Clean Energy Federalism

Legal scholarship tends to approach the law and policy of clean energy from an environmental law perspective. As hydraulic fracturing, renewable energy integration, nuclear reactor (re)licensing, transport biofuel mandates, and other energy issues have pushed to the forefront of the environmental law debate, clean energy law has begun to emancipate itself. The emerging literature on clean energy federalism is a symptom of this emancipation. This Article adds to that literature by offering two case studies, a novel model for policy integration, and theoretical insights to elucidate the relationship between environmental federalism and clean energy federalism. Renewable portfolio standards and feed-in tariffs both seek to mitigate global climate change by promoting low-carbon, renewable energy. Despite their shared objective, subtle differences in the design characteristics and regulatory requirements of both policies point to different policy innovation pathways, recommending renewable portfolio standards for implementation at the federal level and feed-in tariffs for implementation at the state level. Contrary to the literature’s traditional view that renewable portfolio standards and feed-in tariffs are mutually exclusive policy alternatives, this Article proposes a model for closely integrating both policies toward a better, more efficient allocation of investor and regulatory risk. Properly integrated, such a joint policy regime could harness the competitive market forces inherent in portfolio standards and redirect them to optimize overall risk allocation. With aggregate risk mitigation greater than the sum of its parts, an integrated policy regime could leverage higher private-sector investment in renewables while requiring lower returns than necessary under less coordinated current policy approaches. From a theoretical perspective, this Article illustrates how clean energy federalism both draws on and advances the theories shaping today’s environmental federalism discourse. Specifically, this Article calls for a more nuanced, multidimensional application of environmental federalism’s matching principle, offers support for a more open-ended, institutionally agnostic public choice narrative, and operationalizes dynamic federalism theory in the clean energy arena