Why Joe Biden’s ‘green new world’ is an expensive mess

Liz Peek, opinion contributor

President Biden’s vision of a Green New World is becoming a little blurry. 

Believe it or not, under our “climate warrior” president, installations of new wind farms and solar fields in the U.S. dropped 16 percent in 2022 from the year before. How can that be? Didn’t we just allocate a boatload of money in the Inflation Reduction Act (IRA) for renewable fuels developments? Hasn’t Biden energized every agency of the federal government to combat climate change, which he considers our nation’s greatest security threat?

Here’s the truth: The push to vastly increase America’s renewable energy is colliding with a brick wall of reality. The U.S. can’t handle it, and many communities don’t want it.

Joe Biden setting arbitrary emissions targets and Congress allocating hundreds of billions of dollars for climate initiatives turns out to have been the easy part. Now we need to rewrite permitting procedures, fast-track developments, subdue environmental zealots and update our transmission grid to accommodate expanded energy flows.

In addition, Washington bureaucrats encouraging the construction of vast solar and wind farms have to find communities that welcome such huge disruptions.

A recent New York Times piece details some of the many solar fields and wind farms that have been stalled or canceled in part because too many projects are stacked up seeking to connect to the nation’s transmission systems. Grids often are at capacity, so that renewable energy developers who fight through the approval thicket then have to pay for to construct new transmission lines.

Delays, as the Times reports, “can drag on for years, leaving some developers to throw up their hands and walk away.” 

Thousands of projects, most in the works before Congress passed the IRA, are awaiting approval. PJM Interconnection, which operates a large transmission system from Illinois to New Jersey, has “been so inundated with connection requests that last year it announced a freeze on new applications until 2026,” according to the Times report. PJM’s backlog predates passage of the IRA.

A group that wants to develop a wind farm in Wyoming has been trying for 10 years to get approval for new high-tension wires needed to transmit the power to Los Angeles. TransWest Express still has not broken ground on this valuable project, even as California struggles with brown-outs.

The Economist reports that “McKinsey, a consultancy, reckons it can take up to five years to get a permit for a solar farm and seven for an onshore wind farm.” In addition, “An ambitious timeline to build a high-voltage transmission line is at least ten years.”  

It appears the Democratic legislators who passed the 750-page Inflation Reduction Act, aka the climate bill, did not understand the urgency of resolving these issues. There is nothing in the IRA that speeds the permitting and approval process, without which, as the Economist writes, “America risks allowing the investment boom the IRA unleashes to be for naught.”

Instead of solving real issues, the IRA fished for votes by catering to special interest groups. For instance, the White House announced in December that “The Inflation Reduction Act supercharges President Biden’s Justice40 Initiative, which commits to delivering 40 percent of the overall benefits of climate and clean energy investments to disadvantaged communities, including communities with environmental justice concerns.”

It isn’t clear how that formula will be applied, but it sounds as if nearly $150 billion will spur clean-energy investments or provide tax incentives for climate-related spending in communities of color, with a focus on “Tribes, communities with environmental justice concerns, [and] rural areas,” among others.

Unfortunately, according to Robert Bryce, who tracks such events, a growing number of rural communities do not want solar and wind installations. He writes that last year “nearly 80 rural governments either banned or restricted solar energy projects” and another “55 communities [enacted] ordinances or other measures that prohibit the installation of large wind facilities.”   

This is a problem since, according to Princeton’s Jesse Jenkins, “to accommodate the hundreds of megawatts of new wind and solar under the IRA would require a land area about the size of Tennessee.”

Also singled out for favored treatment are “energy communities.” Presumably that directive relates to concerns that coal miners or oil well drillers, for instance, will lose their jobs as the government works to replace coal or oil with wind turbines or solar panels. Thank you, Sen. Joe Manchin (D-W.Va.).

Biden’s buddies in Big Labor get special treatment, with the IRA promising to provide “bonus credits to projects that … pay prevailing wages and use registered apprentices, or meet certain domestic content requirements.” The term “registered apprentices” is code for budding union members. 

As has been widely reported, the domestic-content requirements of the bill are giving manufacturers fits, because many of the components for green energy products, ranging from batteries to solar panels, are produced overseas.

That provision of the bill is also enraging our allies and has already provoked a mini-trade war. In early February, the European Commission announced it would direct more than $270 billion to promoting the trade block’s green energy industries, responding to the enormous subsidies on offer to U.S. manufacturers in the IRA.

“Buy American” provisions in the IRA are a sop to labor unions but also serve a reasonable purpose, which is rebuilding U.S. manufacturing. However, such rules and all the other special diktats will inevitably drive costs up and create even more delays as suppliers try to reorient supply chains to maximize their subsidies.

Ultimately, the climate bill that Joe Biden considers his signature achievement, and which The Economist describes as “ambitious, risky—and selfish,” will cost taxpayers hundreds of billions of dollars and — quite possibly — achieve very little. Biden will campaign on it in 2024, because it won’t be immediately obvious that diverting hundreds of billions of dollars to the federal government will bring the usual penalties for enlarging the state’s intrusion into the private sector: slower growth, lower productivity and enormous inefficiencies.

Liz Peek is a former partner of major bracket Wall Street firm Wertheim & Company. Follow her on Twitter @lizpeek.