Volts podcast: Sen. Tina Smith on the promise of a Clean Electricity Payment Program

In this episode, Sen. Tina Smith (D-MN) discusses a policy that she has proposed in the Senate and is working to get included in the upcoming reconciliation bill: a Clean Electricity Payment Program (CEPP), which would aim to reduce carbon emissions in the US electricity sector 80 percent by 2030. She also shares some excellent thoughts on the filibuster!

Full transcript of Volts podcast featuring Sen. Tina Smith (D-MN), September 1, 2021

(PDF version)

David Roberts:

There are lots and lots of policies being discussed for inclusion in the Democrats’ upcoming budget reconciliation bill, from a childcare tax credit to universal pre-K to a wide range of climate and clean-energy measures.

According to the office of Senate Majority Leader Chuck Schumer (D-NY), the climate provisions in the bill would collectively reduce total US greenhouse gas emissions 45 percent below 2005 levels by 2030 — getting us close to America’s Paris agreement pledge.

Schumer’s numbers have not yet been backed up by outside analysts, so they should be taken with a grain of salt for now. But what’s clear, and unlikely to change, is that the bulk of the emission reductions will come from the electricity sector — specifically, from the clean-energy tax credits and the Clean Electricity Payment Program.

As regular Volts readers know, the Clean Electricity Payment Program is a version of the more familiar Clean Energy Standard that has been modified to fit within the rules of budget reconciliation. It would set up a federal program that would offer utilities financial incentives to increase their proportion of clean energy and levy fines on those that failed to do so. Its goal would be to reduce emissions from the US electricity sector 80 percent by 2030.

As Schumer’s graph shows, the Clean Electricity Payment Program, in combination with the extension and expansion of the clean-energy tax credits, would be responsible for almost 42 percent of the bill’s total reductions.

To hear more about the program and how it will work, I talked with Minnesota Senator Tina Smith (D), the policy’s sponsor and its greatest champion in the Senate. Smith is one of the handful of senators with in-depth knowledge of the dynamics in the US electricity sector, and she’s deeply involved in budget negotiations, so I was excited to ask her about how the program would work, what kinds of jobs and projects it might produce, how it might affect coal states, and of course, because I am me, what she thinks about the filibuster.

Senator Tina Smith, thank you so much for coming on Volts.

Sen. Tina Smith:

Well, thank you, David. It is terrific to be with you.

David Roberts:

We're going to talk today about clean electricity policy and the politics of getting it passed, which are two of my very favorite subjects in the world, so let's just dive right in.

Senator Smith, I’m pretty confident that Volts listeners are familiar with state-level policies, renewable portfolio standards or clean energy standards at the state level, that mandate that utilities in the state increase their proportion of clean energy. It’s a regulatory mandate passed by the state government; these are familiar, there are dozens of them across the country.

The Clean Electricity Payment Program that you have proposed is not quite that. So why don't you start by telling us what it is and how it is similar and different to these more familiar state policies?

Sen. Tina Smith:

Well, the basic goal is the same. We want to move the power generating sector so that it is adding clean energy. One way of doing that is to have a regulatory framework that says, you will add clean energy, and if you don't, you'll pay a penalty. But another way of achieving that goal of adding clean power is to do what we're doing with the Clean Electricity Payment Program.

This is a plan that says: We will provide financial incentives to utilities to add clean power; there'll be a fee if you fail to add clean power; and our goal is to get, on a national average, 80 percent of our power generation from clean energy sources by 2030.

So the goal is the same: adding clean power. The mechanism is a little bit different.

I think this mechanism has some real advantages, because under a regulatory framework, adding that clean power costs money in the short term (though it saves money in the long term) and often those costs are passed on to ratepayers. With the clean electricity plan that we're proposing, this federal incentive would defray the costs that utility ratepayers would normally pay. That's the real advantage of this approach.

David Roberts:

It’s worth pointing out something I've heard from a couple of the architects: costs on ratepayers tend to be regressive, whereas federal money comes from more progressive income taxes. So you get a progressivity advantage by drawing the money from the federal pot.

Sen. Tina Smith:

Absolutely. That's exactly right.

We need to be on this path to a clean energy transition, but what you don't want to have happen is for the cost of that transition to be disproportionately borne by people who can least afford it. This is especially important to me, because the costs of the fossil fuel economy have been disproportionately borne — in bad health outcomes and in all sorts of other external costs — by poor people, Black and brown people, people who are sited right next to freeways or right next to that coal-burning power plant.

David Roberts:

The details of this thing obviously matter. I'm curious, to what extent are the details of the program fixed and in place vs. being negotiated right now? Do we know the size of the payments? Are we sure that the target is going to stay the same through negotiations? What's in place and what's still up in the air?

Sen. Tina Smith:

Well, of course, everything is in the midst of being negotiated all the time, as you well know. Negotiations will be finalized when the budget reconciliation bill is completed.

But for me, there are a couple of key aspects of this. One, the goal of achieving 80 percent clean power in the power sector nationally, on average, is set in stone. That was described in the Democratic budget resolutions that we passed at the end of the last session. That is described as the goal of the president. So to me, that's the starting point.

Then there are a couple of other things that are crucial to this