Clean energy wins and woes in Biden’s budget

Boosting clean energy is at the heart of the President Biden-backed spending bills in Congress, but somehow, with trillions of dollars at stake, it’s easy to lose sight of the individual policies and proposals that they would fund. Buried within these bills are clean energy wins and woes. Some measures would responsibly further clean energy goals, but others would engage in costly and counterproductive activities.

Before putting American taxpayers on the hook for decades to pay for enormous spending packages, Congressional leaders should separate the wheat from the chaff. Clean energy policies should meet the needs of the moment, not find the quickest ways to spend billions of dollars.

The spending bills’ biggest win is funding to build new electric transmission lines — wires that get the power from where it’s generated to where it’s used. A basic problem for many clean energy projects is a lack of transmission capacity. The locations best suited for wind and solar power generation are far away from the population centers that use that electricity. But transmitting that power is not as simple as running it on the transmission wires that already exist — those lines can only carry so much electricity at once, and carrying too much power will fry the wires. 

The fact is, the power grid in prime wind and solar generation regions is too congested to accommodate all the electricity generated today, let alone to have room for new projects. This is holding back hundreds of already approved, low-cost wind and solar projects that can bring dozens of gigawatts of power to the grid — enough to power millions of homes and businesses. Adding more transmission capacity can help households and businesses throughout the country take advantage of wind and solar power waiting to be harnessed. 

Another crucial component in bringing new clean energy projects online is the materials needed to build them. Wind turbines, solar panels and batteries all use certain minerals and metals known as rare earth elements, of which America uses much but produces little. Bringing more domestic rare earth elements to market is a key test in a clean energy buildout.

America has plenty of rare earth element resources to capitalize on, and the spending bills address two key components. Just a third of American lands are adequately mapped for mining, and the bills provide funding to remedy that. And, while it must be accepted cautiously, evidence from Canada and Australia hints that $1 of government mapping investments draws out $5 of private-sector mining investments. The bills also boost funding for mineral recycling research, which can help keep these materials on the market longer. 

The spending bills provide a partial win (and partial loss) regarding America’s largest source of carbon-free electricity — nuclear power. On one hand, it’s good that the bills do not ignore nuclear power in a clean energy buildout (as some clean energy advocates often do). On the other hand, simply handing money to financially struggling large, traditional nuclear power plants misses a key opportunity to look ahead. The future of nuclear power is small modular reactors — the cheaper, safer, smaller and more operationally flexible innovation in the field. As a candidate, Biden proposed cutting red tape to speed up SMR deployment, but these bills are silent on the matter. 

Another policy miss is the bills’ determination to spend more money on government-sponsored energy efficiency upgrades, which routinely overpromise and underdeliver. For instance, a study of a major federal low-income household energy efficiency program found that the program spent twice as much money as those households saved on energy. The cost to reduce one ton of carbon dioxide emissions was seven times higher than the estimated economic damages that carbon dioxide would cause. Lowering household energy costs is a noble goal, but it would be more worthwhile to pursue policies that make the electricity itself less expensive, rather than squander money on expensive appliance upgrades.

The spending bills’ biggest blunder is Biden’s energy policy centerpiece — the Clean Energy Payment Program (CEPP). The CEPP would pay utilities extra money (from taxpayers’ pockets) to develop more clean energy while levying an extra tax on utilities that don’t. This approach ignores what’s really holding clean energy back while simultaneously exacerbating one of its main challenges.

Clean energy investment and technology costs — presumably the CEPP’s target — are not what is holding clean energy development back. Even in a lackluster 2020, a record $25 billion was invested in wind power. Key regulatory reforms in the grid interconnection and transmission process could unlock trillions of dollars of private investments in clean energy. Clean energy’s largest hurdle is regulatory in nature, but the CEPP would exacerbate this problem by subsidizing a regulatory machine prone to excessive spending — monopoly utilities.

The CEPP would further entrench monopoly utilities by handing them the money and the means to erect barriers to competition from competitive clean energy suppliers, crowd out distributed generation resources and stifle customers’ adoption of their own clean energy technology. Instead of giving monopolies yet another opportunity to shut out their competition, Biden would do better to let the market work by instilling economic discipline and innovation through competition and consumer choice. 

Ultimately, Biden’s budget is a mixed bag of clean energy policies. Some address genuine challenges in bringing clean energy to market, while others are more counterproductive than innovative. Understanding what is needed to bring more clean energy to market tomorrow is crucial to finding the right policies to support today.

Jakob Puckett is an energy policy analyst and associate contributor for Young Voices. The opinions expressed here are his own and not those of another organization.