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Transmission reform could lower US emissions faster than climate package: think tank

Highlights

Says US needs to 'overhaul' transmission regulation

Emphasizes importance of competition

Reforming the US' electric transmission planning processes could have a larger impact on emissions than the recently enacted Inflation Reduction Act, a free market think tank policy director said Sept. 20.

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"We think transmission reform would actually have more total-emissions impact than either Build Back Better or IRA would have in aggregate," said Devin Hartman, director of energy and environmental policy at the R Street Institute, a public policy research organization that promotes free markets, during a webinar.

The Federal Energy Regulatory Commission has issued two proposed rules to improve transmission planning processes and generator interconnection queues across the country (RM21-17, RM22-14). The reforms aim to remove hurdles to transmission infrastructure buildout to help integrate more renewable energy resources onto the grid and reduce congestion on the system.

But the current state of transmission policy and the way the sector is structured is "particularly problematic," Hartman said. Short-term, siloed planning is a major driver of inefficiencies for constructing infrastructure that will last for decades.

"There's no hyperbole to say that you need an overhaul of regulatory elements in this domain," he said. "Even when we do factor in benefits, we tend to only look at different projects in different silos and not looking at the benefits that they would holistically provide."

'Archaic permitting processes'

Offering a timeline projection based on the proposed FERC rules, Hartman said many of these planning horizon reforms will not actually be implemented until 2027, while actual steel-in-the-ground may not occur until well into the 2030s. With that in mind, the US should not "sacrifice quality for expedience," he said, though piecemeal interim solutions could offer some congestion relief in the later 2020s.

But current so-called "archaic permitting processes" have taken a financial toll, Hartman said.

"The consequences of this actually over the next few decades, I think you're looking at hundreds of billions of dollars of foregone cost-savings compared to what an efficient regulatory paradigm would get you," Hartman said. "You actually have as many incentives to suppress innovation as you do to even explore or expand it."

Hartman also underscored the importance of competition, noting the economic discipline needed in the space to improve transmission planning. The markets can facilitate competition or regulation can substitute for competition to help promote this discipline, he said, but much of the transmission today does not fall under either category and thus has been developed inefficiently.

Jennie Chen, senior manager of clean energy for the World Resources Institute, emphasized the need for improved governance reform to help with competition. Without transparency, incumbent entities in the space are at a greater advantage compared to newcomers, which can stymie competition.

More effective planning can save money locally as well, Chen said.

"If we plan for things earlier, we can avoid multiple costly local upgrades and potentially come up with a solution that can address some of these local needs as well as regional needs and potentially more cost effectively," she said.