Clean Energy Could Face A Detour

This article was licensed through Dow Jones Direct. The article was originally published on The Wall Street Journal.

Architects of the legislation known as the Inflation Reduction Act paved a policy road map of solar and wind power paired with electric vehicles. But without a speedy build-out of transmission lines to link them, that path might lead to more coal and natural-gas usage.

That is the finding of a recent analysis conducted by the Rapid Energy Policy Evaluation and Analysis Toolkit (REPEAT), a project led by Prof. Jesse Jenkins of Princeton. The analysis found if the U.S. builds out transmission lines at the pace of the past 10 years (a glacial 1% annually), it would result in more coal and natural-gas consumption in 2030 than if the green energy-focused Inflation Reduction Act hadn't passed.

That is because provisions in the law will push up demand for electricity through incentives for things such as electric vehicles and electric heat pumps. Without a faster transmission-line build-out, there is a natural limit on the number of new utility-scale solar and wind farms that can get on the grid. That is because sunny and windy patches of land ideal for renewable-energy development tend to be located some distance away from electricity demand. Net-net, greenhouse-gas emissions decline in a scenario with the law (compared with one without it) because the legislation includes provisions to reduce transportation- and industrial-related emissions, according to the analysis.

The bigger takeaway from the analysis is that the green benefits of the law won't be fully realized without a speedier transmission-line expansion. The analysis found if the U.S. expands transmission at more than double the recent pace (roughly 2.3% a year), greenhouse-gas emissions would be roughly 800 million tons lower in 2030 compared with a scenario where transmission expands at a 1% pace.

Transmission-line permitting has always been a messy tangle of red tape in the U.S., the product of a fragmented grid and never-in-my-back-yardism. Sen. Joe Manchin's permitting bill, which seems to face long odds of passage, attempts to fix that by granting the Federal Energy Regulatory Commission authority to site and grant construction permits for transmission projects deemed to be in the national interest. FERC has permitting authority over interstate natural-gas pipelines, but not over transmission lines that cross several states. The bill gives FERC the authority to allocate transmission-line costs to each region based on the proportional benefit if the project sponsor asks for such an analysis.

Some lawmakers from both parties oppose parts of the bill. It would speed up the approval process for all kinds of energy projects. It also greenlights the Mountain Valley Pipeline, a natural-gas conduit project in Mr. Manchin's state of West Virginia. "To the extent that nobody likes it, one could argue that it's a perfect compromise," says Christi Tezak, managing director at Washington, D.C., energy research firm ClearView Energy Partners. Allowing a faster build-out of transmission lines would probably result in a reduction of coal and natural-gas consumption that is "several multiples" of what the Mountain Valley Pipeline can enable, says Mr. Jenkins.

There are parallel proceedings that could speed up renewable-energy connections to the grid. FERC proposed a flurry of changes this year, including rules to accelerate the process for connecting new electric-generation facilities to the grid. The backlog of interconnection requests has been a serious bottleneck for new solar and wind generators this year. FERC proposed rule changes to address shortcomings in regional transmission planning, including one that aims to address the cost-allocation issue among different states.

It is possible the growth in electricity demand -- spurred by the Inflation Reduction Act -- will motivate a faster build-out of transmission lines. The transmission-line network in the U.S. grew 1% a year over the past decade, but that coincides with stagnant power demand. If one zooms out to look at the pace of transmission expansion to include periods where demand for power grew -- from 1978 to 2020 -- that number is 2%, according to REPEAT's analysis.

The path toward a speedier transmission-line build-out is still open, even if it looks narrow at the moment.