As Congress works on a bipartisan infrastructure bill and budget reconciliation package, a new analysis provides important economic insight into the energy and climate provisions that are part of—or should be part of—that work. The paper is one of three analyses released by the Aspen Economic Strategy Group (AESG), a program of the Aspen Institute focused on promoting evidence-based solutions to U.S. economic challenges. The set of papers provide insight on how infrastructure investments can promote economic growth and broader prosperity.
The paper, “Challenges of a Clean Energy Transition and Implications for Energy Infrastructure Policy,” targets the central challenge in the transition to clean energy: the need to balance this transition while simultaneously controlling costs and ensuring a reliable energy supply.
“Transitioning our national energy system to zero-emissions sources, and doing so in a way that ensures costs remain low and the supply is reliable, will take historic investments,” says Ryan Kellogg, a co-author of the paper and a Professor and Deputy Dean for Academic Programs at the Harris School of Public Policy. “From the way we incentivize, develop and export clean technologies, to how we deliver these technologies to people’s homes and businesses, to ensuring legacy fossil fuel sites are plugged up and safe, we’re past due for an upgrade throughout the energy system. This is what our climate needs, and it is what our economy needs.”
Kellogg and his co-author Severin Borenstein, E.T. Grether Professor of Business Administration and Public Policy at the Berkeley Haas School of Business, present key policies the country will need to support a clean energy transition. These include:
- Broad incentives – such as carbon pricing, clean energy standards, or clean energy subsidies – that do not discriminate across zero-emissions resources. Such incentives are essential for directing capital towards cost-effective investments in clean energy infrastructure.
- Investments in the development and early-stage deployment of zero-emissions technologies, so that they can be more easily adopted both in the U.S. and around the globe. Reducing the costs of zero-emissions energy sources will be an important way to encourage other nations to reduce their own emissions and truly tackle the global nature of climate change.
- Reforms to wholesale and retail electricity markets, and to the regulatory process for long-distance transmission investment, to enable a low-cost energy transition that distributes its costs and benefits in an equitable way.
- The decommissioning of legacy oil and gas wells, which offers an opportunity to employ displaced oil and gas workers.
This analysis and the other two papers in the set will be included in the Aspen Economic Strategy Group’s annual policy volume, “Rebuilding the Post-Pandemic Economy,” which will be released in December 2021. The group released these analyses in advance because of their critical role in informing debate as the U.S. infrastructure agenda evolves.
Many of the energy and climate infrastructure needs discussed by Kellogg and Borenstein are further elaborated on in the U.S. Energy & Climate Roadmap, including: