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Biden Concedes Defeat on Climate Bill as Manchin and Inflation Upend Agenda

WASHINGTON — President Biden bowed to political reality on Friday, conceding that he had been unable to persuade a holdout coal-state Democrat, or any Republicans in the Senate, to back legislation that had been his greatest hope to confront the climate crisis.

Ending more than a year of fruitless negotiations over a proposal to push the nation’s electricity and transportation sectors away from fossil fuels, Mr. Biden said Friday he was instead prepared to “take strong executive action to meet this moment.”

Even for a president who has prided himself on compromise and the art of the possible, it was a marked retreat, one driven by the economic and political challenges of rampant inflation.

Mr. Biden called on Democratic senators to pass a narrow bill to expand health-insurance subsidies through the Affordable Care Act and reduce the cost of prescription drugs. The move effectively dooms his quest for a major climate change law, and his accompanying plans to raise taxes on businesses and high-earning individuals, unless Democrats hold the House and Senate in November’s midterm elections.

The president’s climate goals stalled amid shifting economic priorities driven by fast-rising consumer prices, including the gasoline price spike triggered by Russia’s war in Ukraine. Underscoring that point, Mr. Biden made the announcement from Saudi Arabia, where he flew on Friday to press the region’s oil giants to pump even more crude onto global markets.

At the end of a news conference in Jeddah, Mr. Biden vowed that “I am not going away” on the climate fight. “I will use every power that I have as president to continue to fulfill my pledge toward dealing with global warming,” he said.

Mr. Biden came to office promising to wean the United States from fossil fuels like oil and coal in order to reduce the greenhouse gas emissions that are on pace to trigger catastrophic global warming.

He surrounded himself with experienced and aggressive advisers on international and domestic climate politics. He cast himself as a master negotiator who had spent nearly four decades in the Senate and could build coalitions on big legislation.

But the events of Thursday showed how thoroughly Mr. Biden has been frustrated in that effort.

Democratic leaders began the day thinking they were finally close to agreement with their party’s sole holdout, Senator Joe Manchin III of West Virginia. But by nightfall, Mr. Manchin told them he could not support roughly $300 billion in tax incentives for clean energy like solar and wind power. He said he wanted to wait for more encouraging data on inflation, even though administration officials said the clean energy provisions would be part of a broader bill designed to reduce health and electricity costs, cut the deficit and strengthen the economy. It was the coda to more than a year of tortured negotiations.

Mr. Manchin had been in talks with Senator Chuck Schumer of New York, the majority leader, on a scaled-back version of the climate initiatives Mr. Biden had unsuccessfully tried to sell to Mr. Manchin last fall. In a taste of the on-again, off-again nature of the discussions, on Friday, Mr. Manchin told the West Virginia radio host Hoppy Kercheval that he was still engaged in those negotiations and dangled the idea that he might support energy legislation in September.

But Mr. Manchin also said he was wary of raising taxes to offset the energy and climate credits, at a time when inflation is rising at its fastest pace in 40 years.

“Inflation is absolutely killing many, many people,” Mr. Manchin said on the radio program. “Can’t we wait to make sure that we do nothing to add to that?”

Mr. Biden’s statement effectively ruled out waiting any longer on Mr. Manchin, who has objected to various portions of the climate plan over the course of prolonged negotiations.

Mr. Manchin’s vote was key in an evenly divided Senate, where not a single Republican has been willing to vote for the Democrats’ climate legislation.

Auto industry analysts said that the death of the legislation would likely slow the nation’s transition to electric vehicles and cause some automakers to rethink their investments.

The bill had included $7,500 in tax credits for buyers of electric cars, intended to help reach Mr. Biden’s goal that half the new cars sold in the United States will be all-electric by 2030, up from just 6 percent today.

Without that incentive, electric vehicles, which climate experts say are essential to reducing emissions, could be out of reach for many consumers.

The collapse of the legislation will also kneecap the clean energy industry in the U.S. even as it takes off around the world, said Heather Zichal, chief executive of the American Clean Power Association, which represents wind and solar energy companies and battery manufacturers.

“After this, if you are looking around across the world to see where the opportunities are to invest, you are now going to overlook the U.S. Other countries have put policies in place,” she said. “They provide regulatory certainty. We don’t have that.”

For decades, the U.S. has provided short-term tax credits for wind and solar power, usually expiring after one to two years, subjecting the industry to a boom-bust cycle until the credits are renewed. The tax credits in the blocked legislation would have lasted 10 years, giving companies confidence to make long-term investment decisions.

The death of the legislation is just the latest, but arguably worst, blow to Mr. Biden’s climate agenda, as his tools to tackle global warming have been stripped, one by one.

“There has been a party leadership-wide failure to address this,” said Varshini Prakash, executive director of the Sunrise Movement, an environmental group that represents many young climate activists.

“I want to make sure Biden and his administration hear this loud and clear,” Ms. Prakash said. “They have to create a response across all agencies of the government at every level over the course of the two and a half years that they remain in office to do everything in their power to address the climate crisis, or risk being a huge failure and disappointment to the American people and young people in particular.”

Leaders of some of the country’s biggest environmental organizations delivered that message during a call Friday afternoon with two of Mr. Biden’s top aides, Steve Ricchetti and Bruce Reed, as well as Ali Zaidi, the White House deputy climate adviser.

“We were very clear in our meeting at the White House that this was a moment that demands presidential leadership. President Biden has said the climate crisis is ‘code red’ and he’s right,” said Fred Krupp, president of the Environmental Defense Fund, an environmental group, who co-chaired the discussion.

They urged the White House to make maximum use of regulations to cut emissions from power plants and vehicles, including actions that had been delayed in an effort not to anger Mr. Manchin during negotiations. They also urged the administration to stop new drilling for oil and gas as well as coal mining on federal lands and waters. The Biden administration had allowed for the possibility of new drilling in the Gulf of Mexico, also to appease Mr. Manchin, several administration officials have acknowledged.

“The people that elected Biden need to see much more action,” said Ramón Cruz, president of the Sierra Club.

Several people on the call, who asked not to be identified because they were not authorized to discuss it, said White House officials acknowledged the need for action but did not offer specifics. One person described the response as “not inspiring.”

Economists generally agree there are two basic ways to reduce emissions and curb global temperature rise. One is to drive down the cost of low-carbon energy sources, like wind, solar or nuclear power, while improving energy efficiency. The other is making fossil fuels more expensive to use, either by putting a price on carbon emissions or raising the price of the fuels.

Mr. Biden appears to have lost his best chance to lower the costs of clean energy, at a time when he is working to bring down the price of fossil fuels.

He could pursue executive actions to regulate emissions in some sectors of the economy, though his options have been narrowed on that front by a recent Supreme Court ruling that restricted the authority of the Environmental Protection Agency to limit emissions from power plants, the nation’s second-largest source of planet-warming pollution.

At the White House, Mr. Biden’s climate team is now assembling a suite of smaller and less muscular tools to fight global warming, which experts say could still reduce the nation’s carbon footprint, although not by enough to meet Mr. Biden’s pledge to cut the country’s greenhouse gas emissions by about half by the end of this decade.

In the coming months, the E.P.A. still plans to issue tougher regulations to control methane, a potent greenhouse gas that leaks from oil and gas wells, along with a more modest rule to cut emissions from utilities.

And while many economists have long pushed for governments to tax fossil fuels to reduce emissions, Mr. Biden and his advisers have said repeatedly that they want to reduce, not raise, gasoline prices. The president is mindful of gasoline’s impact on household budgets and the political toll that high gas prices have exacted on his presidency.

Mr. Biden acknowledged the contradictions of that position last fall, when gasoline prices were rising but were still $1.50 a gallon cheaper on average in the United States than they are today.

“On the surface,” he told reporters at a news conference following a Group of 20 summit meeting in Rome, “it seems like an irony, but the truth of the matter is — you’ve all known, everyone knows — that the idea we’re going to be able to move to renewable energy overnight and not have — from this moment on, not use oil or not use gas or not use hydrogen is just not rational.”

The collapse of climate legislation comes as Mr. Biden’s top environmental advisers are said to be headed for the exits. Mr. Biden had assembled what many called a dream team of experts including Gina McCarthy, who had served as the head of the Environmental Protection Agency under President Barack Obama, to lead a White House office of climate policy.

Ms. McCarthy has indicated she intends to step down from her position this year, but had hoped to do so on a high note after the passage of climate legislation, aides have said.

Mr. Biden’s top international envoy, John Kerry, who served as secretary of state in the Obama administration, is expected to leave after the next round of United Nations climate negotiations, which will be in November in Egypt.

With little to show from the United States, however, Mr. Kerry will struggle to push other countries to cut their climate pollution, experts said. Doing so is critical to keeping the rise in average global temperatures to 1.5 degrees Celsius, compared with preindustrial levels. That is the threshold beyond which the likelihood of catastrophic droughts, floods, fires and heat waves increases significantly. The Earth has already warmed by an average of about 1.1 degrees Celsius, or about 2 degrees Fahrenheit.

As the world’s biggest emitter of greenhouse gases historically, the United States occupies a singular role in the fight to mitigate global warming. President Donald J. Trump abdicated that role, but when Mr. Biden was elected he declared that America was “back” and would lead nations in tamping down the pollution that is dangerously heating the planet.

Now, the United States “will find it very hard to lead the world if we can’t even take the first steps here at home,” said Nat Keohane, the president of the Center for Climate and Energy Solutions, an environmental group. “The honeymoon is over.”

Emily Cochrane contributed reporting.

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