Progressive California Pays Price from Procrastination

Stalled energy projects drive up costs in a state already plagued by excessive debt, but is there a quick fix?
by | March 30, 2011

Somewhere buried beneath all the bureaucratic and environmental red tape in California sits a pot of gold that could potentially make the state’s $26.6 billion budget deficit disappear.

Thirty-one of the state’s energy projects could give California a much-needed boost by pumping nearly $60 billion into the economy and creating 142,100 jobs a year, according to a study commissioned by the U.S. Chamber of Commerce. But at a time when gas prices continue to climb, the study revealed that these solar, wind and other energy projects have been held up due to complex regulations, intricate permitting requirements and lawsuits by environmental groups. These costly delays should serve as a wake-up call for lawmakers to improve the permitting process, according to William Kovacs, U.S. Chamber senior vice president of Environment, Technology and Regulatory Affairs. 

“We don't know that all these projects could be built at one time,” he said. “But we're leaving a lot of jobs and growth from the economy on the table. If we're serious about jobs and renewable energy, we have to find some way to move projects forward a little quicker.”

Of course, the state wouldn’t be able to move forward on every single project that’s in limbo, but these projects grow more expensive as time passes. That’s why Assemblyman V. Manuel Pérez wants to speed up clean energy development in a way that also supports environmental groups.

This month, Pérez introduced a regulatory reform bill to streamline the permitting process for renewable energy within the state’s Desert Renewable Energy Conservation Plan. The legislation adds wind and geothermal energy projects as an expansion to the current program. It also gives developers the option to forego the traditional permitting process and instead pay mitigation fees, which would then be used by the state Department of Fish and Game to help protect the state’s ecosystems and wildlife, according to Pérez’s office. After passing in the state Assembly, the legislation now goes to the appropriate Senate committee for consideration.

“Whether it’s utility-scale renewable energy generation, green-tech research and development, green and sustainable construction, or the manufacturing of green components and technologies,” Pérez said in a statement, “we must ensure that our state remains a leader in the clean-tech industry and that those businesses and jobs are created here in California.”

The U.S. Chamber of Commerce didn’t single out California in its first-of-its-kind economic study, Progress Denied: The Potential Economic Impact of Permitting Challenges Facing Proposed Energy Projects. In 49 states, 351 proposed energy projects have been held up or shut down altogether. The study estimates that if constructed and operated for 20 years, the total economic benefit could be $3.4 trillion. (Check out for an in-depth breakdown of every stalled project.)

“In going through the study, the results were simply startling,” Peter Morici, former chief economist at the International Trade Commission, and the study’s peer reviewer said in a release. “We anticipated the impact all the projects collectively would have on jobs and the economy. But the real surprise was how positively California could be affected if it moved forward on just two projects. To my knowledge, there is no database like this anywhere in the world.”  

“The Chamber study hit the streets at a good time,” wrote Jessyca Sheehan, senior associate in APCO’s Sacramento office and a member of APCO’s energy/renewables practice. “With unemployment still high and consumers once again feeling the pinch at the pump, the time appears ripe for state and federal action to address siting challenges and incentivize new investments in alternative energy.”

Last Friday, Gov. Jerry Brown signed 13 bills to reduce California's budget deficit, but his struggle to find common ground continues. Nevertheless, California's position in the clean tech market remains strong. In December, Reuters reported that California attracted 60 percent of the clean-tech venture capital market, according to a report by Clean Edge, a consulting firm. With his eight-point energy plan, Brown said he believes the state can lead the way in the clean tech transition.

Yesterday, a bill that cleared the Legislature and was sent to Brown would increase by 13 percent the amount of electricity that public and private utilities must obtain from renewable energy sources by 2020. Opponents argue that the jump from 20 percent to 33 percent would increase future electricity prices. Brown has not taken a position, but he broadly supports "codifying the requirement," spokeswoman Elizabeth Ashford told the Sacramento Bee.

Although Brown has yet to name a clean energy jobs czar, the policies he helps shape now can have a lasting impact with the renewable energy market, expected to triple to $2 trillion over the next decade.