Flipping the Switch: The Clean Energy Performance Program

Rising concerns regarding irreversible climate change, geopolitical conflict, and resource scarcity have prompted governments and businesses worldwide to prioritize decarbonization policies and technologies. Decarbonization involves transitioning from a predominantly fossil fuel-based economy to one powered by carbon-free energy sources and is a central aspect of virtually all zero-emissions pathways. To achieve the ambitious goals outlined in the Paris Agreement and the Biden Administration's agenda, including 100 percent clean electricity by 2035 and net-zero emissions by mid-century, the United States must prioritize decarbonizing the power sector. However, to achieve these goals rapidly, utility suppliers, who currently rely heavily on natural gas, will require robust federal investments and incentives to deploy clean technologies. The most effective way to expedite decarbonization is through a national-level investment policy. The implementation of a Clean Electricity Performance Program (CEPP) represents the ideal policy tool to electrify and decarbonize the economy at the necessary pace to avoid the worst impacts of climate change.

Today, the electricity sector, the second-largest emitter after transportation, is responsible for 25 percent of US emissions. According to the Energy Information Administration, natural gas, accounting for 38 percent of the energy mix, is the largest source of electricity generation as of 2021. However, to meet the Biden Administration's Nationally Determined Contribution under the Paris Agreement and the commitment to reduce emissions by 50-52 percent from 2005 levels by 2030, the US must phase out all fossil fuels and achieve a 0 percent emissions rate by 2035. Since the late 1970s, states have implemented Renewable Portfolio Standards (RPS) that require a specific percentage of electricity utilities to come from renewable resources, driving renewable energy generation. Over half of the growth in US renewable energy generation since the beginning of the 21st century can be attributed to these state policies, with 31 states and the District of Columbia having renewable portfolio standards or clean energy standards as of December 2021. However, the absence of a national RES or CES has resulted in a fragmented energy policy landscape with varying portfolios and timelines across states.

The diverse approaches to decarbonization policies among states reflect the fact that energy transitions are complex social projects that involve value-based choices. Besides economic efficiency, state and local governments consider factors such as environmental protection, reliability, affordability, job creation, and social justice. For instance, New York State's Reforming the Energy Vision initiative aims to reduce emissions to improve public health and stimulate clean job growth. Conversely, states may prioritize job security, as exemplified by West Virginia, a state closely associated with the coal industry, lacking a RES framework due to concerns about economic stability and cultural identity. These examples represent satisficing processes, where states make decisions based on limited time, information, or resources. Renewable Energy Standards, or their absence, align with each state's social, economic, and political realities.

Despite the fragmented nature of energy policy resulting from an economic analysis, a more subjective lens offers promise for comprehensive clean energy transitions. Human beings are inclined to respond to stories, constructing narratives about challenges, solutions, and their implications for communities. Stories serve as a framework for organizing and processing information, and strategic communication can shape perceptions and drive socio-technological developments. Columnist Thomas Friedman, in his New York Times article "How to Defeat Putin and Save the Planet," highlights the significant impact of energy systems and policies on foreign policy, human rights, national security, and the environment, emphasizing the societal significance of these issues. Friedman draws parallels to World War II, invoking patriotism and moralism to rally support for solar rooftops as the modern equivalent of victory gardens. By effectively crafting narratives that foster national acceptance of the need for an energy transition, the federal government can overcome obstacles to decarbonization.

Given the urgent trajectory of anthropogenic climate change, placing us beyond the planetary boundary of 1.5 degrees Celsius, decarbonization becomes a pressing imperative. As the US approaches its carbon budget, experts from the scientific, political, and business realms have identified the power sector as the primary area for immediate action in the green energy transition. Energy systems are technologically mature and more accessible to consumers than other sectors, such as transportation. Benjamin Storrow, an E&E journalist, explains that clean electricity serves as the foundation for decarbonizing other sectors of the economy, with most plans for greening transportation, factories, and heating systems relying on electricity instead of fossil fuels. By decarbonizing the power grid, a substantial portion of the climate challenge can be addressed. Thus, it is crucial for the federal government to act swiftly and unilaterally to accelerate the transition to renewable energy and mitigate the worst impacts of climate change.

A top-down approach represents the most effective means of achieving rapid decarbonization in line with the urgency emphasized by climate science. Implementing specific policy tools like the Clean Electricity Performance Program can expedite the electrification process. Clear policy objectives, along with defined goals and benchmarks, are essential for success. Fortunately, the CEPP provides coherent goals, requiring utility suppliers to increase their average share of clean electricity annually between 2023 and 2030. If they meet or exceed the 4 percent threshold, they receive a grant for every megawatt-hour supplied above the previous year's clean generation share. Conversely, falling short of the 4 percent goal results in financial penalties. These clear instructions and goals have the potential to deliver optimal outcomes in our pursuit of a clean energy future.

Policies similar to the Clean Energy Performance Program have proven effective at the state level, with utilities demonstrating high compliance rates historically. By employing a combination of incentives and penalties on a national level, this investment-based policy would amplify the impacts of state-level policies and transform decarbonization into a national endeavor, potentially even a moral imperative. The current geopolitical and planetary conditions present a unique opportunity to make significant environmental progress in the United States. Implementing the Clean Energy Performance Program would be the most consequential climate policy of the Biden Administration, if not in American history. By providing federal investments to incentivize clean energy growth, the CEPP can play a vital role in diversifying America's energy mix, meeting climate commitments, improving public health, stimulating economic growth, and crucially, reducing the influence of petro-dictatorships and addressing climate change. Through compelling narratives and national ambition, we have the potential to transform how we produce and consume energy.