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Tuesday, April 11, 2023

Strategic CSR - Bureaucracy

The article in the url below examines how challenging it can be to build the energy infrastructure in the U.S. that is required to shift from fossil fuels to a renewable future. Of particular importance are transmission lines, so energy can be transported from those parts of the country where it is generated (often sparsely populated) to those parts of the country where it is needed (more densely populated):

"That means using the megawatts generated by Wyoming's winds to charge a Tesla in Los Angeles. But a bureaucratic thicket stands in the way. Both PacifiCorp [the biggest utility in the American West that operates a suite of wind farms in the county] and Mr Anschutz [a businessman who "wants to turn his Wyoming ranch into a sea of turbines"] have spent more than a decade trying to get high-voltage transmission lines that cross multiple states approved. TransWest Express, Anschutz Corporation's proposed line from Wyoming to the Nevada-California border, has yet to break ground."

The reason for the delay is the amount of regulation and compliance that characterizes this still-growing industry. Even though we have been saying we need to build this infrastructure for a long time now, the fact that we are still not close to realizing what is essential is extremely frustrating:

"But the process to get [clean energy projects] approved can be long, onerous and litigious. McKinsey, a consultancy, reckons it can take up to five years to get a permit for a solar farm and seven for an onshore wind farm. An ambitious timeline to build a high-voltage transmission line is at least ten years. … The Rhodium Group, a consultancy, estimates that [the Inflation Reduction Act has] the potential to cut emissions by 32-42% below 2005 levels by 2030. But a recent study … suggests that America would need to more than double its average pace of transmission expansion over the last decade to realise that goal."

And, this is not even considering technologies like "nuclear power and carbon capture" (which can achieve faster gains in emissions reductions more efficiently) that also exist in highly regulated industries that often generate local resistance:

"Legal challenges often revolve around threats to endangered species. In Wyoming, environmentalists worry that wind farms and transmission lines will harm sage-grouse habitat. Native American tribes sue to stop officials from approving energy projects on land sacred to them. A recent study … identified 53 big wind, solar and geothermal projects that were delayed or blocked between 2008 and 2021. A third of them faced permitting difficulties. [Environmental legal] challenges make up the largest proportion of federal climate-change litigation in America."

And, all the delays increase costs:

"PacifiCorp originally budgeted about $1.3bn for a transmission line from Wyoming to Utah. Some 15 years later, the cost has climbed to $1.9bn. For new nuclear plants, which are extremely capital-intensive, delay can mean death."

So, we face a choice – which "endangered species" are we willing to place under greater threat? If we don't move more quickly, it is hard not to conclude that the species under the greatest threat will be our own. We have delayed so long that it seems we have left it too late for the low-hanging fruit, and no longer have any easy choices left. As a result, we need to decide which of the least worst options is the most palatable. Whatever happens, we are going to be unlikely to please all of the people (and sage-grouse) all of the time.

Take care
David

David Chandler
© Sage Publications, 2023

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