Powering the Future: Renewable Energy Policy Takeaways
The Friedrich Naumann Foundation’s Washington, DC office hosted seven international energy experts on a study tour from May 13-20, 2023, with meetings in both Washington, DC and Portland, OR. The delegation was a diverse group, featuring participants from India, South Africa, Germany, Bulgaria, Guatemala, Italy, and Malaysia. Over the course of the eight-day trip, our experts met with representatives from the U.S. Congress, think tanks, and advocacy groups in Washington, as well local government officials, academics, and private industry in Portland.
Our group noted numerous trends over the course of the trip. The Inflation Reduction Act (IRA) was a major talking point in both Washington and Portland, although the details of these conversations differed depending on location and speaker. Despite the progress made following the passing of the IRA however, there remain major obstacles to overcome, including implementation, upgrading infrastructure, and overcoming partisanship and NIMBYism (the “not in my backyard” mindset prevalent around the country). A major benefit of traveling to Portland was witnessing firsthand the differences between the federal approach, primarily discussed in Washington, and the more localized approaches taken by Portland and Oregon leaders. Finally, we personally experienced some of the incredible progress that is happening in the renewable industry field. However, despite this progress, there remains much work to do, and as evidenced by the record-high temperatures in summer 2023, this progress may be coming too slowly, and too late.
The IRA has Already Created a Major Impact in American Industry
President Joe Biden signed the most consequential climate bill in U.S. history, the Inflation Reduction Act, into law after months of negotiations. Although the IRA was only nine months old in May 2023, numerous meeting partners emphasized the impact of the bill. There was an interesting contrast in opinion regarding the IRA between partners in Washington and Portland. Several experts in Washington remained focused on the challenges of implementing the bill, including how to handle “American-made” solar panels and batteries manufactured with Chinese parts, as well as rising tensions with the EU over industry subsidies. In Oregon however, there was widespread enthusiasm with the infusion of federal funding for renewable energy projects.
Partners in local government, nonprofits, and the private sector all mentioned that there was noticeable momentum in domestic manufacturing following the passing of the IRA. Several speaking partners emphasized their enthusiasm in applying for federal grants, and others mentioned that there was a noticeable increase in domestic manufacturing activity in renewable energy sectors.
The numbers back up these sentiments. As of August 2023, a full year after the IRA’s implementation, the investment in clean energy is impressive. $278 billion in private investment, 170,000 jobs created, and 272 new clean energy projects announced. Alone these are impressive accomplishments; together they highlight a complete sea change in how the U.S. is approaching climate change and the energy transition.
There remain major obstacles with implementation of existing laws, energy transmission, and the U.S. regulatory state
One of the more intriguing revelations of the week was the complex web of government agencies regulating energy across the U.S. In Washington, the overall federal regulatory landscape was presented as a barely comprehensible network of various regulatory agencies, from local to state to federal, often with competing interests. In Portland, we learned about the on-the-ground impact of this inefficient bureaucracy, as the current regulatory setup has severely hamstrung efforts to increase transmission capacity across the country.
The foundational issue is that the U.S. has no singular electrical grid, but rather three grids: Eastern, Western, and Texas. This severely complicates matters as states and the federal government work to expand the current grid and increase transmission capacity. As one speaker in Portland said, if the U.S. wants to expand renewable energy, then the American grid must also be expanded. However, competing jurisdictions, both state and local, hinder progress when attempting to build long-range transmission grids.
The Biden administration is currently trying to address this matter. The “Building a Better Grid” initiative was launched in January 2022, and includes $20 billion in federal funds towards improving and expanding the nation’s electrical grids. However, there is still much work to be done, and as one speaker in Portland argued, the issue is not the need for more laws, but rather better implementation of existing ones.
Partisanship and NIMBYism remain large issues
A recurring theme that emerged throughout the week in both Washington was that of resistance to new renewable energy projects, both from the political and community spheres. NIMBYism is a decades-old phenomenon in the U.S., primarily associated with wealthier property owners who oppose any new developments in their neighborhoods, including housing, transit, or energy-related projects.
NIMBYism takes many forms, from protests against new bike lanes in cities or affordable housing developments in affluent neighborhoods, to lawsuits halting construction on transit and energy projects. While many self-professed “liberal” American voters may support renewable energy and sustainable housing and transit options in theory, their support wanes the closer these projects are to their backyards.
Although this problem is hardly a phenomenon unique to America, the history of individualism and property rights in the U.S. adds additional difficulties to overcoming this resistance. Politicians across the country should have the courage and conviction to ignore the loudest negative voices, and move forward with projects that positively impact communities as a whole.
This is made more difficult by the political resistance to renewable energy projects by many politicians and voters on the American right. An important note however, is that the vast majority of Americans do in fact support a transition to renewable energy. According to a Pew Research Center poll in January 2022, 69% of Americans support the U.S. prioritizing “developing alternative energy sources, such as wind and solar, over expanding the production of oil, coal and natural gas,” and the same amount approve of “the U.S. taking steps to become carbon neutral by 2050.” In a country world-renowned for its record levels of partisanship, these is an impressive level of support.
Unfortunately, the American political right does not reflect the national consensus on renewable and sustainable energy. In the same poll, 64% of self-identified conservative voters opposed the U.S. taking steps to reach carbon neutrality by 2050. This is reflected in the Republican Party’s policies as well. During the first Republican Presidential debate, the eight candidates on stage were asked if human behavior causes climate change. Only one candidate, former Arkansas governor Asa Hutchinson, raised his hand. Former South Carolina Governor Nikki Haley also conceded climate change is real, before swiftly blaming India and China for it.
Republicans in Congress hold similar beliefs. Not a single Republican representative voted for the IRA, which is currently the most consequential climate legislation ever passed in the U.S. While House Republicans do boast a Conservative Climate Caucus, their legislative record is less than stellar. However, Republican governors such as Brian Kemp of Georgia and Henry McMaster of South Carolina have encouraged electric car company manufacturers to move to their states, despite opposing the IRA that enabled a new manufacturing boom across the country.
Ultimately, the U.S. will have to overcome both NIMBY obstructionists at the local level and conservative politicians across the country to continue to make progress in the energy transition. The polling numbers show that the vast majority of Americans support moving to renewable energy, now the Biden administration and climate advocates must emphasize the benefits while highlighting the dangers of inaction, which are all too clear at the moment.
Progress is possible, but is currently moving too slow
The U.S., and indeed the entire planet, face major hurdles in reducing humanity’s reliance on fossil fuels and combatting climate change. However, one of the most impressive aspects of the week was the noted progress multiple speakers emphasized. From Washington to Portland, speakers in government, civil society, and the private sector remarked upon the measurable progress following the passage of the IRA.
The most innovatige progress can be found at the local level. In Portland, this takes the shape of the Portland Clean Energy Fund (PCEF). After a sustained grassroots campaign, the city of Portland passed this project by a ballot initiative with 65% of voters in favor. The PCEF charges large corporations with over $1 billion in international annual revenue and at least $500,000 worth of sales in Portland a 1% tax on annual gross revenue. These funds are invested into climate infrastructure, including renewable energy, transit, with an emphasis on low-income and minority communities.
The PCEF has turned into a striking success. Estimates before implementation put annual revenue at $44-$61 million – since the PCEF’s founding, the tax has generated around $100 million annually. The challenge now is how to best spend these funds equitably and efficiently, rather than the classic dilemma of a lack of funds for climate investment.
This case study illustrates that progress towards a just and effective energy transition are possible, especially when implemented at the local level. However, the record high temperatures, continued increases of forest fires, intense storms, flooding, and droughts worldwide are an ominous sign that the current rate of progress may not be enough. After decades of complacency, the U.N. released a report in September 2023 warning that current climate efforts fall far short of what is required to keep warming levels to 1.5 degrees Celsius above pre-industrial levels.
As the report states, “much more is needed now, on all fronts and by all actors to meet the long-term goals of the Paris Agreement.” This challenge exists far beyond the U.S. and its allies, but Western democracies, who largely industrialized long before the rest of the world, need to take the lead on combatting climate change. Measures such as the PCEF are a great start, but cities and countries around the world would be wise to accelerate their efforts in combatting climate change before the planet reaches a dangerous tipping point.