In the US, the most elusive piece of any new energy project isn’t material such as copper or steel, labor or even capital. It’s a permit: Without the right approvals, nothing gets built.
When developers want to put up a power line or lay a gas pipeline, they must run a regulatory gauntlet that can consume more than a decade. The permitting process is so slow and convoluted that the clean energy and fossil fuel industries, along with Democrats and Republicans, are united in calling for reform.
The push to streamline energy permits even became a part of negotiations to raise the US debt ceiling, with some limited changes included in the final deal President Joe Biden signed on June 3. But energy experts say there’s much more to be done.
“The same underlying issues that are causing delays and cancellations of oil and gas projects are stymieing efforts on the Democrat side to build out renewable energy,” says Anne Bradbury, head of the American Exploration and Production Council, which represents independent oil and gas companies. “It creates a situation of strange bedfellows.”
To understand how daunting the permitting process can be, consider a humble power line. Transmission is crucial for decarbonization because the best sites for wind and solar farms are usually far from the cities and industries that consume the most electricity.
To build a long-distance transmission line, developers must get permission from an alphabet soup of federal, state, local and tribal agencies, plus win over any private landowners. The initial step, getting the US Department of Energy to designate a broad corridor for the line, can take up to two years. Then the DOE performs an environmental assessment, which usually takes four or five years. Getting state authorities on board and starting the Federal Energy Regulatory Commission approval process eats up two more years. At that point FERC begins yet another environmental review, which can take yet another four or five years.Read more: The Clean-Power Megaproject Held Hostage by a Ranch and a Bird
That means putting up a power line to carry, say, wind power from New Mexico to the giant neon signs and slot machines in Las Vegas can take more than 17 years—as it has for the 500-mile-long SunZia Southwest Transmission Project, which won its final federal approval three weeks ago. With such lengthy delays, Biden’s stated goal of purging polluting fossil fuels from the electrical grid by 2035 looks out of reach.
While most everyone agrees the energy permitting system is broken, any overhaul will face resistance. Oil drillers favor less federal oversight, while clean energy developers want more federal involvement to help bypass balky state governments, says Christine Tezak, managing director at research firm ClearView Energy Partners LLC.
“Everybody wants pizza, but everybody wants a different pizza,” says Tezak, likening the marginal improvements made in the debt bill to a plain cheese pie. “It doesn’t make the vegetarians happy, and it doesn’t make the meat eaters happy.”
In reaching agreement on the cheese pizza, Democrats fended off several top Republican priorities, such as setting time limits on lawsuits that invoke the 1970 National Environmental Policy Act to challenge government reviews and shrinking the role of states in permitting projects that may affect waterways. And Republicans were able to block major changes that would have sped up the approval and construction of transmission lines, amid resistance from some investor-owned utilities.
“We didn’t do permitting reform,” says Senator Brian Schatz, a Democrat from Hawaii, explaining that the debt bill made only narrow changes. “I think there is a deal space. But we’re not going to do the American Petroleum Institute wish list and call it permitting reform.”
Lawmakers are already laying the foundation for a second round of changes. Senator Martin Heinrich, a Democrat from New Mexico, on Thursday introduced two bills meant to speed grid upgrades, including legislation that would give FERC authority over high-voltage power lines that cross multiple states and set a deadline for its final decisions.
Reaching net-zero by 2050, the carbon-cutting target most often cited by corporations and governments, will require building the clean energy equivalent of 3,000 power plants, says Jason Grumet, head of the industry group American Clean Power Association. And all of that new generation will require permits.
“There is an imagination that somehow clean technology just flows into society in this kind of gentle, small-is-beautiful, solar-panels-on-dairy-farms-in-Vermont kind of way,” Grumet says. But that ignores how hard it is to transform the world’s largest economy in under three decades, he says, adding, “You’re not going to do that at speed and scale through community-based decision-making."
Green groups are concerned that broad permit reform will unlock more fossil fuel projects, like the stalled Mountain Valley Pipeline, a controversial pet project of West Virginia Democratic Senator Joe Manchin that will be fast-tracked as part of the debt ceiling deal. But experts argue that streamlining approvals will be far more beneficial to clean energy. One reason is that Biden’s landmark clean energy law, the Inflation Reduction Act, is expected to unleash an estimated $3 trillion in spending on renewable projects. Another is that there are about three times as many clean energy projects under federal environmental review than there are fossil fuel projects, according to an analysis of 2021 records for large projects by think tank R Street.
“If you create a more efficient system for everything, it’ll benefit oil and gas some, but it’ll improve clean energy a lot,” says Xan Fishman, energy policy director at the Bipartisan Policy Center. “We’re adding clean more than we’re adding dirty.”
--With assistance from Ari Natter.
©2023 Bloomberg L.P.
