minerals Administration. In her roles at the DOI, Marcella has managed the litigation schedule and rule-making, including carbon sequestration programs, on federal lands.

As the Department of Energy and other federal agencies begin implementing funding programs in the infrastructure bill, King & Spalding will use that collective experience and expertise to help customers take advantage of significant funding opportunities.

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