Government policy plays a significant role in facilitating a just clean energy transition. As a clean energy entrepreneur, and now as a Congressman, Representative Sean Casten has built his career around addressing the climate crisis. Using his industry experience, Casten’s landmark Clean Electricity and Transmission Acceleration (CETA) Act links climate goals with economic growth, a key component to a durable energy transition. This October, as part of the MITEI Presents: Advancing the Energy Transition speaker series, Casten shared his insights into persisting energy trends, grid roadblocks, and key legislation needed to advance the energy transition.
Q: We’re currently in the middle of an election season, with climate and energy being key issues of importance for many Americans. What energy macrotrends do you see continuing, regardless of the election’s outcome?
A: Regardless of the election, there are four macrotrends I don’t see fundamentally changing. First, the United States has largely decoupled economic growth from fossil fuel consumption. Over the last 15 years, our economy has grown by 50%, while oil use has flattened and coal use is down 50%. We have a long way to go, but we have found ways to grow our economy without linking it to fossil fuels.
Second, we’ve combined electrification and renewable energy deployment. Reducing coal, oil, and natural gas usage would not be possible without providing access to electricity. The U.S. now generates more power from non-hydro renewables than we do from coal. We’ve also electrified huge parts of the country since it’s much easier to decarbonize the electric sector than other sectors.
Third, we are reinvesting in manufacturing in the United States. In the last year, about $150 billion was invested in manufacturing as the result of bipartisan consensus to bring manufacturing back to the United States, but there are still trade-offs. In the solar industry, there are trade-offs between the interests of solar developers—who want low-cost plants to sell solar energy at the lowest price—and solar panel manufacturers—who want to sell at higher prices to bypass foreign supply chains.
Fourth, we are increasingly awash with cheap energy due to virtually no operating costs. Once a solar panel is installed, you’re not paying for electricity anymore; once you buy an electric vehicle, you’re not paying for gasoline anymore. The politics behind these macrotrends lie in what the goal of energy policy should be: is it maximizing benefits to consumers or to producers? But, answering that question poses a political challenge.
Q: What do you see as the biggest challenges as we transition to low-carbon energy sources, and how does the regulatory structure of our energy system contribute to these challenges?
A: As I mentioned, getting consensus on whether to maximize benefits for energy consumers or producers is a huge challenge—although it’s hard for me not to argue that producers are prioritized. In the electric sector, the price of electricity can fall when cheap renewable energy, like solar and wind, come onto the grid, making it difficult for a utility to hit their return on equity targets. Additionally, the parts of our country that produce coal, oil, and gas tend to be represented by Republicans, while the parts of the country that benefit from cheap, clean energy tend to be represented by Democrats. Embracing clean energy, which is also cheap energy, presents a massive wealth transfer from energy producers to consumers, from Red America to Blue America.
Another major challenge is grid interconnection. We have about 1,300 gigawatts of generation in this country, with 2,000 gigawatts of mostly renewables and storage waiting to interconnect. Part of this problem is the Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs) with governance structures that lack accountability. While grid reliability is significant, helping states meet their decarbonization targets should also be prioritized. The Federal Energy Regulatory Commission (FERC) can only do so much when many of these issues are at the state-level. These regulatory actors—FERC, RTOs, ISOs, state utilities—also play a role in the trade-offs around energy producers and consumers. Historically, utilities have been rewarded for deploying capital, but not for lowering the cost of power. These regulators all have some ability to fix the problem, but none have complete authority, which creates problems.
Q: You’ve been a key contributor to climate and energy policy through the Clean Electricity and Transmission Acceleration (CETA) Act and the Inflation Reduction Act (IRA). How does policy address existing energy challenges and advance the energy transition?
A: An important factor in creating policy to advance the energy transition is robust community engagement that centers on environmental justice (EJ) communities. When creating the IRA, I insisted on expanding the definition of EJ communities to include those historically hurt by pollution and those left behind in the transition; now those are communities where major IRA investments are flowing. As a part of CETA, EJ communities are essential consultants in the permitting process.
Another crucial element to create effective policy for the energy transition involves fixing incentives. If you fix profit incentives, permitting problems become easy; if not, you’re compelling people to do something against their economic interest. This is a key component of CETA, which aims to improve renewable connections to the grid and build out new transmission lines. We can’t decarbonize the United States without building more transmission storage than anyone thinks is politically possible, but we just need to design the right energy market and use the right tools to make it happen.
There will always be some balance of capitalism and socialism, but to say that we won’t decarbonize because we haven’t invented the right economic model is to give up. We have an opportunity to massively decarbonize and grow our economy in these next few years. This can be a decisive turning point for the energy transition.
MITEI Presents: Advancing the Energy Transition is an MIT Energy Initiative speaker series highlighting energy experts and leaders at the forefront of the scientific, technological, and policy solutions needed to transform our energy systems. Join the MITEI on November 13 for the next seminar in the series to hear from Joseph DeCarolis about how to use energy modeling to systematically examine the future of energy. For more information on this and additional events, visit: energy.mit.edu/events