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Consolidated Appropriations Act of 2021: Energy Financial Incentives

Industry - Clean Energy and Renewables

President Biden has announced ambitious energy and environmental goals in an effort to combat the effects of climate change. Many of the president’s goals hinge on increasing support for alternative forms of energy production, increased use of low or zero emissions vehicles and fuels, as well as investment in and deployment of carbon reduction technologies, such as carbon capture and storage (“CCS”). While it remains to be seen what the new administration may seek from Congress in terms of further legislative support, the appropriations and stimulus act passed by Congress and signed into law by the prior administration at the end of 2020 lays the groundwork for the Biden administration, through the Department of Energy, to provide financial support for and form partnerships with the private sector to help meet the administration’s climate goals.

The Energy Act of 2020, Division Z of the Consolidated Appropriations Act of 2021, contains a number of provisions intended to modify the Energy Policy Act of 2005 and set forth Congress’s agenda to pursue the aggressive development of renewable and low-carbon energy technologies. The Energy Act of 2020 also provides for federal financial support measures in the form of grants and prize competitions to incentivize the development of technologies for carbon management and carbon removal. These programs are a departure from many federal programs to support the development of low-carbon technologies in the past, because the legislation is more focused on the establishment of grants and federal cost-share programs, eschewing the loan guarantee programs that became controversial during the Obama administration.

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This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.