At the USEA / US Energy Association’s Annual State of the Energy Industry Forum held in Washington DC in January – one of the recurring themes discussed by many of the nearly two dozen US energy sector association leaders was the call for energy infrastructure permitting reform. So – what on earth is this? Why is it such a big problem?
Most people outside the energy sector are blissfully unaware of this whole process is all about, and why it is such an impediment to achieving net zero carbon for the US. Last year the prestigious Brookings Institution published a report called “How does permitting for clean energy infrastructure work?” which offers great insights into this highly complex issue.
Energy sector trade association leaders calling for permitting reform at the USEA meeting included: Mike Sommers from the American Petroleum Institute, Maria Korsnick from the Nuclear Energy Institute, Karen Harbert from the American Gas Association, Jim Matheson from Rural Electric Cooperative Association, Dena Wiggins from Natural Gas Supply Association, Greg Wetstone from the American Council on Renewable Energy, Michelle Bloodworth from America’s Power, Malcomb Woolf from National Hydro Power Association and Desmarie Waterhouse from American Public Power Association.
The US Energy Sector Permitting Process
Consider the long road typically involved with planning and building US energy infrastructure:
Pre-Application Process: Preliminary studies are done to assess the feasibility of the project as well as potential environmental impacts. Feedback is often sought from various regulators and other key stakeholders in terms of project requirements and potential obstacles that may need to be addressed.
Preparing Applications: Energy companies and other developers then prepare and submit a permit application to the appropriate regulatory agencies. These applications include detailed site plans, engineering schematics, potential environmental impact assessments and other information.
Regulatory Agency Reviews: Permitting agencies on a federal, state and local level then review the application and can request additional information or studies be conducted to address concerns. These agencies often consults with other agencies, key stakeholders, and the public to help determine the project’s potential impact and get feedback.
Environmental Review: Permitting agencies then usually conduct an environmental impact review of the project to help determine the potential impact on water and air quality, wildlife and vegetation and other environmental considerations.
Permitting Decision: The permitting agencies then pass decisions on the permit application that either approves or denies it or can give conditional approval. Some permits require environmental impact mitigation, monitoring and reporting.
Appeals / Litigation: If the permit is denied or if any stakeholders (like environmental groups) challenge the permit decision – there is a process for appeals and litigation which can further delay the project and drag on for many years.
Post-Permitting Requirements: Once the permit is approved, energy companies / developers must strictly comply with the requirements and conditions of the permit, including environmental monitoring and impact reporting requirements.
Permitting Reform Obstacles
Balancing Energy Development Initiatives with Environmental Protection: Permitting agencies need to consider the potential environmental impact of energy infrastructure development, and fossil fuel companies in particular often have a target painted on themselves when it comes to building infrastructure. Considerations include air and water pollution, habitat destruction and greenhouse gas / carbon emission levels. These need to be balanced with the economic development opportunities, sustainability, and energy security / grid reliability improvement considerations.
Communication / Coordination Between Permitting Agencies: The permitting process for the US energy sector is often a nearly unmanageable maze of multiple federal, state, and local agencies – each with its own set of regulations, procedures, and policies. This often leads to different priorities, interpretations of the law and general mass confusion. Improved coordination and communication among these permitting agencies will be needed to streamline and accelerate the permitting process – especially considering the mass infusion of government and private sector funding that will be the result of the Inflation Reduction Act.
Public Participation / Key Stakeholder Engagement: The permitting process can include multiple stakeholders – from residents / communities near the proposed development site to environmental conservation groups, along with economic development entities, the energy companies themselves, shareholders, analysts, and the media. While it is critical to engage all these groups to determine their interests and concerns, it can also lead to increased costs and delays as permitting agencies may call for more studies and public meetings to address these myriads of concerns.
Legal Challenges to Regulatory Reform: Permitting reform is likely to face legal challenges and create regulatory uncertainty as a result – especially when it comes to changing existing regulations. These legal challenges are expensive and time consuming, which and act as a barrier to investment and innovation in the green energy sector, further impeding the ability of the US to get to its net-zero carbon emission targets.
Directional Permitting Reform Solutions
Sensible permitting reforms might include the following:
Create a More Streamlined / Transparent Permitting Process: This will require greater collaboration and coordination between federal, state, and local agencies. Establishing common regulatory standards at all three levels would be ideal. The US GAO / Government Accountability Office looked at some of these issues back in 2018 and made some sensible recommendations.
Improved Stakeholder Engagement: Engaging stakeholders sooner rather than later in the process can help front-run potential problems. Energy companies and regulatory agencies can then better understand and address concerns and manage everyone’s expectations – thus accelerating the whole process.
Use AI / Artificial Intelligence Technology and Data Analytics: These resources can help regulatory agencies use machine learning algorithms to process huge volumes of data and information and in turn automate parts of the permit application process.
Permitting Process Legal Reforms: Congress and state legislatures will likely need to get involved in terms of passing legislation that will mandate permitting process reforms from various regulatory agencies. These might include standardized and consistent approaches / requirements for certain types of permits and further automation of the application review process. The Federal Energy Regulatory Commission (FERC) is trying to make headway in this area with its Joint Federal-State Task Force on Electric Transmission in conjunction with state regulators (National Association of Regulatory Utility Commissioners / NARUC). Check out one of the webcasts of a joint task force meeting to see what a quagmire this whole effort is.
Provide Additional Resources: To keep pace with an increased volume of permit applications and complex review / approval process – regulatory agencies will need to overcome their often-bureaucratic mindset and act with a great sense of urgency. Federal and state legislatures will need to provide additional funding so agencies can hire additional staff / improve automation with the acquisition of new technology. All agencies should also consider re-engineering their basic permitting revies / approval processes to make sure the process is faster and more cost-efficient.
Conclusions
It is clear that significant permitting reform will be needed if the US is going be able to undergo an extremely aggressive build-out of the renewable energy generation and electricity transmission required to unlock the full potential of the Inflation Reduction Act and reach the Biden Administration’s goal of 100% carbon pollution-free electricity by 2035 for this country.
The situation suggests the adage “A definition of insanity is doing the same things over and over and expecting a significantly different outcome.” The planet we will leave for our children and future generations is at stake, nothing less.
The long-term solution will require a concerted effort on the part of the US energy private sector, bi-partisan support from elected officials and cooperation from the leadership of all the federal, state, and local regulatory agencies involved, along with concerned citizens from across the country.
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