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The $3.5 trillion budget bill could transform the US power sector—and slash climate pollution

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The $3.5 trillion budget bill could transform the US power sector—and slash climate pollution


In the coming weeks, Congress may pass one of the most important climate policies in US history.

The $3.5 trillion budget plan includes a provision known as the Clean Electricity Payment Program, which would use payments and penalties to encourage utilities to increase the share of electricity they sell from carbon-free sources each year. If it works as hoped, the legislation would ensure that the power sector generates 80% of its electricity from sources like wind, solar, and nuclear plants by 2030, cutting more than a billion tons of annual greenhouse-gas emissions.

The measure would mark a foundational step in President Joe Biden’s ambitious climate plan, which aims to put the nation on track to eliminate climate pollution from electricity generation by 2035—and achieve net-zero emissions across the economy by midcentury.

There are real questions, though, about whether the program will achieve its aggressive targets. How the nation’s complex electricity sector actually responds will depend heavily on how the agency that oversees the program implements it, and particularly where it sets the payments and penalties, some economists say.

It’s also still unclear if the measure will pass in anything like its current form—or at all.

How would it work?

The Clean Electricity Payment Program is a twist on a clean electricity standard, a regulation numerous states have implemented that requires utilities to reach certain levels of clean electricity by specific years. The proposal mainly opts for payments and penalties over binding mandates because that could enable it to pass under a legislative process known as budget reconciliation, which requires only a simple majority of votes in the Senate.

Once companies boost their share of clean electricity above an annual target, they would earn payments for every additional megawatt-hour of electricity they sell that comes from carbon-free sources, according to an analysis by the Clean Air Task Force. Those that fail to reach that threshold would have to pay a fee.

The program wouldn’t require all electricity suppliers to reach the same levels at the same times. It would adjust the yearly goals according to the point from which each is starting. But the overall target would be for the US power sector to produce 80% of its electricity from clean sources, on average, in the next nine years.

US Senator Tina Smith of Minnesota has championed the measure, which the Department of Energy would likely oversee.

The budget plan also includes federal tax incentives for building more clean electricity generation. With those credits, the program would be funded at around $150 billion to $200 billion, according to Third Way, a center-left think tank in Washington, DC.

Added together, the measures in the package would amount to “the biggest, most ambitious climate and clean energy policies that the US has ever enacted, by far,” says Josh Freed, head of the organization’s climate and energy program.

What would the program do?

If the measures achieve the goal of 80% clean electricity by 2030, it would more than double the share of carbon-free electricity in the US and significantly accelerate the pace of the transition to clean energy.

Currently, about 38% of the electricity generated in the US comes from carbon-free sources: 18% from renewables and 20% from nuclear power.

Pushing the power sector to 80% would cut carbon dioxide emissions by 86% from 2005 levels, according to an analysis by the Natural Resources Defense Council, included in an Evergreen Collective report published this month.

That would eliminate well over a billion tons of annual climate pollution in the next nine years. By comparison, the power sector reduced annual emissions by a little more than 800 million tons in the 14 years leading up to 2019, driven almost entirely by the shift from coal to natural gas and the increase in renewables.

How else does it help?

That takes a giant whack at one of the largest sources of US climate pollution. The electricity sector produces a quarter of the nation’s total greenhouse gases, second only to the transportation sector at 29%.  

Cleaning up the power sector also makes it easier to address other major emissions sources. It ensures, for instance, that far more of the electricity used to charge electric cars, trucks, and buses is carbon free. The same goes for things like heating and cooking if regulations require more homes and businesses to shift to electric stoves, heat pumps, and other cleaner technologies.

“If we want to achieve real, deep cuts in emissions, we’ve got to do it through clean electricity,” says Leah Stokes, an assistant professor of political science at the University of California, Santa Barbara, who has consulted on the policy.  

Meanwhile, other studies have found the shift to around 80% carbon-free electricity would spur $1.5 trillion of investments into clean energy, create hundreds of thousands of jobs, and save hundreds of thousands of lives over the coming decades through reduced air pollution.

But will it really get us to 80% clean electricity by 2030?

“Who knows?” says James Bushnell, an environmental and energy economist at the University of California, Davis.

The downside to going with incentives over strict mandates is that you can’t guarantee the end result. The government will need to make some imperfect predictions, or continually assess and refine how big the sticks and plentiful the carrots will need to be to bring about the desired changes, Bushnell says.

It will also have to carefully design the program to prevent the industry from gaming it. He sees scenarios where utilities could pack together big additions of clean electricity in certain years and narrow misses in others, in ways that could minimize penalties, maximize payments, and slow the progress of the program.

Another problem is that much of the data today on US electricity generation and sales is self-reported, while the “cleanness” of electricity purchased in real-time markets isn’t always clear. So the government will likely need to set up stringent processes for monitoring and verification, and develop reliable ways to certify or track where carbon-free electricity originates and where it ends up.

What would it mean for electricity prices?

Most assessments of the Clean Electricity Payment Program conclude it will drive down consumer prices. That’s because it’s funded by the federal government, and utilities would be required to use the payments to benefit customers.

“In a traditional [clean electricity standard], the cost is carried in electricity rates, and therefore by utility customers,” noted the Evergreen report, which Stokes co-wrote. In contrast, the payment program would shield Americans from rising electricity bills, the report said.

But Bushnell says that even if those performance payments are used to reduce prices, it’s still possible they could tick up in some instances. That’s because utilities will all be competing for limited sources of both old and new clean electricity, which would drive up prices. Prices for dirty electricity could fall for the same demand and supply reasons. But how all that balances outs from market to market remains to be seen, he says.

So why not just enact mandates?

While simply mandating utilities to sell set levels of clean electricity by certain times offers a clearer path to the desired result, the proposed payment plan has one powerful advantage: it’s politically feasible.

Specifically, it could enable legislators to include the proposal in the budget reconciliation process. That allows Congress to approve legislation on certain issues, related to taxes and spending, with 51 votes in the Senate—precisely the number Democrats have if Vice President Kamala Harris steps in to cast a tie-breaking vote.

A regulatory rule wouldn’t qualify for reconciliation, requiring it to secure 60 votes to overcome the threat of a filibuster.

So does that mean it will definitely pass?

Not at all.

There are tight restrictions on what sorts of measures can be included in the reconciliation process, under what’s known as the Byrd rule. The Senate can’t consider “extraneous” provisions requiring any proposals to alter federal spending or taxes in ways that are more than incidental to other policy aims, among other tests.

So there’s always a chance that the Senate parliamentarian could rule that certain measures don’t qualify, stripping them from the final bill altogether.

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Why can’t tech fix its gender problem?

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From left to right: Gordon MOORE, C. Sheldon ROBERTS, Eugene KLEINER, Robert NOYCE, Victor GRINICH, Julius BLANK, Jean HOERNI and Jay LAST.


Not competing in this Olympics, but still contributing to the industry’s success, were the thousands of women who worked in the Valley’s microchip fabrication plants and other manufacturing facilities from the 1960s to the early 1980s. Some were working-class Asian- and Mexican-Americans whose mothers and grandmothers had worked in the orchards and fruit can­neries of the prewar Valley. Others were recent migrants from the East and Midwest, white and often college educated, needing income and interested in technical work. 

With few other technical jobs available to them in the Valley, women would work for less. The preponderance of women on the lines helped keep the region’s factory wages among the lowest in the country. Women continue to dominate high-tech assembly lines, though now most of the factories are located thousands of miles away. In 1970, one early American-owned Mexican production line employed 600 workers, nearly 90% of whom were female. Half a century later the pattern continued: in 2019, women made up 90% of the workforce in one enormous iPhone assembly plant in India. Female production workers make up 80% of the entire tech workforce of Vietnam. 

Venture: “The Boys Club”

Chipmaking’s fiercely competitive and unusually demanding managerial culture proved to be highly influential, filtering down through the millionaires of the first semiconductor generation as they deployed their wealth and managerial experience in other companies. But venture capital was where semiconductor culture cast its longest shadow. 

The Valley’s original venture capitalists were a tight-knit bunch, mostly young men managing older, much richer men’s money. At first there were so few of them that they’d book a table at a San Francisco restaurant, summoning founders to pitch everyone at once. So many opportunities were flowing it didn’t much matter if a deal went to someone else. Charter members like Silicon Valley venture capitalist Reid Dennis called it “The Group.” Other observers, like journalist John W. Wilson, called it “The Boys Club.”

The men who left the Valley’s first silicon chipmaker, Shockley Semiconductor, to start Fairchild Semiconductor in 1957 were called “the Traitorous Eight.”

WAYNE MILLER/MAGNUM PHOTOS

The venture business was expanding by the early 1970s, even though down markets made it a terrible time to raise money. But the firms founded and led by semiconductor veterans during this period became industry-defining ones. Gene Kleiner left Fairchild Semiconductor to cofound Kleiner Perkins, whose long list of hits included Genentech, Sun Microsystems, AOL, Google, and Amazon. Master intimidator Don Valentine founded Sequoia Capital, making early-stage investments in Atari and Apple, and later in Cisco, Google, Instagram, Airbnb, and many others.

Generations: “Pattern recognition”

Silicon Valley venture capitalists left their mark not only by choosing whom to invest in, but by advising and shaping the business sensibility of those they funded. They were more than bankers. They were mentors, professors, and father figures to young, inexperienced men who often knew a lot about technology and nothing about how to start and grow a business. 

“This model of one generation succeeding and then turning around to offer the next generation of entrepreneurs financial support and managerial expertise,” Silicon Valley historian Leslie Berlin writes, “is one of the most important and under-recognized secrets to Silicon Valley’s ongoing success.” Tech leaders agree with Berlin’s assessment. Apple cofounder Steve Jobs—who learned most of what he knew about business from the men of the semiconductor industry—likened it to passing a baton in a relay race.

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Predicting the climate bill’s effects is harder than you might think

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Predicting the climate bill’s effects is harder than you might think


Human decision-making can also cause models and reality to misalign. “People don’t necessarily always do what is, on paper, the most economic,” says Robbie Orvis, who leads the energy policy solutions program at Energy Innovation.

This is a common issue for consumer tax credits, like those for electric vehicles or home energy efficiency upgrades. Often people don’t have the information or funds needed to take advantage of tax credits.

Likewise, there are no assurances that credits in the power sectors will have the impact that modelers expect. Finding sites for new power projects and getting permits for them can be challenging, potentially derailing progress. Some of this friction is factored into the models, Orvis says. But there’s still potential for more challenges than modelers expect.

Not enough

Putting too much stock in results from models can be problematic, says James Bushnell, an economist at the University of California, Davis. For one thing, models could overestimate how much behavior change is because of tax credits. Some of the projects that are claiming tax credits would probably have been built anyway, Bushnell says, especially solar and wind installations, which are already becoming more widespread and cheaper to build.

Still, whether or not the bill meets the expectations of the modelers, it’s a step forward in providing climate-friendly incentives, since it replaces solar- and wind-specific credits with broader clean-energy credits that will be more flexible for developers in choosing which technologies to deploy.

Another positive of the legislation is all its long-term investments, whose potential impacts aren’t fully captured in the economic models. The bill includes money for research and development of new technologies like direct air capture and clean hydrogen, which are still unproven but could have major impacts on emissions in the coming decades if they prove to be efficient and practical. 

Whatever the effectiveness of the Inflation Reduction Act, however, it’s clear that more climate action is still needed to meet emissions goals in 2030 and beyond. Indeed, even if the predictions of the modelers are correct, the bill is still not sufficient for the US to meet its stated goals under the Paris agreement of cutting emissions to half of 2005 levels by 2030.

The path ahead for US climate action isn’t as certain as some might wish it were. But with the Inflation Reduction Act, the country has taken a big step. Exactly how big is still an open question. 

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China has censored a top health information platform

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China has censored a top health information platform


The suspension has met with a gleeful social reaction among nationalist bloggers, who accuse DXY of receiving foreign funding, bashing traditional Chinese medicine, and criticizing China’s health-care system. 

DXY is one of the front-runners in China’s digital health startup scene. It hosts the largest online community Chinese doctors use to discuss professional topics and socialize. It also provides a medical news service for a general audience, and it is widely seen as the most influential popular science publication in health care. 

“I think no one, as long as they are somewhat related to the medical profession, doesn’t follow these accounts [of DXY],” says Zhao Yingxi, a global health researcher and PhD candidate at Oxford University, who says he followed DXY’s accounts on WeChat too. 

But in the increasingly polarized social media environment in China, health care is becoming a target for controversy. The swift conclusion that DXY’s demise was triggered by its foreign ties and critical work illustrates how politicized health topics have become. 

Since its launch in 2000, DXY has raised five rounds of funding from prominent companies like Tencent and venture capital firms. But even that commercial success has caused it trouble this week. One of its major investors, Trustbridge Partners, raises funds from sources like Columbia University’s endowments and Singapore’s state holding company Temasek. After DXY’s accounts were suspended, bloggers used that fact to try to back up their claim that DXY has been under foreign influence all along. 

Part of the reason the suspension is so shocking is that DXY is widely seen as one of the most trusted online sources for health education in China. During the early days of the covid-19 pandemic, it compiled case numbers and published a case map that was updated every day, becoming the go-to source for Chinese people seeking to follow covid trends in the country. DXY also made its name by taking down several high-profile fraudulent health products in China.

It also hasn’t shied away from sensitive issues. For example, on the International Day Against Homophobia, Transphobia, and Biphobia in 2019, it published the accounts of several victims of conversion therapy and argued that the practice is not backed by medical consensus. 

“The article put survivors’ voices front and center and didn’t tiptoe around the disturbing reality that conversion therapy is still prevalent and even pushed by highly ranked public hospitals and academics,” says Darius Longarino, a senior fellow at Yale Law School’s Paul Tsai China Center. 

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