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It’s Time to Update Our Energy Laws and Make Them More Consistent

Anyone who has raised a family or run a business knows that complex problems resist easy solutions. Problems are like onions: You peel away one layer and there’s always another layer underneath it.

Take the problem of energy and the law, for example. There are federal regulations governing the transmission of energy resources such as natural gas and electricity. But there is no common set of laws or regulations governing how energy is consumed at the individual level. That’s left to the states and municipalities. As a result, there’s a large degree of variability.

Our energy laws are a hot mess; they are inconsistent and unpredictable. They create uncertainty, making it difficult for businesses to plan for the future. In some instances, our energy laws conflict with the rights to private property guaranteed by our Constitution. Because the laws around energy are often ambiguous and easily misinterpreted, they can sow the seeds for unanticipated problems in the future.

Let’s say I’ve built a manufacturing plant in one state and I want to expand operations into another state. In a perfect world, building and energy codes would be roughly similar across the nation. But in the real world, they can vary widely. The net result is that I can’t use the same design and building plans in different municipalities because they are likely to have different building and energy codes.

“We have the idea that energy laws are monolithic and centralized under one umbrella, and that energy issues can be solved by a single entity,” says Brandon Barnes, senior litigation analyst for the energy sector at Bloomberg Intelligence. “But that’s just not the case. We have a multi-level, multi-tiered system. You have to deal with issues at each level and tier – and that’s where you run into a lot of challenges.”

While it may seem as though several federal agencies are “in charge” of energy, their actual authority is limited. For example, the Federal Energy Regulation Commission (FERC) was initially set up to regulate the interstate transmission of electricity, natural gas and oil.[1] Since its creation in 1977, FERC has been tasked with numerous additional responsibilities, including governing environmental reviews for major federal energy projects. “Congress decided to take another statute, the National Environmental Policy Act (NEPA), and overlay it on top of the original Natural Gas Act certificate requirement,” Brandon explains.

The resulting confusion over who’s really in charge is the fault of Congress, not the federal agencies, says Brandon. I agree with that assessment. Considering the scope of FERC’s role, it does a pretty good job. But it has little genuine authority over local energy issues.

“The dilemma is that we’re trying to use outdated regulations and legal schemes to solve modern problems,” Brandon says. For example, one of the reasons that it’s hard to fight climate change is that the law doesn’t address it directly. “

His comments cut to the heart of the matter. We don’t have a practical mechanism for holding companies or individuals accountable for climate change and for the damages caused by climate change, such as coastal erosion, severe weather events, unhealthy air, melting glaciers and dangerously hot summers in parts of the world. As lawyers say, “there’s no single throat to choke” when you’re trying to assign liability for climate change. Our common law and case law are not effective tool for fighting climate change. Even our federal law, such as the Clean Air Act, aren’t written to deal directly with the effects of climate change.

“For the most part over the years, the courts have decided they don’t actually have the authority to find liability here,” Brandon says. “If the goal is finding liability or holding companies accountable, the court is not the proper venue right now.”

Essentially, the courts have ruled that climate change is a political issue and should be solved in the political arena, not in the courts. That brings us back to the fundamental problem of inconsistency across our many levels of government.

This lack of consistency is deeply woven into the fabric of American culture, but it’s become the Achilles heel of our relationship with energy. It’s critical to remember that energy follows the laws of physics. Energy doesn’t care about philosophy or politics. It doesn’t matter whether you believe in big government or small government – we need consistent energy regulations that will enable us as a society to generate and consume the energy we need, without irrevocably harming the biosphere we inhabit.

We often hear people complaining about “too many laws.” As an energy consultant, I’d say the problem in our industry isn’t too many laws – the problem is that many of our energy laws are relics of a bygone era. Today, they need a refresh. They need updating, refinement and modernization.

We also need to accept that many issues cannot be solved purely by writing and applying better laws. There are market forces that must be acknowledged and incorporated into whatever legal solutions we devise.

In other words, the law has to reflect the realities of our economy and our human nature. As human beings, we respond to rewards and punishments. Good laws provide carrots and sticks – you can’t have one without the other.

This blog post is excerpted from Elena Cahill’s new upcoming book, POWER ECONOMICS: An Executive’s Guide to Energy Efficiency, Conservation, and Generation Strategies (Wiley, 2021). You can purchase or download copies of the book from Amazon, Barnes & Noble, Wiley and other online booksellers.

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