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The Key Climate Investments Before Congress that Can Reduce Demand for Russian Oil and Gas

The crisis in Ukraine makes it clearer than ever that the United States must transition away from oil and gas to an electrified, 100% clean economy.

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Climate in Congress
Address by President of Ukraine Volodymyr Zelenskyy to the US Congress.
President Volodymyr Zelenskyy addresses US Congress on March 16, 2022 (Photo via President of Ukraine/Flickr)

Russia’s unprovoked invasion of Ukraine is a brutal humanitarian tragedy that has already taken thousands of lives and upended millions more. It has also sent already-volatile international oil and gas markets spiraling, pushing energy prices to historic highs and enriching fossil fuel companies while American working families pay astronomical prices at the pump. No matter how much oil and gas we extract in the US, as long as we are dependent on these global commodities, America’s economy and household prosperity will remain vulnerable to geopolitical shocks and the whims of petro-dictators abroad.

Fortunately, the climate investments in the House-passed reconciliation bill would help achieve real energy security by supercharging the transition to a 100% clean energy economy. This is the only long-term solution to the oil and gas market’s intrinsic volatility. The Senate must take up and pass this legislation immediately.

This brief lays out the key areas of investment from the reconciliation bill that will accelerate the clean energy transition and reduce US demand for fossil fuels, protect working families from price spikes, stop enabling petro-dictators like Vladimir Putin, and cut pollution to avert the worst consequences of climate change. For a more detailed analysis of the specific investments contained in the reconciliation bill that would help achieve these goals, read Evergreen’s full policy memo here. These measures were passed by the House last year via reconciliation, and the Senate should pass them immediately to reduce America's dependence on Russian oil and gas. The measures are incredibly popular: over two-thirds of voters agree that in light of the Russian invasion, America should invest in domestic clean energy production.

The policy firm Energy Innovation recently released modeling on the oil and gas demand reductions that would be driven by the full $555 billion climate package. According to their analysis, those investments would ultimately cut demand enough to more than offset Russian oil and gas imports, insulating the country from price swings driven by international conflict. The takeaway is clear: President Joe Biden and Senate Majority Leader Chuck Schumer must bring the $555 billion package over the finish line and make a historic step toward cutting American dependence on unstable, costly, and polluting fossil fuels.

Get the Full Policy Memo

Investing in Clean Energy

Clean energy investments are key to reaching President Biden’s goal of cutting greenhouse gas pollution by 50% by 2030, and they’re critical for reducing dependence on fossil gas. Fossil gas (also known as natural gas) makes up 38% of utility-scale electricity generation in the US, and Energy Innovation found that out of the full $555 billion climate package, clean energy spending would make the most substantial cuts to American fossil gas demand.

The House-passed reconciliation bill includes a full suite of clean energy investments, totaling well over $340 billion. A few highlights among those policies include: the Clean Electricity Production and Investment Tax Credits, which would incentivize the production of clean energy and investments in new clean generation capacity; the Transmission Investment Tax Credit, which would help build new transmission lines to open grid capacity for 30,000 new megawatts of renewable energy; and the Greenhouse Gas Reduction Fund, which would provide $29 billion in low-cost financing for clean energy infrastructure projects, as well as state, local, and tribal programs that invest in clean energy and electric vehicle charging infrastructure. All of these investments would help supercharge the transition to clean energy and away from fossil gas. 

Deploying Electric Vehicles

According to Energy Innovation’s modeling, increasing the share of electric vehicles (EVs) on American roads is key to cutting US demand for oil. Out of the entire $555 billion climate package, EV investments will make the biggest dent in oil demand—in 2021, the US imported close to 73 million barrels from Russia, but by 2025, reductions from the EV tax credits alone would entirely offset those imports. By 2030, the growth in EV sales would cut US oil demand by 180 million barrels per year.

To see those investments pay off, Congress must pass them now—slow fleet turnover, with cars lasting about 11-12 years on the road, means it will take time to transition the country to EVs. Among other necessary investments in EVs, the House-passed reconciliation bill includes: the EV Tax Credit 30(D), which subsidizes new EVs for consumers buying their next car; the Alternative Fueling Credit for EV Infrastructure 30(C), which helps businesses install new charging stations to ensure that EV drivers have ready access to charging infrastructure nationwide; and funding for federal fleet electrification, to electrify the entire 645,000-strong fleet of federally owned vehicles.

President Joe Biden and Senate Majority Leader Chuck Schumer must bring the $555 billion package over the finish line and make a historic step toward cutting American dependence on unstable, costly, and polluting fossil fuels.

Electrifying Buildings

In the US, buildings are a major consumer of fossil fuels—fossil fuel appliances burn approximately 25% of all fossil gas and 5% of all oil consumed nationwide each year, and electrifying building systems will be necessary to cut back on oil and gas demand. Buildings investments also offer an important opportunity to address energy burden injustices. This past winter, heating costs were projected to increase by 54% for propane, 43% for home heating oil, 30% for fossil gas—and only 6% for electric heating. In a country where the poorest households can spend more than 10% of their annual income on utility bills, electrification would be a financial lifeline and a way to ease this energy burden.

Several investments in the $555 billion climate package would help lower home energy costs while driving down demand for fossil fuels, including: the High-Efficiency Electric Home Rebate Program, which would provide homeowners and landlords an incentive to replace fossil gas-fired appliances with electric alternatives, like high efficiency electric heat pumps; the HOPE for HOMES Program, which would help train new energy efficiency contractors and give rebates to homeowners to invest in energy efficiency improvements; and the Residential Energy Efficiency Tax Credit 25(C), Energy Efficient Home Credit (45L), and Commercial Energy Efficiency Tax Deduction 179(D), which together would support electrification and energy efficiency in residential and commercial buildings.

Decarbonizing Heavy Industry

American heavy industry burns a third of all fossil gas consumed in the US. The sector is also expected to emit a growing share of greenhouse gas pollution globally as easier-to-abate sectors electrify and go clean. For those reasons, it is critical to begin decarbonizing heavy industry now to reduce demand for fossil gas and cut the carbon pollution driving climate change. Electrifying industrial processes and converting to cleaner fuels can advance that goal.

The House-passed reconciliation bill includes numerous investments in cutting industrial emissions. The following policies in particular would drive toward the goal of reducing demand for fossil gas and supporting key american industries: the Advanced Industrial Facilities Deployment Program, which would support firms installing and implementing advanced industrial technology at energy-intensive industrial and manufacturing facilities; the Hydrogen Tax Credit, which would help make green hydrogen viable as an alternative fuel for some high-heat industrial processes; and federal Buy Clean spending, which would help the government procure from contractors who can demonstrate relative advantage in the climate and environmental impacts of their products and processes. 

Mobilizing American-Made Clean Energy

Cutting across all of the above sectors is the need to manufacture more advanced, clean technologies in the US, creating jobs here at home with the technologies that will power the future. Batteries, solar panels, electric heat pumps, and much more—all of the new tech we’ll need to replace fossil fuel infrastructure—have to get built, and the $555 billion package would help manufacturers build them in America, with American labor. Developing domestic clean tech manufacturing would secure our clean energy supply, revitalize the American manufacturing workforce, and ready us to answer Europe’s call for help transitioning off Russian fossil fuels.

A few investments in the House-passed reconciliation bill would do just that: the Advanced Manufacturing Tax Credit 48(C), which supports facilities building advanced clean technologies; the Advanced Solar Manufacturing Tax Credit, which offers tax credit incentives for the production of solar panels; and the Energy Storage Tax Credit, which will help develop advanced energy storage to provide flexibility on a 100% clean grid and make large-scale clean energy deployment more viable. 

Ambitious Climate Investments Offer Our Best Path Forward

The crisis in Ukraine makes it clearer than ever that the United States must transition away from oil and gas to an electrified, 100% clean economy. In the coming weeks, President Biden will act to aid European allies and mitigate the fallout of the Russian energy crisis; that endeavor must focus on accelerating the deployment of clean energy and efficient technologies, and not on developing new fossil fuel infrastructure. The most important action President Biden and Congress can take toward that end, and to combat Putin’s energy crisis and prevent similar future crises, is pass the $555 billion climate investments package. There is no better moment to kickstart the clean energy transition and insulate the country from future energy crises. President Biden and Majority Leader Schumer must get a deal done, and get the climate provisions of the House-passed reconciliation bill through now.

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