Policy | Analysis

A $550bn clean energy effort

The US is considering a $550bn clean energy investment bill that will modernise everything from power generation to bus networks. JP Casey reports.

In July, the US Senate passed a massive $550bn clean energy investment bill, a plan dubbed a “once-in-generation investment” by the White House to dramatically improve the US’s clean energy landscape. On paper, the bill ticks all the boxes, with $73bn set aside for clean energy generation and a further $7.5bn for electric vehicles, as the US looks to improve its environmental performance across all levels of its society.

The bill also comes at a time when the world’s environmental outlook could not be more dire. As the Senate debated the proposed legislation, and sent it on to the House of Representatives, the UN’s Intergovernmental Panel on Climate Change released its long-awaited report, highlighting the “unprecedented and somewhat irreversible” ways that human activity is damaging the Earth’s environment.

With the US typically among the world’s most polluting countries, producing the second-most total carbon dioxide in 2019, behind only China, any moves to clean up the US’s climate performance could have impacts around the world.

Indeed, 2020 already proved to be something of a banner year for renewable power in the US. According to the American Clean Power Association (ACPA), 26GW of clean energy projects came online last year, the most in a single-year span, and bringing the contribution of renewable power to the total US energy mix to over one-tenth.

With US clean energy trending generally, if slowly, in the right direction, the investment could be the shot in the arm that the US needs to overhaul its environmental performance.

Clean energy, clean lands

At the heart of the bill is its massive commitment to clean power, with the White House claiming that the proposed law is the largest single investment in clean energy transmission in history. While the details of the project are yet to be finalised, with commentators expecting some within the House of Representatives, particularly Republicans, to oppose parts or all of the bill, the headline figure that $73bn will go towards new clean power projects is a stunning figure by itself.

The promised support also joins a string of investment into renewable power across the US. According to the ACPA, by the end of 2020 the US had nearly 90GW of renewable power infrastructure under development, worth around $120bn in new investment. Clean power was also responsible for more than $2.5bn in tax and landowner lease payments, helping to establish clean power as a self-sustained component of the US economy.

Indeed, the government announced that much of the funding for its massive clean energy plan will come from unspent emergency relief funds, corporate taxation, and revenue generated from clean power projects themselves, suggesting that economic viability remains a key aspect of the US’s recent and dramatic push for greater renewable power.

Clean power was also responsible for more than $2.5bn in tax and landowner lease payments.

More detail comes in the form of $21bn put aside for “environmental remediation”, with the government targeting the cleaning up of Superfund sites, some of the most polluted areas within the US. The White House has announced that these funds will go towards cleaning up polluted areas, reclaiming abandoned mine sites, and capping orphaned gas wells.

This creates a two-pronged approach where the state involves itself in both generating power from new facilities and minimising the harmful impacts of old and obsolete energy projects.

In promoting the bill, the White House also noted many of the ethnic inequalities involved in the spread of polluted land in particular. The government noted that 29% of Hispanic Americans and 26% of Black Americans live within three miles of Superfund sites, and the new bill will aim to tackle some of the socio-economic inequalities under the surface of energy policy that are often ignored by big-picture plans to simply build more wind turbines.

Grid and infrastructure projects

It is also true that without an effective grid distribution system, generating clean power is all but useless. The fact that the bill explicitly targets transmission and distribution reveals a fundamentally pragmatic approach to the project, and one that could help ensure its delivery in the long term.

The government has announced plans to develop “thousands of miles” of new power transmission lines, part of what it calls “the single largest investment in clean energy transmission in American history”. The state again makes an economic argument for its investment, noting that power outages cost the US around $70bn annually, a figure comparable to the new clean energy funding that is lost from the US economy every year.

The bill will also create a new administrative body, the Grid Deployment Authority, to help overcome some of the logistical red tape that often slows down the development of new energy infrastructure projects, particularly those that cross state borders.

Some 70% of the country’s power lines and transformers are more than 25 years old.

While cross-country projects such as oil and gas pipelines operate under the direction of a single, federal body, there is no such central authority for power distributors, individual states, or even local municipalities to decide on the legality of any new energy transmission project that passes through their territory.

The new body aims to streamline the process by which companies apply for permits for energy transmission, and empower a federal agency to hand out these permits, and will see existing public properties such as highways and railways used as the basis for the construction of new power lines. This aspect of the bill could help tackle what activists have suggested has long been a weakness of the US energy landscape: its outdated grid system.

According to Americans for a Clean Energy Grid, an advocacy group based in Virginia that works to encourage support for a new, more modern energy distribution grid, 70% of the country’s power lines and transformers are more than 25 years old, highlighting the obsolescence of the network.

Road and rail transport

The US transport sector is set to be one of the primary beneficiaries of the bill, and, at least in the short term, the White House has announced significant details about how the proposal will change the sector.

Chief among these is the $7.5bn set aside to develop a nationwide network of electric vehicle charging stations, with the proliferation of such vehicles a cornerstone of President Biden’s climate policy, and a further $39bn of new investment to modernise the US’s public transport industry.

The investment in public transport in particular is significant, considering the growth in the sector over the last two decades. According to the American Public Transportation Association, the total annual miles travelled by passengers has increased from 44.1 billion in 1998 to 55.8 billion in 2018, and between 1995 and 2020, the US saw a 28% increase in public transport usage, a faster rate of growth than that of the US population more broadly.

$7.5bn has been set aside to develop a nationwide network of electric vehicle charging stations.

With the government setting aside $5bn for the construction of new “clean” buses, and the investment of an additional $8bn across the sector in the form of capital investment grants, the new law aims to realise the economic and environmental potential of a more modern, clean energy-reliant public transit sector.

Even more money is being set aside to modernise Amtrak, the cross-country rail network that functions as a for-profit company, but that is operated by the state. The White House has announced $66bn in investment in the firm, the largest single investment in passenger rail since the creation of Amtrak.

However, it has been noted that part of this investment will go towards eliminating a “maintenance backlog” that has taken hold in the rail industry, leaving it unclear how much of this money will go towards improving the environmental performance of the sector.

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