The past two years have witnessed increasingly vocal calls for rapid decarbonization of the global economy through a clean energy transition. A growing list of multibillion-dollar climate disasters in the United States and overseas have underscored vulnerability to the climate and the potential risk of leaving climate change unchecked.

Congress is considering the United States' path forward toward decarbonization. The bipartisan infrastructure package recently passed by the Senate includes billions of dollars worth of investments in renewable energy. Another potential avenue to address carbon emissions is a bill on a reconciliation track through Congress and aimed at implementing much of President Joe Biden's domestic policy agenda.

Properly incentivizing the clean energy transition in the United States may require a comprehensive variety of energy incentives to account for differences in energy markets among states. Many Democrats would like the reconciliation bill to include a version of a Clean Electricity Standard, which is a policy that sets a target for utilities to provide a certain amount of clean electricity.

However, traditional CESes, which have only ever been passed at a state level, are typically implemented as regulatory policies, a strategy that is not allowed in the budget reconciliation process. How Congress chooses to design a CES that will satisfy reconciliation rules has several implications for how the CES would achieve low-carbon outcomes.

One factor to consider is the source of funding for utilities to move to clean electricity, including costs associated with power generation and distribution. Under a traditional CES approach, the transition to clean power generation would be funded by additional charges in utility bills, while a proposal under consideration for inclusion in the reconciliation bill would pay utilities to expand clean electricity and tax them for not meeting a certain threshold.

Read the full article about achieving energy equity by Liam Regan and Benjamin Lee Preston at RAND Corporation.