Permitting the Energy Transition

Abstract

The United States now has a landmark climate and clean energy law: the Inflation Reduction Act. The Act may provide more than a trillion dollars in spending on new clean energy technology—over $8,000 for every household in the United States. What will Americans receive for this titanic investment? The answer largely turns on how quickly new clean energy projects will receive permission to build.

As this Article explains, a fundamental irony of the energy system is that the cleaner energy sources we are now funding are more dependent on building far-flung infrastructure than our traditional energy sources. Coal and oil built the modern world because they could be easily transported by existing methods such as rail, ship, and vehicle to growing urban areas with a voracious appetite for energy. By contrast, solar and wind development must wait on new power lines to bring them to market. Likewise, nearly all the cleaner options for backing up these intermittent sources, including hydrogen and natural gas with carbon capture are equally dependent on new, linear infrastructure.

Rather than place a price on carbon emissions, the federal government has chosen to fund zero carbon energy alternatives in the hope that, once they are deployed, they will displace carbon emitting alternatives. But there is a danger that, as with the United States historic investments in high-speed rail, launched over a decade ago—American taxpayers spend billions but have little to show for it because of how long it takes infrastructure projects to win permission to build. This Article explains the challenge of permitting the new energy projects that we are now funding, explains why some initial efforts at permitting reform fall far short of what is needed for a green energy build out, and proposes solutions fit for the purpose of building a clean energy system.

Keywords: Inflation Reduction Act, Clean energy technology, Renewable energy sources, Energy systems, Energy infrastructure, United States, Clean energy projects, Investments, Permitting reform, Energy transition, Federal government permits, Federal Climate Policy

JEL Classification: K32, O13, Q42