Inflation Reduction Act’s costly green giveaways

OPINION:

A few days ago, President Biden finally said the quiet part out loud: The Inflation Reduction Act, which was sold to the American people as a way to reduce the deficit, is actually a climate bill — more specifically, a climate spending bill. The president boasted that it was the most significant climate change law ever. While the significance of this measure is questionable, the cost is undeniable.

In that speech, Mr. Biden bragged about “his $369 billion climate investment” as if he were cutting the checks himself. Meanwhile, the Joint Committee on Taxation has increased the cost of the green subsidies to $515 billion, and Goldman Sachs estimates that it will balloon to $1.2 trillion by 2032. Even these are likely to be low estimates. Who’s really picking up the check? American taxpayers.

But here’s the catch. Unlocking the billions of dollars for renewable power generation in the Inflation Reduction Act will happen only if there is a major expansion of high-voltage transmission lines. That’s because a big chunk of the giveaways, especially for wind and solar power, can’t be collected until new energy projects are connected to the grid.

Further, because of the massive cost associated with such an expansion, advocates of a renewable-only power grid are pushing to socialize the cost of these upgrades to ratepayers. That is precisely why the Democrats have finally jumped on the permitting reform bandwagon.

The Democrats have a clear goal regarding permitting reform. They want to bypass state and local opposition to large transmission projects by centralizing planning at the federal level. This gives them the greatest chance of building these questionable projects and unlocking the potential untapped subsidies in the Inflation Reduction Act.

In proposed bipartisan legislation, co-authored by Sens. Joe Manchin III, West Virginia independent, and John Barrasso, Wyoming Republican, it appears that the Democrats are getting most of what they want. The Energy Permitting Reform Act of 2024 centralizes the determination of reliability under the Federal Energy Regulatory Commission, effectively undermining states’ ability to make crucial decisions about project necessity.

This shift represents a fundamental change to the Federal Power Act, transferring the authority to define reliability from states to the federal government. The measure also appears to bypass regional and local planning processes.

These established systems have long been instrumental in ensuring that transmission projects are well conceived and truly beneficial to the communities they serve. By bypassing these processes, the bill risks forcing customers to pay for transmission projects that may not directly benefit them, all under the veil of “national significance.”

In exchange, the bill contains changes to existing law that seemingly advance Republican priorities such as shortening timelines, streamlining environmental reviews for energy and mineral projects and increasing leasing opportunities for energy production on federal land. But since the lead authors limited the bill’s scope to the jurisdiction of the Senate Energy and Natural Resources Committee, the bulk of what is truly needed for meaningful permitting reform has been left out.

For years, Republicans in Congress have tried to streamline the federal permitting process. Laws including the National Environmental Policy Act, the Clean Water Act and the Endangered Species Act have been misused, leading to needless delays and excessive lawsuits for critical energy and infrastructure projects.

Meanwhile, Democrats have been all too happy to sit back and do nothing, mainly because these delays affected projects they didn’t like, including pipelines and increased oil and natural gas production on federal land. Now, these same permitting bottlenecks are blocking billions in federal subsidies from being harvested by wind and solar operators, many of which are large contributors to the Democratic Party.

Every single Republican in the House and Senate voted against the Inflation Reduction Act., and for good reason: The bill’s green subsidies are projected to bust the budget. While these costs are somewhat constrained for now, all bets are off if this bill becomes law.

As a matter of policy, Republicans should oppose the transmission provisions in the Manchin-Barrasso legislation. Politically, if they are willing to trade meaningful permitting reform for a further expansion of the Inflation Reduction Act’s costly green giveaways, they should demand a much steeper concession from Democrats.

• Thomas Pyle is president of the American Energy Alliance.