his week Politico and AWEA partnered to hold the third and final installment in our Reinventing American Energy series. While the first two panels focused on transmission and electrification, the capstone session examined clean energy’s future in Congress. You can view the full panel event below:
Amy Farrell, AWEA’s Senior Vice President for Government and Public, opened the event with the following remarks:
Good morning and thank you for joining us for our final session on Reinventing American Energy!
AWEA is excited to work with Politico to elevate the discussion around clean energy policy—what’s possible during the remainder of this Congress, and what bigger actions are on the horizon, as we look to power more of our lives with affordable, reliable clean energy.
When thinking about how to tee up today’s conversation, I couldn’t help but think about some of the parallels between what I’m talking about today and what I was talking about a decade ago after leaving the White House at the end of the Bush Administration and starting in the private sector.
Three things had the potential to drive emission reduction progress then, and the same three things will drive where we go now:
- Congressional action (or lack thereof);
- Industry investment and innovation; and
- The business climate.
Back in 2009, there was also a lot of discussion around climate change legislation. Congress was debating, holding hearings and even voting on climate policy. Cap and trade had a chance at passing into law, and there were even rumblings of a carbon tax.
Although no climate policy ultimately passed, industry-driven investment and technological innovation still led to emission reductions, particularly in the electricity sector. We didn’t appreciate the full scope or scale of what would follow, but 2009 was the front end of the shale revolution that brought affordable natural gas online and drove down both energy costs and carbon emissions.
This shale boom was enabled by the business climate– state regulatory agencies moved quickly, along with industry, to set workable regulations. Federal regulators at FERC tasked with approving pipelines ran permit applications through predictable processes and permitted projects. The business environment allowed shale gas to succeed, and the power of the free market worked.
As I survey the American energy landscape today, the same three things have the potential to drive emission reduction progress:
- Once again, there’s a lot of discussion around climate change legislation. Whether it’s the Green New Deal, a carbon tax, or a number of other proposals, climate policy is in the headlines. However, this time around, the dynamic feels a little different. The broader business community is taking the need to address climate policy as a given. Utilities and Fortune 500 companies planning for the long-term assume climate policy of some kind in the years ahead. The real question now is when something will pass and what will it look like.
- Once again, industry investment and innovation are set to play a role in driving emission reductions. Thanks to industry investment and technological innovation, wind is powering more and more American homes and businesses and reducing carbon emissions. In fact, in many parts of the country, wind and solar are now the cheapest sources of new electricity and we are poised for a massive deployment of clean energy resources.
- Also once again, the business climate will affect the scope and pace at which clean energy deployment and emission reductions progress. It’s this third factor where things seem most different this time around. It is unclear if the business climate will allow wind and solar to reach their full potential. Even though wind and solar are often the most economical choices, structural and federal policy barriers stand in the way – for example tariffs, a confused tax code, and ineffective federal authority and implementation to support transmission infrastructure siting.
As we talk about comprehensive energy and climate policies of the future, we should also talk about near term policies that will influence clean energy growth.
We should ask ourselves, if climate legislation stalls again, how do we ensure affordable, clean energy grows as widely and as quickly as it’s capable of? And what can Congress or the Administration do to create a regulatory and business environment that enables the private sector to continue advancing market-driven, clean energy?
Before the panelists take the stage, I’ll exercise my sponsor’s prerogative to offer a few of my own answers to those questions.
I’ll start with tariffs.
Tariffs are raising the costs of raw goods and materials, making life harder for American manufacturers across all industries and artificially raising the cost of renewable energy. In today’s global economy, American workers depend on an international supply chain. Tariffs that artificially raise the price of essential materials don’t protect American workers—they endanger them. Ceasing the ongoing trade war will restore normalcy and stability for American manufacturers and their workers.
I also see opportunity to add parity to a confused tax code.
Because we largely lack a comprehensive energy policy, energy is legislated through the tax code. This has led to a mish mash of different energy tax credits that vary in length and size, with some credits available to certain technologies but not others. Our tax code lacks parity and is filled with uncertainty, creating an unstable business environment rather than a pro-growth one. My member companies are investing billions of dollars developing wind projects in the US — $12 billion last year alone – and we’d like to invest more. Congress can help by implementing a transparent price on carbon, by setting a technology-neutral tax credit, or at the very least by ensuring wind has parity with other renewables.
And finally, I’ll revisit a them that has come up during every event in this Reinventing American Infrastructure Series – the need for electric transmission infrastructure.
Large quantities of low-cost U.S. wind and increasingly affordable utility-scale solar resources can’t be harnessed due to inadequate transmission. Inadequate infrastructure is preventing low-cost energy from being able to compete. We’ve got technology and investment dollars waiting to fix this problem, but we need the federal government to be a willing partner.
Even though Congress recognized the need for a federal role in the siting of projects in the national interest, in the past decade DOE has not established a single corridor and FERC has never used its backstop siting authority. In contrast, over the last decade, the federal government has exercised its federal authority and the U.S. has added gas pipeline capacity nearly 10 times faster than electricity transmission capacity. And while FERC tried to ensure in Order 1000 that interregional solutions are built, hardly any have made it through the process, which has shown it doesn’t work in practice. Congress should direct FERC to reform the interregional transmission planning process and should encourage the Department of Energy and FERC to use their existing authority. Congress should also pass legislation to make transmission projects in the national interest eligible for the FAST Act.
While some would have you believe the solution for reducing emissions while powering the U.S. economy is somewhere in the future – some technology yet to be invented– the reality is we already have the tools we need to power more of our world with clean energy now.
As Congress continues to discuss a future comprehensive national energy and climate policy, we encourage them to also look at opportunities to create a level playing field for all clean energy sources today. Looking at the big picture, whatever clean energy initiatives Congress takes up in the years ahead should be informed by a common goal: carbon reductions. Aligning policies around that outcome will create a level playing field and ultimately cut the most carbon pollution at the lowest cost. Solutions exist, but we need workable policy in both the short- and long-term to reach clean energy’s full potential. Reforms on trade, infrastructure, and the tax code can make an enormous difference in both the amount of clean energy that’s deployed in the years ahead and the speed by which it comes online.
We look forward to hearing from the panelists today about what’s in the realm of the possible.