Will utilities, state agencies fully embrace clean energy? One climate change policy expert says the Inflation Reduction Act has changed the landscape for renewablesDecember 8, 20224 min read
Did The Inflation Reduction Act of 2022 change the national conversation about clean energy?
Tulane University climate change policy and politics expert Joshua Basseches says the sweeping bill’s incentives for renewables and other investments have states and policymakers moving from the debate about whether they need to shift to cleaner energy to now discussing how to make the shift happen.
“The faster this issue becomes one of dollars and cents rather than political ideology, the more progress we’ll see and the less reversible that progress will be,” said Basseches, the David and Jane Flowerree Professor in Environmental Studies and Public Policy at Tulane University School of Liberal Arts. “Any state resisting clean energy risks getting left behind.”
Basseches shared his thoughts on the challenges ahead for making the transition to clean energy, whether the power grid is capable of handling the change and why he believes the policy landscape has shifted substantially.
What are the most significant opportunities when transitioning to cleaner, renewable energy sources under the Inflation Reduction Act?
The Inflation Reduction Act represents an enormous opportunity for utilities and ordinary individuals to accelerate the transition to energy sources that produce little-to-no greenhouse gas emissions, thus slowing down the pace of climate change. The $369 billion law supports a wide range of green investments. These include incentivizing utilities to build large-scale renewable electricity generation plants or sign power purchase agreements with other developers that qualify for generous federal tax credits, as well as incentivizing individuals and households to purchase and drive electric vehicles with a $7,500 rebate for eligible new vehicles and a $4,000 rebate for eligible used vehicles. Additionally, $9 billion is available in rebates for eligible energy-efficient home appliances such as electric heat pumps and for retrofitting entire homes to conserve energy.
What are the biggest constraints?
The constraints remain the lack of compulsory mechanisms to ensure that the economic transformation envisioned by the law occurs as well as the fact that states remain critical intermediaries when it comes to energy provision. A great deal of the funding flows through state-level offices and it is unclear if all states will embrace these investments. We may see some foot-dragging as we did with, for example, the Affordable Care Act, which similarly relied on state-level implementation. When it comes to electric utilities, state-level public service commissions or public utility commissions remain in the position of ultimately arbitrating the plans of utilities.
What are you most optimistic about when it comes to the clean energy transition?
I’m optimistic about how quickly the policy landscape has been shifting, even though energy transitions never occur overnight. The energy economy is fundamentally different now than it was just a few months ago, before the passage of the Inflation Reduction Act, and for the better when it comes to fighting climate change. There continues to be strong demand, especially from young people, for climate policy, and while the energy policy in the United States remains relatively obscure, it is under more scrutiny now than ever before. And that’s a good thing. Venture capital directed toward decarbonization has reached levels not seen before, and the conversation seems to be shifting from whether to address climate change to how best to do so.
What are you most worried about?
I worry about a couple of things. The first is transmission, which is needed to create a well-functioning, clean electricity grid. It was not adequately addressed in the Inflation Reduction Act. Unlike fossil fuel energy sources, which can be located near population centers, renewable energy potential is concentrated in parts of the country that consume the least amount of electricity (in the aggregate, since there are far fewer people and businesses located in those areas). Many miles of new transmission lines will need to be constructed (and paid for) to calibrate clean electricity supply with demand. Building transmission is costly and politically complicated.
The second is the possibility that the transition will exacerbate economic and social inequality. The fact that electricity in this country is largely privatized means that the interests of energy company shareholders can often be pitted against those of consumers. Energy costs, in general, are highly regressive, meaning that lower-income folks are hit the hardest by high energy bills, which utilities may pursue to recover the costs of prematurely closing down fossil fuel plants. We also see equity issues regarding access to rooftop solar, which, for example, typically requires homeownership as a pre-requisite.
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Joshua Basseches Assistant Professor, Department of Political Science | The David and Jane Flowerree Assistant Professor of Public Policy and Environmental Studies
Joshua Basseches is an expert in energy and climate politics and policymaking, especially in the U.S. states.