Clean Energy? The Climate Versus Biodiversity Dilemma
Author
Lynn Scarlett - Former Deputy Secretary of the Interior
Former Deputy Secretary of the Interior
Current Issue
January-February 2024
Issue
1

Economist Thomas Sowell once wrote that “There are no solutions. There are only trade-offs.” Sowell’s observation seems especially apt as nations set greenhouse gas emission reduction targets and commitments to invest in renewable energy infrastructure. Summarizing a 2020 report, The Nature Conservancy highlights an urgent conundrum: “The massive footprint required for wind, solar, and hydropower development could have devastating impacts on ecosystems, biodiversity, and communities.”

The scale of potential land transformation is startling. As the TNC report notes, worldwide, “more than 10 million hectares of natural lands (an area the size of Iceland) could be cleared for wind and solar development.” The impacts would potentially undermine biodiversity—a global challenge with its own alarming consequences for nature, people, food security, and economies. Both climate change and dramatic biodiversity loss have existential consequences.

Focusing on the United States, legal scholars J.B. Ruhl and James Salzman zero in on these intersecting challenges in “The Greens’ Dilemma: Building Tomorrow’s Climate Infrastructure Today.” The suite of modern environmental laws that emerged in the 1970s—and have elevated environmental (and, later, justice) concerns to constrain and sometimes altogether stop infrastructure, land management, and other activities—now risk impeding the very investments needed to address climate change. “The trade-offs,” they write, “inherent between building climate infrastructure quickly enough to achieve national climate policy goals versus ensuring strong conservation, equity, and participation goals are difficult.”

Ruhl and Salzman take a hard look at the decision processes and corresponding litigation that have contributed over many decades to greater environmental protections and public participation in what gets built, where, when, and how. They “explore how to assess the trade-off between speed to develop and build climate infrastructure, on the one hand, and ensuring adequate conservation, distributional equity and public participation on the other.” They argue that “a common goal for much of the environmental movement for decades has been stopping or slowing what was seen as bad growth. But this feature can become a bug” when the goal is to rapidly develop renewable energy infrastructure. Their central thesis: significant changes in decisionmaking processes and rules are needed for renewable energy infrastructure.

At the outset, Ruhl and Salzman make a policy framing choice—they elevate addressing climate change as the most essential task, acknowledging the importance of both the climate challenge and environmental protection but tilting the balance toward getting clean energy infrastructure in place quickly. They cite legal author Michael Gerrard, who concludes: “When all the legal impediments are added up, it is difficult to imagine how the United States can build the renewables capacity needed to come even close to our temperature targets.” Thus, they ask: How might modern environmental laws and decision processes, which have served the nation reasonably well in moderating adverse impacts from traditional energy development and more, be rethought to facilitate clean energy. They advance a few predicates to their examination of decision processes that might facilitate the needed rapid development.

First, they offer compelling evidence of the sheer scale of clean energy needed, in a very short timeframe, to meet greenhouse gas emission reduction targets. They cite numerous analyses: “To meet even a middle-road renewable energy scenario would require bringing online two new 400MW solar power facilities—each taking up at least 2,000 acres—on line every week for the next thirty years.” Similar eyepopping scale and pace are needed for wind energy and transmission lines. A TNC report puts it this way: “To fully decarbonize the U.S. economy, we need to build up to 2,000 gigawatts of renewable energy, which could have a footprint the size of Arizona. This is ten times our current renewable energy capacity.”

Second, Ruhl and Salzman describe why such pace and scale of siting clean energy are not going to happen under the current decisionmaking regimes. They note “over 60-plus federal statutes governing infrastructure approval” such that large-scale siting “must endure a sprawling system of federal, state, and local approval processes within which any one process can be the source of pinch-points and delays.” State and local laws and processes further complicate the siting of infrastructure. And they point to numerous examples of communities and states using these decisionmaking tools to stop renewable energy projects—sometimes propelled by NIMBY sentiments, sometimes by environmental and other concerns.

Third, they perceive an appetite for rethinking decision processes and laws—both among some in the environmental community and among lawmakers from both major parties. They point to various efforts at incremental change to environmental laws in the Congress and to initiatives among both Republican and Democrat administrations to streamline processes, enhance agency coordination, create strict decision timelines, and more. Sometimes, these reform efforts target expediting renewables infrastructure; other efforts focus on facilitating all infrastructure and resource management activities.

These predicates form the backdrop for their assessment. Tweaks to decision processes are, they conclude, inadequate. At the other end of the spectrum, as in authorizations by the Congress for agencies to waive all laws to build a border wall, there is no balance at all, with environmental, cultural, and participatory considerations entirely eliminated—an outcome Ruhl and Salzman view as unacceptable.

What, then, might be done to expedite renewable energy projects while still sustaining environmental protections, public participation, and equitable outcomes? Ruhl and Salzman argue that it is time to rethink the toolkit of modern environmentalism.

They assess several recurring options that include limiting the jurisdiction for which the traditional laws would apply—in effect, streamlining decisionmaking for clean energy projects or for projects in pre-selected locations; or consolidating decisionmaking (either through enhanced coordination among agencies or through outright federal preemption); or streamlining regulatory “pinch points” through tweaking existing permitting timelines.

Ruhl and Salzman conclude that none of these approaches “resolves the inherent tension between speeding up important climate infrastructure and retaining robust conservation, distributional equity, and public participation.” The approaches are too fragmented and cumbersome to speed up clean energy projects, or they significantly diminish all the environmental and other values the decision processes of modern environmentalism were intended to secure. We need, they suggest, a New Grand Bargain—“a new environmental and siting regime designed for the scale and urgency of climate infrastructure”.

They see four features important to a new decision regime—limiting coverage of the rules, centralizing decisions, establishing timelines, and increasing information. They open up the discussion about reforming processes that many in the environmental community have considered something akin to a holy grail of environmental protection.

Ruhl and Salzman suggest that speeding up renewable energy siting “is unlikely to be met at no cost to other goals such as conservation, distributional equity, and public participation,” a perspective they justify by underscoring that failure to meet climate mitigation targets “risks dire economic, social, and environmental consequences.” Thus, they argue, “speed and climate impact metrics must be the primary design drivers” for policy reform.

The authors propose a package of policies including creation of a commission similar to the Base Realignment and Closure Commission that would select projects in eligible categories that would enjoy a “new specialized regime to work with one federal agency and one assessment and permitting process, period.” Rules and processes “distributed through the 60-plus federal statutes currently governing infrastructure project approval—habitat, species, water quality, wetlands, historic preservation, impact mitigation, and a long list of others—would be consolidated into a single statutory program replacing and preempting all other federal laws for covered projects.”

And they propose federal preemption of state and local processes along with various timelines for steps along the decision trajectory. Though they elevate climate goals as the primary decision driver, they underscore that “conservation, equity, and similar factors like those currently included in NEPA assessments will be spelled out in the enabling legislation as part of the project assessment.”

Their proposed policy package is bold—and they strive to outline its virtues in providing a pathway to rapid renewable energy development. Conservation, equity, and participation values would inform decisions, but some impacts and trade-offs involving these values would likely ensue.

Ruhl and Salzman open up an important policy conversation, making a compelling case that climate goals will not be met without some means of expediting clean energy projects. On the other hand, the particular remedies they offer would likely face fatal political opposition on many fronts. Even efforts at orchestrating “tweaks” have faced significant opposition. In particular, elevating clean energy goals above conservation, equity, and public participation goals underplays just how important these goals are in their own right—loss of biodiversity, for example, is itself a crisis of existential dimensions.

Some efforts at “clean energy zoning” to site clean energy in least impactful or already degraded areas offer some promise, with fewer trade-offs. But Ruhl and Salzman help propel serious discussions of the challenges of siting renewable energy within the current legal and decisionmaking constructs—an essential element of any path forward.

Lynn Scarlett was deputy secretary of the interior in the Bush II administration.

On Biodiversity Versus Climate Change.

Depoliticize to Decarbonize
Author
Joel B. Stronberg - JBS Group
JBS Group
Current Issue
September-October 2023
Issue
5
Solar Panels

The science community warns that the world is fast approaching a temperature increase threshold of no return—1.5 degrees Celsius, the “aspirational” but necessary ceiling of the 2015 Paris Agreement. Beyond that point, many of the changes we are now seeing—more damaging storms, habitat loss, prolonged droughts in vital agricultural regions, cities flooded by torrential rains and rising oceans, climate-driven migration—continue to increase in severity, scope, and frequency.

To avoid the worst global warming has to offer requires nations to replace fossil fuels with cleaner alternatives like solar and wind at a rate and scale never before attempted in an energy transition. According to the White House, achieving the president’s goal of reaching net-zero for U.S. greenhouse gas emissions by 2050, and for the rest of the world to follow, will “require a nearly complete transformation of today’s energy system—which relies on fossil fuels that emit carbon dioxide in meeting 80 percent of global demand—to one that relies on zero- or negative-emission technologies.” The White House clearly views the situation as an opportunity for America to lead by example, and this article will look at whether that is possible (the answer is a clear yes) and whether it is likely. The answer to that depends on the ability of leaders at all levels to heed human nature.

To start, can the United States replace fossil fuels with wind, solar, and other clean technologies at a pace and scale capable of accomplishing a nearly total metamorphosis of its energy systems—in less than thirty years? That would mean setting a rigorous and stable standard on how to establish and achieve emissions goals and work with all sectors to realize them—a questionable assumption that is at the crux of the issue. That includes industry as well as the population as taxpayers and energy users. And as voters. There are also other stakeholders—including communities affected by new facilities and infrastructure.

Second, is the task technologically realizable? In theory the United States can reach net-zero by 2050. And in so doing, one of the globe’s leading emitters can serve as both an example for other countries and as a purveyor of world-class, innovative American clean energy technologies. History has shown that the United States almost always accomplishes whatever it sets its collective mind on doing—whether that’s to help win a world war, land astronauts on the Moon, place a powerful folding telescope in space that can see back to the Big Bang, or formulate a vaccine against a heretofore unknown killer virus in less than a year.

On paper, transitioning the nation to a low-carbon economy seems an eminently doable task—when looking at the scale and the available resources. Analysts at the National Renewable Energy Laboratory have concluded that current clean technologies coupled with a flexible grid could reliably supply, on an hourly basis, 80 percent of 2050 electricity demand. It is not hard to imagine new technologies will fill the gaps and address other sources of greenhouse gas emissions by mid-century. For example, medium-sized geothermal plants can supply low-cost heating and cooling to existing neighborhoods while new construction prioritizes net-zero housing. Skyscrapers with no emissions are already being built. Green hydrogen can free industry from its dependence on fossil fuels and also run fleet vehicles and long-distance trucks.

Having the needed technology means the emphasis of our analysis will now be on widespread deployment. Markets are proving to be accepting of solar and wind power. And momentum for the transition has long been building in the private sector. But corporate America cannot accomplish the transition on its own—the task is too big and requires national coordination and standard-setting, with state and local implementation. Only government at all levels can gather the entire cast of needed players.

There are several relevant trends. For instance, recent commitments by the auto industry show it willing to manufacture only electric vehicles by the midpoint of the next decade. The White House and Congress are providing stimuli to the carmakers with the recent passage of the Infrastructure and Investment Jobs Act, the Inflation Reduction Act, and the CHIPS bill. These measures coupled with pledges from Detroit and the renewables sector are a firm foundation that increases the probability of achieving President Biden’s net-zero goals.

Accomplishing so total a transformation of the economy within the 2050 timeframe is problematic. Standing in the way are practical and political problems that must be resolved. Not the least of these is resistance to large, utility-scale solar and wind projects at the neighborhood level. The community is a critical—if complicated and conflicted—stakeholder that cannot be ignored. A study by Columbia Law School found that “228 local laws, ordinances and policies have been enacted in 35 states to restrict renewable energy.”

Meeting the nation’s power needs with solar, wind, batteries, and other clean options requires installing new wind capacity at six times the rate of 2020. For rooftop and utility-scale photovoltaic installations, the expedited rate is nearly four times that accomplished in 2020. Becoming a renewables economy will change the energy landscape—both figuratively and literally. Solar and wind need up to ten times the land per unit of produced power than fossil and nuclear power plants. Currently, the nation’s energy footprint is 81 million acres of land—about the size of Iowa and Missouri combined. Acreage estimates for renewables vary between the models and depend on the assumptions used to run the programs. NREL researchers estimate that 22,000 square miles of photovoltaic panels would be needed—roughly the size of Lake Michigan. At 20 percent efficiency, a conversion rate thought possible by solar experts, land drops to 10,000 square miles—roughly the size of Lake Erie. According to analysts, up to 250,000,000 more acres of land will be needed for onshore wind farms and 15,000,000 for offshore projects—roughly equivalent to the combined acreage of Arkansas, Iowa, Kansas, Missouri, Nebraska, and Oklahoma. Land will also be needed for new transmission lines. Between 1,400 and 10,100 miles of new high-voltage lines will be needed annually by 2035. Rolling out renewables at the above scales means that a lot of communities will be affected; indeed, overcoming resistance at the local level may be the biggest outstanding challenge in achieving net-zero.

The wide range in estimates reflects how much is not yet known about where the new generating facilities will be sited, their distance away from the grid, and where the end users are. Obtaining the needed permits and rights of way add layers of complexity and additional time to the project approval process.

Including nuclear in the mix would both reduce greenhouse gas emissions and land requirements. However, entrenched opposition and strict environmental regulations mean nuclear projects will take much longer to commission and complete than solar and wind. The Energy Information Agency is projecting nuclear will be a declining part of the mix—going from today’s 19 percent to 12 percent in 2050. As time is of the essence, nuclear contributions remain problematic.

There are systemic legal choke points that slow the deployment process—often to a crawl. At the federal level the National Environmental Policy Act requires reviews for any project on federal lands or with federal funding or involvement. NEPA requires an Environmental Assessment when the impact of a project is unclear. An agency may take a year or longer to complete an EA. If the EA concludes that a project needs a full-blown Environmental Impact Statement, then a notice of intent to conduct the study is published. On average, an EIS takes 4.5 years to complete. The Fiscal Responsibility Act of 2023 extending the U.S. debt limit also included provisions designed to streamline the NEPA process. The new law places a one-year limit on the time required to complete an assessment and two years for an impact statement. Other changes should be considered. Would it not be possible to amend NEPA to permit master environmental assessments and studies, leaving decisions on the particulars of any given project subject to staying within broad guidelines? In addition to NEPA states have their own laws governing required environmental impact studies. It is not unusual for a project to be subject to both federal and state laws and even municipal restrictions. A solar farm may be on federal lands, while new transmission lines cross private and state properties—each subject to a different set of evaluation, permitting, and licensing requirements. Clearly, reforms are necessary in the siting process if we are to meet the 2050 goals.

It can be difficult to tell whether a government is being cautious because of the environmental harms involved or to reduce the risk of litigation. Both incur avoidable delays that we need to get serious about reducing. Although substantive assessments and impact statements can provide a defense in case of a lawsuit, they don’t ensure that a legal challenge won’t be levied with its attendant costs and delays. Since lawsuits can be filed by citizens who are affected by a project, litigation is one of the biggest drags on a timely transition to a decarbonized economy.

The NEPA process isn’t the only one that creates project delays. The Clean Air Act and Administrative Procedure Act guarantee citizens an opportunity to comment on proposed rules. Transparency and public input are sound governance practices, but the requirements can put a heavy burden on agencies. Four million comments were submitted to EPA prior to the issuance of the Clean Power Plan, President Obama’s legacy climate policy that ran afoul of the Supreme Court.

Surely there are ways to shorten the notice-and-comment process that wouldn’t compromise the health and welfare of a community. Or the success of a project. Since the 1980s, scholars have found that the failure to include public input at the earliest possible opportunity complicates and extends the project-approval process—often leading to abandonment of the proposal. A study of 53 utility-scale renewable energy projects that experienced community resistance sought to build on earlier works by answering the question, Why wouldn’t a community want to have a renewable energy power project given the environmental, health, and economic benefits that would likely accrue? The studied projects were located across 28 states. The sources of power included solar, wind, and geothermal. In both their original research and their survey of the literature, the researchers found that individual reasons for resistance can be quite different—even conflicting.

The Susskind, et al. study confirmed earlier findings of researchers like David Bidwell from the University of Chicago and others that the reasons for opposition go deeper than what is generally referred as NIMBYism—Not In My Back Yard. The reasons for resistance varied. They include potential negative impact on property values; the lack of transparency on the part of government siting commissions; a belief that alternatives have not been fully considered; infringement of tribal rights; environmental concerns, e.g., water pollution; conflicts between local, state, and federal governments; aesthetics; and, partisanship.

It’s a mistake to think that because people believe the climate crisis is real and support the transition from fossil fuels that they are guaranteed to welcome a utility-scale wind or solar farm in an otherwise rural setting. Ironically, opposition to a project may be one of the few places climate deniers and environmental defenders are able to find common ground.

In most cases, opposition to a project involves a combination of motivating factors. The proposed Cape Wind Project would have located 130 turbines spaced over almost 25 square miles on Horseshoe Shoal in Nantucket Sound. The farm would have been the nation’s first offshore wind project and would have supplied power to 200,000 homes on Cape Cod and spur the building of other farms up and down the East Coast. The reasons for Cape Wind opposition differed. The area’s economy relies heavily on tourism and fishing. It’s also a seasonal home to many wealthy and politically influential families, many of whom opposed the project. Among the challengers was the Wampanoag Tribe, who claimed the project was to be built on sacred ancestral lands. Other objections included environmental concerns involving losses to commercial fishing and property values, regulatory issues, and aesthetic changes to an iconic American seascape.

There are other examples. In 2017, Georgetown University inked an agreement with MD Solar 1 to construct a 100,000-panel, 32-megawatt solar project on a 537-acre tract in Charles County, Maryland, about 30 miles from its campus. The project was part of the university’s overall commitment to reduce its carbon footprint in part by shifting to electricity generated from clean sources. The proposed project would have supplied over half the university’s demand.

To make room for the panels and remove any obstructions to sunlight, the developer planned to clear-cut 210 acres of trees. The proposed chop was opposed by local environmental organizations like the Audubon Naturalist Society (now Nature Forward) and the Southern Maryland Sierra Club. As in the Cape Wind example, concerns varied. The potential negative impact of the lost trees on wildlife and water sources flowing through the property and ultimately into Chesapeake Bay prompted the project’s rejection by Maryland’s environment secretary. Problems included not just the environmental impact but also the lack of public input, and intergovernmental conflicts between the Maryland Public Service Commission and the state’s Department of Environment. The project was cancelled. The university has since entered into a 15-year agreement for the purchase of power from 11 existing solar farms in Maryland and New Jersey.

Pushback on energy projects can take different forms, including legal challenges and political campaigns. A 2021 Ohio law allows county governments to create exclusion zones where no utility-scale solar or wind project can be sited. Thirteen rural counties have availed themselves of the law. An effort by Apex Clean Energy to override the denial of its plan to construct a 300-megawatt project in Crawford County ended up on the November 2022 ballot. The ban was upheld by voters, while the debate leading up to the election was fraught with alternative facts.

One can’t help but wonder if the Cape Wind and Georgetown projects couldn’t have been saved if in responding to community concerns the developers had considered alternatives to the original design. There are multiple ways to hide solar installations using berms and plantings. In the case of Georgetown, perhaps a smaller solar farm would have been more acceptable, making up for the lost panels by using the rooftops of university buildings or partnering with the many big box stores in the Washington, D.C., metropolitan area.

Opposition to solar projects in semi-rural and rural communities often revolves around the concern that lands used for a solar farm will no longer be used for agriculture. Increasingly, however, developers and farmers are finding ways to produce both power and foods. With the world getting hotter, cash crops like tomatoes are being threatened. A new industry is cropping up in response to such citizen concerns. Under the banner of agrivoltaics, farmers are shading tomato plants under the panels. Developers are meeting the challenge keeping down weeds, grasses, and saplings using goats and sheep to do what they do naturally.

The Cape Wind project failed but it’s not as though all proposed wind projects off the Massachusetts coast have been rejected. Offshore wind projects like the 800-megawatt Vineyard Wind have been approved. Vineyard Wind is 15 miles south of where Cape Wind would have been built, and thus further out to sea.

Different sites require different responses and not all responses will clear away the opposition. However, developers need to be willing to engage communities on a basis other than “take it or leave it”—rather, an approach that asks how can a proposed project meet community concerns as well as a developer’s needs. Will flexibility always lead to a successful conclusion? No, but it will certainly increase the rate of acceptance.

It doesn’t help any that U.S. climate policy is a hostage of America’s culture wars, in which party affiliation tends to dominate all other issues. As a consequence, rational policy is constantly being buffeted by political winds too often blowing in different directions. Among the first actions of every president beginning with George W. Bush has been to rip up the climate-related executive orders of their predecessors. As with many issues of the day, Democrats and Republicans view the world through much different lenses. Substantial differences are consistently seen in voter surveys. Democrats and independents view climate change as real and place a high priority on combatting it. Republicans tend to believe that the science is unclear and that government proposals will fail if attempted—and that the matter is best left to the private sector.

An inverse relationship exists between the time left to complete the sum of actions to stay on the right side of the temperature threshold and the intensity of effort to slow and ultimately reduce the presence of greenhouse gases in Earth’s atmosphere. Change of the magnitude needed to transition the United States to a low-carbon economy will take time—to draft and finalize new codes and regulations covering nearly every aspect of the built environment and how energy is created and used. So will construction of new power-generating facilities and the build out of the infrastructure needed to connect them to the grid. And as will happen when electrifying the transportation sector.

Passage of the IRA, infrastructure, and CHIPS and Science acts are a credible start to a decade of deployment of proven, cost-competitive solar and wind projects. If implementation of the IRA all goes according to plan, the United States would make significant progress toward the Biden administration’s goal of reducing emissions by at least 50 percent from 2005 levels by 2030. When was the last time a government policy—especially one with as many moving parts as the IRA and the infrastructure law—was rolled out as envisioned? It’s an immutable law of governance that stuff always happens.

Voter surveys have for years shown a majority of Americans expressing concern for the environment and a belief that climate change is real. A Pew Research Center survey conducted in January 2022 showed that 42 percent of American adults think climate change should be a top priority of Congress. The survey also found that 75 percent place blame for climate change where it belongs, on human activity and burning fossil fuels. A high number (69 percent) of survey respondents also think developing clean energy alternatives is important and that the United States indeed should be carbon neutral by 2050.

The number of Americans who believe climate change is real and clean energy alternatives are an answer has been generally rising for a decade or more. But survey numbers can be misleading. The high percentage of respondents that are understandably concerned about the consequences of climate change is rarely reflected in the top priorities of voters. Maggie Koerth at FiveThirtyEight writes that the “relationship between voters and climate policy has long fallen under the label of ‘it’s complicated.’ There is an established gap between what voters say they want—action on climate change—and what they’re willing to do to achieve that.”

The nation can no longer afford incremental change in its efforts to deploy available clean energy technologies at the pace and scale needed to avoid the worst consequences of Earth’s warming. The sweep of needed changes requires the rarest elements of all these days—trust and confidence in our elected decisionmakers and government bodies. But American’s confidence in its major institutions is at a historic low. Recent Gallup polls show that only 7 percent of those surveyed have much trust in Congress. For the presidency the number is 23 percent, while trust in the Supreme Court to keep politics out of its decisions rests at 25 percent and is going lower. Trust is better at the state and local levels, but only in comparison. A Pew Research Center survey showed trust at 54 and 66 percent respectively.

A lesson of the pandemic was the willingness of many Americans to get their information from political ideologues over the evidence of experts, including government bodies like the Centers for Disease Control. A study by Johns Hopkins University public health experts found that more than demographics, and at least as much as partisan identification, the factor that distinguished doubters from believers was their trust in science. A recent Gallup poll showed only 45 percent of Republicans trust science compared to Democrats and independents at 79 and 65 percent, respectively.

Missing from today’s debate on climate change—including its causes and consequences—is a national, nonpartisan, science-based narrative of the issue. It’s hardly surprising how little agreement there is on possible solutions given how little agreement there is on the nature of the problem.

Throughout the studies on the causes of opposition to utility-scale solar and wind farms is the consistent observation that transparency and early involvement of the public in the siting process can overcome many of the barriers. Other lessons learned from opposition to proposed large renewable energy projects include knowing the alternatives—the criticality of rewarding communities for accepting large-scale projects, for example by offering discounts on local utility bills or investments in community projects.

The timely decarbonization of the U.S. economy requires depoliticizing the climate debate at least to the point where most are singing in the same key. Admittedly, it is difficult to conceive of how that might happen given the levels of mistrust and the amount of misinformation that characterize the current debate. For the answer to that, I turn to the media scholar and visionary Marshall McLuhan, who believed “there is absolutely no inevitability as long as there is a willingness to contemplate what is happening.” I would add “truthfully” before the word “happening.”

Through whose eyes should what is happening be described? If the message is mistrusted, then perhaps it’s the messengers we should focus on. That medium, as McLuhan would have us say, defines the message and shapes the debate. But the disparity in world views from different media outlets undermines the social consensus needed for McLuhan’s prescription of “willingness” to take hold.

There’s no single solution for speeding up the deployment of clean energy alternatives and the needed infrastructure because there is no single issue preventing their widespread adoption at the pace and scale capable of closing the distance between where we are and where we need to be to stay on the right side of the temperature threshold to avoid the worst consequences of Earth’s warming.

A concurrent approach to streamlining the project approval process up and down the line means attempting to change NEPA and a host of other laws, from the federal to the local levels, including who has standing to sue and on what grounds. Change of this magnitude will be looked at suspiciously. Questions having to do with the willingness to streamline the NEPA process for renewables like solar and wind, but not for fossil fuels, must be addressed and in a nonpartisan manner.

If, as a nation, we are not to march backwards into the future, then voters must be given a much clearer understanding, in terms they can relate to, of why the transition to a low-carbon economy is needed and their individual and collective roles in bringing it to fruition. Resistance to solar and wind farms comes about largely because of misinformation and mistrust. Crucial to the successful siting of large-scale wind and solar projects is early engagement with the candidate communities in semi-urban and rural areas unaccustomed to such installations and wary of the reasons they are needed. Siting is not rocket science. But it is a people game. Solving tomorrow’s siting problems is really more a matter for the social sciences than the physical. Developers need to be mindful of the concerns which motivate and frighten people. The earlier problems are identified, the earlier they can be resolved. But flexibility is required.

If a community is concerned that the presence of thousands of unsightly solar panels will compromise the rural nature neighborhood, a developer should be willing to employ design features, such as setbacks and plantings, to reduce or solve the problem. If the community views the loss of agricultural lands as a deal breaker, then agrivoltaics may be the solution.

Too often in the effort to save Mother Nature, we forget about human nature. For as long as climate change continues to be a part of today’s culture wars, it will be impossible to deploy clean energy technologies at the scale and pace needed to avoid the worst consequences of climate change. It’s unrealistic to think the transition to a low-carbon economy will happen without stable bipartisan collaboration. The simple truth is that to decarbonize, the nation needs to depoliticize climate change. TEF

OPENING ARGUMENT Too often in an effort to save Mother Nature, we forget about human nature. Solving problems with rolling out clean renewable energy is less a matter of the physical sciences than the social sciences—overcoming users’ habits and project resistance at the local level.

Unnatural Disaster
Author
Margaret Peloso - Vinson & Elkins
Kristen Miller - Vinson & Elkins
Vinson & Elkins
Vinson & Elkins
Current Issue
May-June 2018
Issue
3
Unnatural Disaster

As a society, we are devoted to the idea of spreading the costs of catastrophic losses. Continuing this commitment in the face of projected increases due to climate change will require ensuring that such programs also create incentives to engage in hazard mitigation.

Margaret PelosoKristen MillerMargaret Peloso is an environmental and natural resources partner in Vinson & Elkins’s Washington, D.C., office. Kristen Miller is an environmental and natural resources associate in the D.C. office.

Natural disaster response in the United States has long been characterized by the distribution of significant amounts of government funds to aid recovery. These funds are allocated in the form of direct aid in the wake of an event and through subsidized insurance policies before a hurricane, flood, wildfire, or tornado. In fact, our cultural paradigms around sharing the burden of disaster recovery have become so strong that researchers find that individual property owners often choose to live in hazard-prone areas in part because they believe the government will make these areas safe for them or help them rebuild in the wake of an adverse event. This effect is further compounded by the fact that people often misevaluate or even ignore risk, and tend to be under-insured for high-value losses that are rarely experienced.

Against this backdrop, the United States has experienced increasing natural disaster losses from hurricane, flood, and fire events, all of which are attributed at least in part to the impacts of climate change. According to the National Climate Assessment, recent increases in hurricane activity are attributable in part to higher sea surface temperatures. The report notes that floods may intensify in the future as a result of climate change because human-induced warming increases the factors that cause and amplify inundation, such as heavy or prolonged precipitation and storm surges. Wildfires are also impacted, as hotter and drier weather, as well as earlier snow melt, extends the length of the wildfire season and causes fires to burn more acreage. In fact, the impact of extreme weather events can already be seen in the National Flood Insurance Program and the Stafford Disaster relief program administered by the Federal Emergency Management Agency, which collectively required FEMA to borrow approximately $24 billion from the federal treasury to pay out NFIP claims and provide Stafford Disaster relief in the wake of Hurricane Katrina and Superstorm Sandy.

Going forward, climate change will pose two separate but related challenges for the programs that distribute government funds in response to disasters. First, can social insurance be structured such that it remains a financially viable tool to promote resilience and community recovery? Second, how can insurance programs be structured to promote adaptation measures that reduce exposure to extreme events?

An interesting example of the limitations of social insurance arises from the California courts’ attempt to socialize wildfire costs through an expansion of the state’s inverse condemnation law. As this example and others show, the viability of social insurance will be dependent upon the ability of policymakers to proactively structure programs that both engage in risk spreading and promote risk-reduction behaviors.

The role of any insurance product is to spread risk. Insurers remain solvent by collecting more premiums than the losses they have to pay out. They accomplish this in two ways: setting premiums that correlate to the risk of loss, and ensuring risks that are sufficiently diversified that the likelihood of too many claims being made at the same time is reduced. This is particularly challenging when insuring natural disaster events, which often cause losses that are both near total and occur at the same time. When a hurricane storm surge causes flooding, for example, it does not just inundate one house. If an insurer has too much exposure to flood risk, it will not be able to maintain solvency. While insurers can reduce their exposure by purchasing reinsurance and transferring some of the risk to a third party, the ability of insurers to purchase reinsurance will be limited by whether they can increase premiums to cover the costs of such reinsurance programs.

T he problem of limited market capacity to address correlated disaster losses led to the creation of the National Flood Insurance Program in the United States. Prior to the 1950s, commercial flood insurance was available. However, a series of catastrophic floods along the Mississippi River caused many insurers to face significant losses — leading them to either go out of business or exit the flood insurance market. The federal government therefore stepped in to become an insurer of last resort, creating NFIP by statute in 1968.

The program acts as primary insurance for property owners that is underwritten by the federal government. The purchase of insurance under NFIP is required for all property owners who hold a federally backed mortgage in the 100-year floodplain. In theory, NFIP premiums should be set at levels that reflect the risk of flooding at any given property, but there are several factors that result in premiums being heavily subsidized, including the setting of rates based on outdated maps that do not reflect current flood risks.

The structural issues in NFIP were particularly exposed after Katrina and Sandy, when claims on policies vastly exceeded the amount the program collected in premiums. While FEMA is required by statute to repay resultant borrowing, a 2017 GAO report concluded that NFIP is unlikely to generate sufficient revenues to repay these debts. Last year FEMA used new statutory authority to place reinsurance for NFIP, transferring $1.042 billion of risk to the private market to cover payouts exceeding $4 billion. This policy was triggered after Hurricane Harvey, which caused estimated losses to NFIP between $8.5 and $9.5 billion.

The other form of disaster relief at the federal level is the Stafford Disaster Relief Act, which provides aid for the immediate aftermath of presidentially declared disasters as well as for rebuilding. In the case of flood or hurricane events, Stafford works in concert with NFIP to provide funds for rebuilding, but there are limitations on Stafford Relief provided in response to floods. Specifically, the Stafford Act prohibits the use of funds to provide assistance to property owners who were legally required to obtain flood insurance and did not have coverage. There is not a similar statutory provision requiring insurance coverage for recipients of aid after other disaster events, including wildfires.

Prudently, the Stafford Act also has programs to funds to reduce risk, including the Hazard Mitigation Grant Program and the Pre-Disaster Mitigation Program. The first provides post-disaster funds for the deployment of hazard-mitigation measures during rebuilding, although implementation of the program has been uneven. The latter provides grant funding to state, local, and tribal governments for mitigation measures.

The upshot from the combination of the NFIP and Stafford programs is that federal taxpayers will bear most of the costs of disaster recovery (and perhaps an even greater share for non-flood disasters such as fires). In this context, there is an argument that the NFIP program, while flawed, is better than nothing; if taxpayers inevitably foot the bill, it is better for all property owners to pay something in insurance premiums, even if the premiums do not fully reflect risks. In addition, once property owners purchase insurance, the pricing of insurance can be used to create incentives for risk mitigation. NFIP, for example, offers to reduce premiums based upon risk-reduction measures taken at the community level, such as restoring natural functions of floodplains. Because Stafford Relief for other disasters is not tied to similar insurance requirements, the ability of federal policymakers to encourage hazard mitigation for natural disaster risks such as fires is limited to attempting to incentivize action through federal grant programs for hazard-risk reduction.

Several states have also intervened to provide social insurance programs for natural disasters. The most notable of these is in Florida, where the state both participates in the primary insurance market and acts as a reinsurer to provide coverage for hurricane damage. Florida participates in the primary insurance market through a company called Citizens Property Insurance Corporation, created by the legislature in 2002 to provide property insurance to Floridians who are unable to find coverage on the private market. While Citizens is financed by policyholder premiums, catastrophic losses that exceed premiums are financed by assessments that Citizens is statutorily required to levy on all holders of insurance policies in the state — including those who do not purchase their insurance from Citizens — until the debt is eliminated.

Florida is also involved in the reinsurance market through the Florida Hurricane Catastrophe Fund, which provides a way for insurers to increase their capacity by transferring some of their assumed risk to a third party. Florida’s reinsurance intervention occurred in the wake of Hurricane Andrew in 1992, when many private insurers informed the state of their intent to exit the market. Because it wanted to ensure the continued availability of reasonably priced coverage, the legislature authorized the state to create its own reinsurance program, the Florida Hurricane Catastrophe Fund. Relying on its authority to raise funds through the issuance of pre- and post-event bonds, the fund accumulated a balance of $14.9 billion between the years 2006 and 2016, when the state experienced minimal storm activity. This changed in 2017, when the fund reported estimated losses of $2.04 billion from Hurricane Irma. While a significant balance remains even after this loss, the fund warns that it might need to resort to emergency assessments or post-event bonding if a storm of sufficient size were to hit.

The examples outlined above highlight not only the precarious financial state of social insurance programs, a condition that will only worsen if climate change increases the frequency or severity of extreme weather events, but also the failure of these programs to incentivize risk-mitigation behavior. If insured losses increase in the future, the ability of heavily subsidized social insurance programs to maintain solvency will be in question. In addition, policymakers’ decision to provide heavily discounted insurance rates — which would not be available in a competitively priced market — has undermined the function that insurance rates play in signaling the extent of hazard exposure to property owners. These social insurance programs thus create the risk of increasing societal exposure to natural hazards. Therefore, to the extent that social insurance programs are to be maintained, they must be reexamined and modified to meet the twin goals of risk spreading and promoting hazard mitigation.

The need to revisit our social insurance mechanisms is well illustrated by the unsustainable approach that some California courts have taken to wildfire risk. Damage from wildfires in the state has increased over recent decades, especially those occurring during the Santa Ana season, which is characterized by strong, dry winds that cause fires to spread more quickly. The wildfires in Northern California last October were some of the most destructive in state history, killing 44 people and destroying an estimated 8,900 structures.

In response to fires in years past, California property owners have sought to recoup some of their damages by bringing lawsuits against power companies on the grounds that electric transmission and distribution lines and other equipment owned by the utilities played a role in starting the fires at issue. For example, in Barham v. Southern California Edison Company, homeowners argued that power lines ignited the wildfire that destroyed their homes. Finding in favor of such plaintiffs, California courts have held power companies liable for wildfire damages, effectively creating a social insurance regime in which power companies provide additional insurance to homeowners who face losses.

California is unique in this approach. The state constitution requires that the government must pay an owner fair compensation whenever property is taken or damaged for public use under the state’s eminent domain power. Normally, this process occurs when a public entity initiates an eminent domain proceeding. But when the public entity fails to do so, property owners may seek compensation by bringing an inverse condemnation action. As the California Supreme Court has explained, “The underlying purpose of . . . inverse . . . condemnation is to distribute throughout the community the loss inflicted upon the individual by . . . public improvements: to socialize the burden . . . that should be assumed by society.”

The application of this doctrine has been expanded to hold privately owned utilities liable when they damage private property while providing a public service. Courts have explained that while inverse condemnation liability applies only to public entities, privately owned utilities may be held liable as public entities because such utilities enjoy a state-protected monopoly to provide a public service and are afforded some eminent domain authority to construct the power lines that serve customers. As the Barham court explained with respect to the wildfire case against SCE, public utilities are therefore “more akin to a governmental entity.” In the court’s view, because utilities provide “services and functions . . . of vital public interest,” the “loss-spreading rationale” that drives inverse condemnation still applies. “The fundamental policy” driving these decisions “is to spread among the benefiting community any burden disproportionately borne by a member of that community.”

In effect, the state courts have grabbed onto the utility model as a way to spread risk, akin to an insurance program for fire damages. Critical to this policy rationale, however, is the assumption by courts that the loss will successfully be redistributed among the public. In inverse condemnation cases against governmental entities, this makes sense because costs incurred by such entities can be socialized through taxes, thereby distributing the costs across the public.

But this assumption breaks down when the entity incurring the costs is a privately owned entity that does not have the ability to tax. While a utility could theoretically spread costs across its customer base by raising charges, those prices are closely regulated by California’s Public Utilities Commission. As noted by a state appellate court in Pacific Bell v. Southern California Edison — another inverse condemnation case involving a privately owned utility — this tight regulatory control is in large part due to the fact that utilities enjoy state-protected monopolies over services that are essential to the public.

In return, the state regulates the prices that utilities charge their customers. Pursuant to the California Public Utilities Code, the Public Utilities Commission therefore ensures that all charges for services provided by a public utility are “just and reasonable.” To do so, the commission hears general rate case proceedings that determine the costs of operating, maintaining, and financing the infrastructure used to run the utility. Using these numbers, it authorizes the total amount of revenue a utility can collect in order to cover costs as well as a pre-approved profit.

Because electricity rates are predetermined via rate cases, utilities cannot simply adjust their rates when they experience unexpected costs. Rather, they must apply for approval to recover those costs through formal mechanisms established by the commission. Such applications, and the commission’s decisions to grant or deny them, are highly fact-specific and do not guarantee recovery.

It is here that the rationale adopted by the courts in Barham and Pacific Bell for holding utilities liable under inverse condemnation — and the de facto supplemental fire insurance regime — starts to break down. Those courts argued that utilities should be held liable under inverse condemnation theory precisely because doing so would ensure that the risks posed by the utilities’ services would be “spread among the benefitting community.” But, as SCE argued in Pacific Bell, this loss-sharing rationale does not make sense when applied to investor-owned utilities because utilities cannot reliably spread losses among the broader public without guaranteed cost-recovery.

Notably, the Pacific Bell court rejected that argument, stating that it was unpersuaded by SCE’s “implication that the commission would not allow Edison [rate] adjustments to pass on damages liability” from the case. This holding is striking because it indicates that the courts misunderstand key realities of ratemaking law, which simply does not guarantee recovery of unexpected costs. Indeed, last year the commission denied an application by San Diego Gas & Electric to recover costs incurred from similar wildfire litigation. This decision directly negates the Pacific Bell and Barham courts’ assumption that power companies can reliably spread risks of unexpected losses associated with their services across their customer base and, as a result, undermines the doctrinal rationale for applying inverse condemnation liability to privately owned utilities.

This raises the question of why California would turn to the utilities rather than the insurance markets as a mechanism to provide social insurance for fire losses. California does have a legislatively created insurer of last-resort for fires, called the California Fair Access Insurance Requirements Plan. Under the California Insurance Code, all insurers licensed to write property and casualty insurance must participate in the FAIR Plan. The FAIR Plan provides fire insurance policies to homeowners who cannot obtain them elsewhere, and participating insurers bear the losses and expenses of the plan in proportion to their share of the market. However, while insurers are required to provide coverage, homeowners are not legally required to buy the policies. And even those homeowners who do have fire insurance may well find themselves under-insured in the event of a catastrophic loss if they have not purchased additional fire coverage. The courts’ approach to inverse condemnation in these cases exacerbates under-insurance concerns and fails to incentivize risk mitigation, such as zoning restrictions for fire-prone areas.

The literature establishes that most property owners will tend to under-insure for natural disaster risks and fail to take mitigation measures to reduce their hazard exposure. It is not clear why the policy solution to these behavioral economic problems should be to shift the cost of losses to utilities — especially if they are unable to socialize the costs of those losses through rate recovery. As noted above, this is particularly problematic because losses from wildfires, as is true with all natural disasters, are widespread and occur at the same time. Further, unlike an insurance underwriter or a government relief program, utilities providing social insurance through inverse condemnation proceedings have no ability to incentivize investments that will mitigate future wildfire risks. As it stands, California’s current approach to wildfire losses is unsustainable and fails to achieve either the risk spreading or hazard mitigation goals of a social insurance program.

As a society, we have been politically committed to the idea of spreading the costs of disaster losses.
Continuing this commitment in the face of projected increases in such losses due to climate change will require that social insurance programs be restructured to ensure that while they spread risk, they also create sufficient incentives to engage in hazard-mitigation behavior. This can be accomplished both through rate reductions in subsidized insurance programs and also through conditioning receipt of disaster relief for rebuilding on the adoption of hazard-mitigation measures. To be most effective, social insurance programs should be administered in concert with zoning requirements to ensure that taxpayer funds are not being used in a manner that will increase future losses. As currently structured, most programs create a significant moral hazard by allowing property owners to rebuild in disaster areas with full knowledge that others will bear the cost should they lose their home again. On this dimension, California’s current use of inverse condemnation looks particularly inadequate, as neither the utilities nor the state have the ability to condition how any awarded compensation can be spent — meaning there is no way to encourage mitigation.

There are several ways that the programs discussed in this article could be modified to encourage hazard mitigation. For federal and state insurance programs, premiums should accurately reflect risks in order to provide stronger signals to policyholders regarding the hazards of building in certain locations. NFIP, for example, should rely on up-to-date flood zone maps when setting rates. Social insurance programs should also encourage hazard mitigation by offering discounted premiums for such measures, as NFIP does. In addition, state programs should be structured to take full advantage of federal disaster mitigation funds. For example, California’s legislature might consider creating a comprehensive social insurance program that takes advantage of the federal Pre-Disaster Mitigation Program, which provides grant funding for wildfire and utility-line mitigation measures.

Social insurance programs also need to ensure that there is a continued source of funds that can be drawn upon in the event of disaster. As noted, this is a major concern for NFIP, which has put FEMA in debt. The obvious solution is to raise premiums to reflect the actual risk of natural disasters. However, to the extent that this is politically unpalatable, legislators will have to come up with some other funding mechanism. Florida, for example, chose to address this problem by giving Citizens the authority to levy assessments on policyholders in order to pay for any losses that exceed premiums.

Finally, programs should distribute costs in a manner that reflects the likelihood of increasing losses in the future. The current federal system seems designed to provide relief for truly one-in-a-lifetime disaster events that communities could not have foreseen nor prepared for. However, NOAA reports that in 2016, the United States was subject to 16 separate disaster events with damages in excess of $1 billion. Therefore, any reexamination of social insurance programs should ask whether these significant costs are most appropriately spread over the federal tax base as a whole or if social insurance for certain types of risks should be spread across a smaller subsection of property owners who share in that risk, as the California courts seem to have intended. TEF

LEAD FEATURE ❧ As a society, we are devoted to the idea of spreading the costs of catastrophic losses. Continuing this commitment in the face of projected increases due to climate change will require ensuring that such programs also create incentives to engage in hazard mitigation.

More Bog for the Buck
Author
Amy Streitwieser - Environmental Law Institute
Environmental Law Institute
Current Issue
March-April 2018
Issue
2
Parent Article
ELI Report
Amy Streitwieser

For over seven years, ELI’s Gulf of Mexico team has been working to provide information to stakeholders about the restoration and recovery processes put in place after the oil spill. This includes the Gulf Coast Ecosystem Restoration Council founded by the RESTORE Act, which is set to receive almost $1.6 billion.

Last fall, the council announced that it was seeking public comment on a proposal to “approve implementation funding for the Robinson Preserve Wetlands Restoration project” in Florida. If approved, the council will allocate $1.8 million in RESTORE Act funds to implement the project, including a “reallocat[ion of] $470,910 from planning [funds] to implementation.” The project will restore 118 acres of habitat, including coastal upland, wetland, and open water habitats in the Tampa Bay Watershed.

How is the council able to reallocate nearly a half-million dollars in planning costs to implementation activities? The answer lies, in part, in its use of a mechanism intended to make environmental compliance more efficient: “adoption” of an existing environmental review document. When planning funds for the Robinson Preserve project were first allocated in 2015, it was expected that part of those funds would be used for “any needed environmental compliance activities,” including conformity with the National Environmental Policy Act. Since then, the council has identified and is proposing to adopt an existing NEPA document prepared by the project’s sponsor, the National Oceanic and Atmospheric Administration, in 2015: a programmatic environmental impact statement addressing a range of restoration types. If the council’s current proposal is approved, the funds that were originally allocated for planning will be reallocated to implementation.

There are mechanisms available under NEPA to help make the process more efficient, including the adoption of an existing EA or EIS. NEPA allows a federal agency to adopt an existing document (or portion of it), even if prepared by a different agency, “provided that the statement or portion thereof meets the standards for an adequate statement.” In cases where “the actions covered by the original [EIS or EA] and the proposed action are substantially the same,” the agency is not required to recirculate the document for comment prior to adopting it as final. 

Here, the council notes that “NOAA has determined that the specific implementation activities for which funding is being sought [for the Robinson Preserve project] are fully covered by [the existing] programmatic EIS, and therefore no further NEPA review would be needed.” If the current proposal is approved, the project can be implemented on an expedited basis and there will be additional money available for on-the-ground restoration activities.

This is not the first time the council has adopted existing NEPA documents to expedite implementation of a restoration project. Earlier this year, the council announced that it approved implementation funding for the Palm River Restoration Project in Florida, including the reallocation of $87,750 from planning to implementation. To do so, council staff worked with EPA, the Corps of Engineers, and the state of Florida “to identify an existing EA and associated environmental compliance documentation that could be used to support council approval of implementation funding for Palm River.” 

The corps had prepared the existing documentation when it issued a general permit for aquatic habitat restoration, establishment, and enhancement activities. The council similarly adopted an existing EA to expedite and increase implementation funding for its 2016 Apalachicola Bay Oyster Project.

As the pace of restoration in the gulf increases in the coming years, there are likely to be further opportunities for the council and other restoration programs (e.g., the natural resource damage assessment process) to identify existing NEPA documents that satisfy compliance requirements in whole or in part. This could lead to expediting restoration projects and possibly directing more funds to restoration implementation. 

ELI’s Gulf of Mexico team has released two papers related to expediting restoration projects: “Fast-Tracking ‘Good’ Restoration Projects in the Gulf of Mexico” (February 2017) and “Fast-Tracking Restoration: Addressing Resource Constraints in Federal Agencies” (December 2017). We are continuing to work on this issue in 2018 and hope to further contribute to the dialogue on this important topic.

More bog for the buck.

Blight Revitalization Initiative for Green, Healthy Towns

ELI’s Blight Revitalization Initiative for Green, Healthy Towns (BRIGHT) identifies corridors of blighted, vacant, and environmentally-impaired properties in overburdened communities and supports the community and municipality in developing a revitalization plan. Combining community-level engagement with organizational and financial support from the private sector, government, and NGOs, BRIGHT catalyzes:

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