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INSIGHT: Deregulating and Reregulating to Address the Climate Crisis

May 12, 2020, 8:00 AM

In the midst of a global pandemic, it can be hard to think of environmental issues as pressing concerns. But climate change, like Covid-19, affects all of us. Indeed, climate change exacerbates certain types of epidemics, particularly after floods and storms.

Even setting aside climate impacts, air pollution from fossil fuel-fired energy causes thousands of premature deaths each year in the U.S. And while there will, hopefully, be a vaccine for Covid-19 in the near future, there is no such direct solution to climate change on the horizon.

So we still need to move away from fossil fuels quite quickly, meaning, among other things, that we need rapid construction of more infrastructure to capture renewable energy sources like solar and wind. While steadily decreasing prices and improving efficiency have helped in recent years, we are still not moving fast enough.

Policy Hurdles

Several policy hurdles block the path to lower-carbon energy. These include, first, a balkanized electric grid in some parts of the country. In these areas, different utilities control portions of the maze of wires necessary to transport electricity from renewable generation to customers.

This means that customers transporting renewable electricity long distances often have to pay several utilities different federally-approved rates for using the wires, leading to cumbersome “pancaked” rates. And the fact that states must approve the location of new interstate transmission lines exacerbates the transmission challenge.

A second barrier to renewables is local opposition. Buchanan County, Missouri; Tippecanoe County, Indiana; and San Bernardino County, California, among numerous other localities, have recently imposed bans on commercial solar or wind projects. Finally, federal and state environmental regulations pile up for each renewable project, providing fodder for litigation.

Of course, there are legitimate interests underlying these obstacles to expanded renewable generation. Residents in states that must approve new transmission lines don’t want tall towers and wires marring local landscapes. And environmental regulations, while sometimes cumbersome, serve an important purpose.

Middle Ground Needed

But some policy middle ground must be achieved if we are serious about combating climate change and major air pollution issues, and the associated massive public health costs. Some of this middle ground should involve loosening or revising existing regulations, or writing entirely new ones.

With respect to the transmission grid, the federal agency that controls interstate transmission service and rates—the Federal Energy Regulatory Commission (FERC)—has already solved much of the problem by encouraging an integrated, open regional grid. In this approach to grid management, utilities hand over control to a third-party entity that controls a large swath of the grid and avoids the rate pancaking problem.

These regional transmission organizations (RTOs) have also driven renewables because they give generators new options for selling their relatively cheap electricity in competitive markets. Some RTOs have also planned for the construction and financing of new, critical transmission lines and have helped to overcome state siting opposition.

On one particularly windy day in October 2019, the RTO covering a large part of the Midwest saw a record 73.67% of generation from renewable sources. But some recent FERC rules for RTOs, such as requirements for minimum bids in markets for new generation capacity, impede state-supported renewables.

Even with a more open transmission grid, renewables continue to face major opposition from some local governments. Some states have adopted a policy middle ground that still allows local input but moderates bans or delays. They have centralized the siting process at the state level (while still requiring compliance with local standards) or, like Wisconsin, placed a ceiling on local regulation, allowing local regulation more stringent than state standards only with a strong local justification.

Finally, federal statutes that protect wildlife and water produce mountains of work for renewable developers, as do requirements for federal and state review of the environmental impacts of projects. As with local regulation, these laws are important. But as currently written, enforced, and litigated, many of them substantially inhibit efforts to address the climate crisis.

How to Lighten Regulatory Burden

There are several ways to lighten the regulatory burden. The most extreme option is to wholly exempt renewable development from some statutes—a status the oil and gas industry enjoys. But there are more moderate approaches, too.

Governments can assign one agency to review a project’s compliance with all statutes, thus consolidating review. They can shorten the timeframe for agency review, placing tighter deadlines on projects.

State and federal agencies, or the several federal agencies that must approve aspects of renewable projects, can also combine forces, allowing renewable developers to submit just one set of data to demonstrate compliance with several statutes.

In one example, Oregon has partnered with the Bureau of Land Management to take this sort of approach. And governments can pre-qualify sites for development, identifying areas with the fewest conflicts with other forms of land development and the fewest regulatory hurdles. The federal government tried this under the Obama Administration’s Smart from the Start initiative.

New York Gov. Andrew Cuomo (D) has proposed a streamlined process for permitting renewables that would include many of these approaches. One agency would review all regulatory compliance for renewables under shorter review timelines, and the state would auction off “de-risked, “build-ready” sites for renewables, pre-approved for development.

Regulatory streamlining and limits to local opposition will be critical for a rapid transition toward renewables, but some new regulations will be needed, too. Statutes to ensure a “just transition” will be essential to support workers and communities losing jobs and their primary economic base in the move away from fossil fuels. And local governments must have enough input in the siting of new projects to address serious environmental justice concerns.

The path to a U.S. powered by low-carbon energy will not be a simple one, but given recent technological advances and steadily declining prices, policy hurdles are one of the primary remaining impediments to be addressed.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Hannah J. Wiseman is the Attorneys’ Title Professor and Associate Dean for Environmental Programs at the Florida State University College of Law, and this summer she is transitioning to Penn State Law. She is a co-author of the textbook Energy, Economics, and the Environment (Foundation Press) and other energy law books. She thanks Professor Jeff Thaler for comments on this piece.

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