Electricity always moves at the speed of light, while congressional clean energy rhetoric and results have moved light years apart. Public spending no longer dictates the pace of the clean transition, but archaic regulation does. Spending, however, is the only tool available to congressional Democrats in the reconciliation package, who aim to pass massive energy subsidies in a sweeping bill this month. But subsidizing mature technologies will yield little climate benefit and impose high costs, whereas regulatory reforms, research and development (R&D) support and efficient emissions pricing would spur innovation, deep emissions cuts and economic growth.

The bill’s Clean Electricity Performance Program (CEPP) has been portrayed as transformative for clean energy. However, this contradicts the practitioner view that appreciates the role of institutions and incentives that determine clean energy deployment. In effect, the CEPP would be a massive public-to-private wealth transfer that risks fatally undermining the market forces that hold the key to an affordable and reliable clean transition.

Fortunately, scrupulous actors remain unsold. Democratic Sen. Joe Manchin recently threw cold water on the plan, noting that paying utilities in this manner “makes no sense at all.” He is correct. An excellent one line summary comes from Max Auffhammer, a professor of sustainable development at the University of California, Berkeley, who noted that the problem isn’t intentions but that the CEPP is a “gameable jumble that likely lets companies bilk taxpayers without creating clean energy.”

It’s hard to be confident in a process that has been mired in opacity since the beginning. Only at the end of last week did details emerge, forcing stakeholders to digest mammoth and detailed spending provisions within days. To help stakeholders and Congress absorb the reconciliation package expeditiously, they should be clear on what’s at stake, and what isn’t, for clean energy and the climate.

What’s Not at Stake in this Package

What’s at Stake in this Package

The irony that Congress is using a tool that does nothing to address the clean energy blockade is only eclipsed by the bizarre federal-state political economy. That is, the focus of the federal progressive package is to make renewables so cheap in red states that utilities and their regulators will have no choice but to gobble them up. Keep in mind, the combination of state renewable portfolio standards and market demand for clean energy in blue states already provides nearly all the propulsion for the transition already. The issue there is institutional reform to secure cost containment and reliability.

Most red states, on the other hand, are strangled by monopoly utilities seeking to overcapitalize investments and shut down consumer choice and third party competition. The most innovative clean energy companies—independent power producers (IPPs)—are nearly shut out of most of these states, while the corporate consumers that spend their own money on clean energy—in sharp contrast to utilities spending that of captive customers—want the freedom to self-provide and buy cheaper clean power on the market. The imperative in red states is to liberalize electricity markets, so it’s no surprise that some IPPs and corporate energy consumers are deeply concerned with recent Hill developments while utilities lobby to force taxpayers to finance their competitive moat.

If all else fails, a last-ditch effort may be crucial for damage control. Modest language adjustments in the bill may have profound consequences, because the effect of the package depends on subsidy design and implementation quality. If this package is locked in, Congress should consider the following changes:

Thus far, the process has illuminated the gap between proper policy process and analysis and congressional drama. But climate change and economic prosperity are too serious for political theater. True clean energy leadership reduces emissions, improves governance and expands economic opportunity. This serves not only our self-interest but sets a template that is reproducible abroad. Accomplishing this requires improving the quality of our institutions and policies that the reconciliation package threatens.

The current CEPP would go down as an historic case of greenwashed corporate welfare negotiated in exclusive backroom deals. It will set an example of a wealthy country blunder that developing countries avoid and none of consumers, taxpayers nor climate stabilization can afford. If the CEPP passes in its current form, we will have to answer to our grandchildren why we left them with a mountain of debt and undermined the mechanisms that would deliver a just transition.

Let’s hope Congress pivots toward a results-over-posturing philosophy through bipartisan regular order that prioritizes regulatory reform, R&D support and efficient emissions pricing. But politics being what it is, at minimum Congress could follow the template above to reduce disruptions in competitive relationships dramatically, minimize taxpayer funding for what the private sector already plans to do and channel any public support to drive additional clean production or emissions mitigation in a cost-efficient manner.

Image credit: Pand P Studio

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