California’s Next “Green New Deal” Should Be Red Tape Reduction

California has long positioned itself as a leader in green energy, with lofty environmental goals and a slew of policies designed to make those goals a reality. For over three decades, the state has poured billions into subsidies and mandates, from tax incentives for solar panels to rebates for electric vehicles. Yet, despite those efforts, progress is thwarted by the very regulations meant to support green development.

It’s time for California’s regulators to learn a new trick: cutting red tape.

The state’s regulatory labyrinth is now one of the biggest barriers to achieving its environmental goals. An unfortunate feature of politics is that it’s usually easier to implement subsidies than it is to push good governance. This has brought California to its current situation–too much of California’s green agenda relies on expensive public support. Those supports can drive electricity costs up in addition to being drags on the state’s overall budget. 

Rather than continuing down this path, California’s next “Green New Deal” should focus on removing the bureaucratic hurdles that make green energy more expensive and harder to implement.

Take solar energy as an example. While the cost of solar panels has plummeted, the true cost of installing rooftop solar in California remains artificially high because of outdated permitting processes and regulatory roadblocks. In the US, solar panel costs are three times what they are in Australia. The US pays about $4.60/watt compared to down under’s $1.50/watt. This is mainly owing to “soft costs,” the expenses of inspections, permitting, and compliance. The panels themselves have experienced incredible price reductions over the last decade.

The inefficiencies drive up costs and delay projects. In some cases, local jurisdictions have the power to grind solar installations to a halt. A good example of the kinds of red tape reduction that California should continue is SolarAPP+, a software tool that automates and streamlines solar permitting. In 2023, the state required that localities use it statewide. Early reports are positive, suggesting that many homeowners are reaping the benefits of faster approvals. The next step should be finding more reforms like this that make it easier to build.

California’s opportunity here is green in two senses–environmentally and economically. Finding additional ways to streamline regulation would create far more jobs than any subsidy or mandate ever could. More jobs would be spurred by faster, more efficient project timelines, which is where true economic growth happens. This is particularly important for California, a state with a shrinking private sector and a growing public sector. The state needs to become a better home for businesses to grow its economy.

And here’s where many policymakers go wrong on job creation claims: they focus on the jobs created by subsidies and mandates as though they are free. They aren’t. These policies fall prey to the broken window fallacy. Positive green jobs claims highlight jobs that come from government spending but miss the opportunities lost by what those dollars would have been spent on otherwise. Or, forget to examine the job losses resulting from higher energy costs and slower, red-tape-ensnared project timelines.

The California Environmental Quality Act (CEQA) is a perfect example of regulation gone wrong. Originally designed to protect the environment, CEQA is now routinely used to block or delay green projects. The common refrain is that CEQA is an indiscriminate killer—everything from solar farms to bike lanes is its prey. Law professor Chris Elmendorf, writing for Mother Jones, pointed out that CEQA is weaponized against the very developments California needs to meet its environmental goals. Streamlining CEQA could be the state’s biggest step toward setting a new example for the future of clean energy policy. Because of its wide reach, it could solve many other problems for the state as well, like housing shortages.

Reducing red tape benefits everyone. By allowing green energy projects to move forward more efficiently, the state can make renewable energy more affordable, create jobs more quickly, and reduce its reliance on subsidies–a boon for California’s overburdened taxpayers. If nothing else can motivate California’s government to see reason here, remember that removing red tape also makes the subsidies more effective!

In short, California needs smarter policies to lead on environmental goals. Cutting red tape enables entrepreneurs to create jobs. If California truly wants to be at the forefront of the green economy, it must prioritize regulatory reform.

The next “Green New Deal” for California isn’t about spending more—it’s about governing smarter.