US$1.2trn U.S. Bipartisan Infrastructure Deal signed into law

The US$1.2trn Infrastructure Investment and Jobs Act (the “Bipartisan Infrastructure Deal”) was signed into law on November 15, 2021 by President Biden and is the largest single infrastructure investment in American history.

What is the Bipartisan Infrastructure Deal? 

The Bipartisan Infrastructure Deal is the largest single infrastructure investment in American history and one aspect of President Joe Biden’s broader infrastructure platform. The purpose of the Bipartisan Infrastructure Deal is multi-fold, and among others includes funds for (a) rebuilding U.S. roads, bridges and rail lines, (b) improving Americans’ access to broadband high-speed internet, (c) advancing environmental justice, (d) tackling energy and infrastructure issues created by the climate crisis and (d) investing in historically underrepresented and neglected communities.  The Bipartisan Infrastructure Deal also seeks to make the U.S. more competitive by strengthening supply chains through long-overdue improvements to U.S. ports, airports, rails and roads.  

Summary of key provisions

Below is a summary of a number of the key provisions of the Bipartisan Infrastructure Deal relating to energy and infrastructure

• Power and grid

US$65bn has been earmarked for investment in grid reliability and resiliency, key technologies such as carbon capture, hydrogen, direct air capture and energy efficiency, supply chains for clean energy technology, and energy demonstration projects, including the following:

Hydrogen:

• National hydrogen strategy: Development of a national strategy and roadmap to facilitate a clean hydrogen economy.
• Clean hydrogen hubs: US$8bn (over five years) for the development of at least four regional clean hydrogen hubs in geographically diverse areas in the U.S.
• Clean hydrogen electrolysis: US$1bn (over five years) to improve efficiency, durability and reduce the cost of producing clean hydrogen using electrolyzers, with a goal of less than US$2 per kilogram of hydrogen by 2026.
• Clean hydrogen manufacturing and recycling: US$500m (over five years) for a clean hydrogen manufacturing and recycling program to support a clean hydrogen domestic supply chain. 
• Clean hydrogen production standards: Development of an initial standard for the carbon intensity of clean hydrogen production from renewable, fossil fuel with CCUS, nuclear and other fuel sources.

Electric vehicle charging:

• Alternative fuel corridors: US$2.5bn (over five years) for electric vehicle charging, hydrogen fueling, propane fueling, and natural gas fueling infrastructure along designated alternative fuel corridors.

Carbon capture, utilization and storage: 

• Regional direct air capture projects: US$3.5bn (over five years) for four regional direct air capture hubs (a network of direct air capture projects, potential carbon dioxide utilization off-takers, connective carbon dioxide transport infrastructure, subsurface resources and sequestration infrastructure located within a region).
• Carbon sequestration on the outer continental shelf: US$2.5bn (over five years) for the development of new or expanded commercial large-scale carbon sequestration projects and associated carbon dioxide transport infrastructure.
• Carbon utilization program: US$310m (over five years) for grants to procure commercial or industrial products that use or are derived from captured carbon oxides.

Nuclear energy infrastructure:

• Advanced reactor demonstration program: US$3.2bn (over five years) for the advanced reactor demonstration program.
• Civil nuclear credit program: US$6bn to evaluate nuclear reactors projected to cease operation due to economic factors and select certified nuclear reactors to be allocated credits.
• Infrastructure planning for micro- and small modular nuclear reactors: Feasibility studies to identify locations for micro-reactors and small modular reactors, including partnering with private industry to develop and deploy them in remote communities to replace diesel generation and other fossil fuels.

Hydropower:

• Hydroelectricity incentives: Approximately US$750m in incentives for hydroelectricity production, efficiency improvement and other capital improvements.
• Pumped storage hydropower: US$10m (over five years) for a demonstration project for a pumped storage hydropower project to facilitate the long-duration storage of intermittent renewable electricity.

Offshore energy storage:

• Offshore energy storage: provide flexibility to incorporate energy storage technologies into future offshore energy development, such as battery storage for offshore wind.
• Demonstration project: US$355m (over five years) for energy storage demonstration projects.

Grid infrastructure, resiliency and reliability

• Transmission facilitation program: US$10bn a year for five years to (i) establish a US$2.5bn revolving loan fund to allow the Department of Energy (“DOE”) to serve as an anchor-tenant for a new or upgrades to transmission lines, (ii) allow the DOE to buy a up to 50% of the planned capacity for future sale after reaching financial viability, and (iii) allow DOE to issue loans to or enter into public-private partnerships with eligible transmission projects.
• Enhancing the resilience of the electric grid: US$5bn to establish a grant program to support activities that reduce the likelihood and consequence of impacts to the grid due to weather, wildfire and natural disasters
• Smart-grid investment matching grant program: US$3bn for a grant program for investments that provide flexibility and help quickly rebalance the electrical system, facilitate the aggregation or integration of distributed energy resources, provide energy storage to meet fluctuating, provide voltage support, integrate intermittent generation sources, increase the network’s operational transfer capacity, and anticipate and mitigate impacts of extreme weather events or natural disasters on grid resilience.
• Ports and waterways

US$16.6bn of investment in U.S. port infrastructure, inland waterway improvements and coastal and waterway infrastructure, including the following: 

• Army Corp of Engineers: US$5.15bn for port construction projects to help address the huge backlog of authorized projects that have yet to receive funding, which will help to address current supply chain issues.
• Port Infrastructure Development Program (PIDP): US$450m in funding a year for PIDP will allow significant improvements to port facilities on U.S. coasts, rivers and Great Lakes.
• Airports

US$25bn of investment in U.S. airports, including US$20bn for grants for airports to use for airport improvement projects including runways and taxiways, terminal development projects, noise, multimodal or airport-owned towers. 

• Western water infrastructure

US$8.3bn of investment (over five years) for western water infrastructure, including US$3.2bn for aging infrastructure, US$1bn for water recycling and reuse projects and US$250m for desalination projects.

• Broadband

US$65bn of investment for broadband development across the country, including US$42.45bn in grants to states for broadband deployment and expansion of private activity bond projects to include infrastructure broadband infrastructure projects.

• Resiliency

US$47.2bn of investment (over five years) to prepare infrastructure for the impacts of climate change, cyber-attacks and extreme weather conditions (flooding, coastal resiliency, protection against wildfires). 

Next up - the Build Back Better Act 

The second part of President Joe Biden’s greater infrastructure platform is the Build Back Better Act. On October 28, 2021, the White House presented its framework for its proposed US$1.75trn Build Back Better Act, which covers investments and initiatives relating to health, education, immigration, and climate change. The proposed Build Back Better Act includes approximately US$500bn in relation to clean energy and addressing climate change.