Coase-Sandor Working Paper Series in Law and Economics
Energy policy is at a critical turning point. To counteract potentially catastrophic climate change, we must rapidly transition to clean energy. At the same time, we must ensure the reliability of an increasingly vulnerable electricity grid. In the wake of recent high-profile power failures, both policymakers and politicians have asserted that there is an inherent tension between the aims of clean energy and grid reliability. But continuing to rely on fossil fuels to avoid system outages will only exacerbate reliability challenges by contributing to increasingly extreme, climate-related weather events. These extremes will disrupt the power supply, with impacts rippling far beyond the electricity sector. Reducing carbon emissions by transitioning to clean energy is the only way to maintain a reliable grid going forward.
This Article shows that much of the perceived tension between clean energy and reliability is a failure of law and governance that results from the United States’ siloed approach to regulating the electric grid. Energy regulation is, we argue, siloed in three directions—among substantive responsibilities (clean energy versus reliability); across jurisdictions (federal, regional, state, and sometimes local); and along a public-private continuum of actors. This segmentation renders the full convergence of clean energy and reliability goals nearly impossible: reliability-focused organizations operating within their silos routinely counteract climate policies—often inadvertently, but sometimes more deliberately—when making decisions about how to keep the lights on. Similarly, legal silos often cause states and regional organizations to neglect valuable opportunities for collaboration.
Despite the challenges posed by this disaggregated system, conceptualizing the sphere of energy reliability as siloed across these dimensions unlocks new possibilities for reform. We do not propose to upend energy law silos or make energy institutions wholly public. Rather, we argue for calibrated reforms to U.S. energy law and governance that shift authority within and among the silos to integrate the twin aims of low-carbon, reliable energy. Across the key policy areas of electricity markets, transmission planning and siting, reliability regulation, and regional grid governance, we assess changes that would integrate climate and reliability imperatives; balance state, regional, and federal jurisdiction; and reconcile public and private values. We believe this approach to energy law reform offers a holistic and realistic formula for a cleaner, more reliable grid.
Alexandra Klass, Joshua Macey, Shelley Welton and Hannah Wiseman, "Grid Reliability Through Clean Energy", Coase-Sandor Working Paper Series in Law and Economics, No. 935 (2021).