POWER July 2021 - 14

LEGAL & REGULATORY
Biden's Jobs Plan-
A Game-Changer for
Clean Energy?
Morten Lund
T
he American Jobs Plan was announced by the White
House earlier this year to much fanfare. It describes
sweeping action, using bold words like " reimagine " and
" rebuild. " And while the Jobs Plan is not specifically an energy
plan, energy topics are featured prominently. If the Jobs Plan
were to be implemented more or less as described, it would
arguably be the most extensive clean energy action ever taken
by the federal government.
The Jobs Plan is more of an aspirational statement than a
true plan, but there is enough detail to make educated guesses
about implementation details. The plan either directly calls
for, or requires by implication or necessity, tax credits and other
financial incentives for renewable energy and energy storage.
The Biden administration also plans to exercise the vast
consumer power of the federal government by electrifying the
federal vehicle fleet.
These actions are helpful and important-but they are not
revolutionary. With the exception of the fleet electrification,
these actions are not even particularly imaginative or aggressive.
Certainly not " reimagined. " The most radical thing about
it is the sheer scale of the plan (and we will see how much of
that scale survives Congress). In most regards, the Jobs Plan
is consistent with past federal programs. More expansive and
ambitious, but not qualitatively different.
Historically, federal clean energy programs consist mainly
of tax credits and other financial incentives, as does the Jobs
Plan. Financial incentives can be a powerful policy tool, but
there are inherent limitations. They are most effective when
the incentive pushes past an inflection price point. Providing a
tax credit on solar energy projects, for instance, is not particularly
effective in markets where solar energy is more expensive
than the alternatives, even with the tax credit-nor is it particularly
effective in markets where solar energy is already cheaper
than the alternatives, even without the tax credit. Tax credits
and other financial incentives are most impactful in markets
where the tax credit is the difference-maker between cheaper
and not cheaper. That's when the full power of the financial
incentive comes into play.
The Jobs Plan would have been more ambitious if it included
a carbon tax or cap-and-trade structure, a national feed-in tariff
for clean energy, a national electric vehicle mandate, or a national
renewable portfolio standard. These are all things climate
advocates have requested or suggested for many years, but
that have gotten little traction at the national level.
It's a different story at the state level. Most states now have
a renewable portfolio standard, and several have renewable
portfolio requirements in excess of 50%. California law requires
that most new housing include solar energy, and many states
have laws that protect the rights of homeowners to install solar
if they choose. Building codes in several cities are moving
toward electrification. Some states have implemented energy
storage mandates, or created capacity markets that allow for
14
monetizing energy storage services. States have provided for
net metering, increasing the value of behind-the-meter distributed
solar energy generation. There have been feed-in tariffs;
there have been tradeable renewable energy credits.
I believe these laws and policies have been the principal drivers
of renewable energy growth in the U.S.-state and local
laws and policies, not federal tax credits or federal anything
else. Federal tax credits have smoothed the path and accelerated
investment, but make no mistake-the real drivers of the
industry are all from the states.
This is specifically because of the states' approach. The
nature of policies enacted by states are qualitatively different
from the federal policies. While there have certainly been tax
credits and other financial incentives at the state level, the bulk
of state policies have been mandatory in nature. From MinIn
most regards, the Jobs Plan
is consistent with past federal
programs. More expansive and
ambitious, but not qualitatively
different.
nesota in 1994 requiring that Northern States Power procure
wind energy, to California's 100% renewable portfolio standard
by 2045, states have relied heavily on prescriptive and proscriptive
measures instead of financial incentives. Though there are
many political views about different types of incentives, there
can be little doubt that mandates are more effective at bringing
immediate change.
Look at the various tariffs imposed on imported solar modules
in the past few years. While these tariffs had a significant
negative effect on development in Texas and other states
without strong clean energy mandates, the solar industry continued
unabated in California and other states with a more aggressive
approach. The financial disincentives were no match
for direct mandates at the state level.
Where the federal policies supporting (or opposing) clean
energy have amounted to a gentle nudging of the markets, the
state policies have been a swift boot to the rear. Federal tax
credits have enticed investors. State mandates have directly
created predictable and financeable markets.
What does this mean? It means that the Jobs Plan won't
change anything. It is certainly welcome, and will further
smooth and accelerate the transition to a clean energy future.
But as long as the federal government insists on price-point
temptation as its principal mechanism, it will be up to the
states to actually get something done. ■
-Morten Lund is a partner at Stoel Rives LLP. He is the current
chair of the Energy Storage Initiative, and former chair of the
Solar Energy Initiative.
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POWER | July 2021
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POWER July 2021

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