As the world grapples with the accelerating impacts of climate change, the need for a robust and modernized energy infrastructure has never been more critical. The Energizing Our Communities Act (EOCA), introduced by Sen. Peter Welch and Rep. Annie Kuster, aims to bridge the gap between our growing energy needs and the reality of our current infrastructure by investing in mutually beneficial relationships between energy developers and the communities that host essential infrastructure projects. This week, a dive into how this legislation attempts to unlock the full potential of renewable energy while benefiting local communities.
The urgency of climate action and grid modernization
Climate change is rapidly advancing. Mitigating its effects requires an urgent reduction in greenhouse gas emissions and a swift integration of clean energy into the US power grid. According to NASA, rapid warming tracked over the last few decades is showing no signs of slowing down. In fact, the Earth's average surface temperature in 2023 was the warmest on record (record keeping began in 1880). This summer, temperatures in over half the US are forecasted to be at least 2 degrees above historical averages, meaning we're in for another warm one!
In 2021, President Biden set an ambitious goal of achieving a 100% carbon pollution-free power sector in the US by 2035, but this target hinges on significantly boosting US transmission capacity. The National Innovation Pathway Report outlines the Biden-Harris Administration’s "all-hands-on-deck" strategy for accelerating key clean energy technology innovations, many believe these innovations should largely be focused on grid modernization. With clean energy production like wind and solar flourishing, it is absolutely critical our infrastructure has the capacity to transmit this additional power.
What is transmission capacity and why does it matter
Transmission capacity is the amount of electricity that can be transmitted along a single transmission line in an electrical grid. Essentially, its the volume of power that can be delivered to consumers through power infrastructure. When looking at managing this volume, it is imperative to have allocation and congestion management to ensure the power flowing through the power grid is within the grid's transmission capacity so a huge increase in demand does not take down the grid (think of Texas in 2021 when cold weather created a record breaking demand for power, requiring rotating outages be implemented to prevent taking the grid down).
When it comes to deploying renewable energy, understanding and investing in transmission capacity is the difference between success and failure. A study by NREL estimates that the total transmission capacity for electricity in the United States will need to be almost three times the current capacity by 2035 to attain the energy goals put forth by the Biden administration. This would require the construction of approximately 1,400 and 10,100 miles of new high-capacity lines each year, starting next year.
Overview of the Inflation Reduction Act
The Inflation Reduction Act (IRA), signed into law in August 2022, is landmark legislation aimed at addressing climate change while also focusing on economic and healthcare reforms. On the climate side, the IRA represents a comprehensive approach to tackling climate change by promoting clean energy, reducing carbon emissions, fostering innovation, and ensuring that the benefits of the clean energy transition are shared. It focuses on the following areas:
1. Investment in Clean Energy
The IRA allocates substantial funding (to the tune of $369 billion) to accelerate the development and deployment of clean energy technologies. Including investments in:
- Renewable Energy: Substantial incentives for solar, wind, and other renewable energy sources to increase their capacity and reduce dependency on fossil fuels.
- Energy Storage: Funding for battery storage and other technologies to ensure reliability and efficiency in renewable energy use.
- Grid Modernization: Improvements to the electricity grid to support a higher penetration of renewable energy and enhance resilience.
2. Tax Credits and Incentives
The IRA offers a range of tax credits and incentives to encourage both businesses and individuals to adopt clean energy solutions.
3. Support for Domestic Manufacturing
To boost the domestic clean energy industry, the IRA provides support for manufacturing:
- Clean Energy Manufacturing: Incentives for the domestic production of renewable energy components like solar panels, wind turbines, and batteries.
- Job Creation: Focus on creating high-quality jobs in the clean energy sector, emphasizing fair wages and labor standards.
4. Environmental Justice
The IRA addresses environmental justice by directing investments to disadvantaged communities:
- Pollution Reduction: Programs aimed at reducing pollution in communities disproportionately affected by environmental hazards.
- Community Resilience: Investments in projects that enhance the resilience of vulnerable communities to climate impacts.
The IRA and the grid
Grid operators could face immense challenges when integrating new clean energy projects into the current grids if the modernization of our aging transmission infrastructure is not a critical focal point. Without dedicated resources, the entire ordeal of bringing modern clean energy onto the grid could be afflicted with delays, higher costs, and ultimately, inefficient energy distribution. This means that more communities across the country will be asked to host energy projects (high voltage transmission lines, substations and other infrastructure) to more the goals of the IRA forward. This is where the Energizing our Communities Act comes in.
The Energizing Our Communities Act
The Energizing Our Communities Act (Senate bill, House bill) focuses on supporting towns, counties, and tribes that host Department of Energy (DOE)-backed projects by providing automatic benefits from a dedicated fund. The main idea behind the bill is that if communities support a clean energy future through transmission capacity expansion, they should directly benefit from their investments in that future. It is no small task to take part in this expansion, communities have to facilitates the planning, financing, permitting, and construction. They should experience the benefits from this investment.
This bill puts a small interest rate surcharge on loans transmission projects receive from the Transmission Facilitation Program or the Transmission Facility Financing program and deposits it into a Community Economic Development Transmission Fund. Communities where transmission projects are built using those loan programs then can receive grants from the CEDTF to build economic development and outdoor recreation projects.
The bill's main provisions include:
- Creation of the CEDTF: The bill establishes this fund, sourced from revenues generated by certain DOE transmission development programs.
- One-Time Awards: The DOE would be required to provide hosting communities with a one-time award from the CEDTF, distributed according to a formula yet to be established by the DOE.
- Timely Distribution: Awards would be required to be distributed to host communities no later than 18 months "after construction of the applicable eligible project commences."
- Flexible Use of Funds: Up to 80% of the award can be used by the host communities for public infrastructure projects such as hospitals, parks, broadband, and schools, or for workforce training. The remaining 20% of the award would be earmarked for "conservation, stewardship, or recreation purposes."
Conclusion
The Energizing Our Communities Act represents a pivotal step towards achieving a clean energy future while ensuring host communities taking on additional burdens realize tangible benefits. By investing in local infrastructure and conservation projects on top of the grid investment, the EOCA not only facilitates the necessary expansion of transmission capacity for the US but also fosters sustainable and thriving communities. As this country works towards our important climate goals, the active involvement and support of all stakeholders, especially those communities providing space and resources, will be essential in make the IRA's vision a reality.
Cover Photo by Efe Kurnaz on Unsplash
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