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Joe Manchin’s Red Tape Reform Could Supercharge Renewable Energy in the U.S.

8 minute read
Patel (@surajpatelnyc), a former candidate for Congress in New York City, is an attorney, a former Obama staff member and an adjunct professor of business ethics at N.Y.U. Stern

Clean energy projects and infrastructure are vital, but they’ve become too expensive because they are too slow to complete, contributing to livability and climate crises that are holding America back. We have too much red tape when what we need is to begin building more projects, and build them at a much faster pace if we want to meet our climate goals by 2050

One way to do that is to streamline the regulatory process, and Democrats in Congress have the opportunity to do just that. When the Senate majority leader, Chuck Schumer, made a deal with Senator Joe Manchin to pass the Inflation Reduction Act, it included a promise to consider legislation reforming environmental reviews and permitting authority.

President Biden’s commitment to getting cranes in the sky and shovels in the ground to transform our economy to carbon neutrality hangs in the balance.

Democrats and progressives ought to embrace that reform rather than veto it, as many Democratic climate hawks are threatening to do. The massive green energy investments in the Inflation Reduction Act will go nowhere—and will not help us in the fight against climate change—without being coupled with reform to allow our country to build again, and build faster.

A leaked outline of Manchin’s proposal includes setting maximum timelines for the environmental review process for energy projects. Other components would make it harder for states to block projects that run through their waters which is a way state authorities block projects of national importance using state laws.

While it includes provisions for pet projects, the crux of the Manchin-Schumer side deal takes aim at a failing feature of our political system: from the Senate to the filibuster, gerrymandering at all federal and state levels, commissions, NIMBY (“not in my backyard”) referendums, community boards and interest group litigation—our regulatory system has become a “vetocracy” that hampers progress. Red tape in permitting functions has become another veto point, because regulatory regimes inevitably get captured by special interests.

The U.S. is one of the slowest countries to build large projects and infrastructure and the most expensive. In turn, our infrastructure and large project costs are astronomical compared to the rest of the world. For example, we hold the title for the most expensive subway project in the world —New York’s Second Avenue Subway expansion, cost $2.2 billion per kilometer and was completed 90 years after conception. By contrast, Paris is building a brand new 47-mile-long subway line for $11 billion total. If NYC were to build a new 47-mile-long subway, it would likely cost well over $100 billion, approximately the entire GDP of the country of Ecuador.

The main driver of that is speed, or lack of it and it starts with the longest planning, permitting, and approval process in the world. One major reason is because our environmental regulatory regime is focused on process, rather than substantive outcomes. No law on the book exemplifies that more than the National Environmental Policy Act of 1969 (known as NEPA).

NEPA requires all construction projects under federal jurisdiction to conduct an environmental-impact statement on a given project. In the beginning, these statements were routinely about 10 pages long.

Today, what was born as a good idea has turned into a demon. The Department of Energy reported that the average completion time for an environmental-impact statement in 2015 was 4.1 years, and the average cost was $4.2 million. They are routinely thousands of pages and take years to complete, and more often than not, they’re used to kill projects with a slow death or make them exorbitantly expensive.

NEPA has recently claimed a number of clean energy projects. For example, New York’s congestion pricing was delayed by NEPA and pushed to 2023 despite passing in 2019 because of the consideration of numerous “alternative routes” to avoid litigation. Bike lanes in San Francisco were delayed by a report that reached 1,353 pages, 2.5 years and over $1 million in costs because of the NEPA review.

NEPA reviews also frequently kill wind projects: In one, wind farms off the coast of Martha’s Vineyard—which would produce enough to power approximately 720,000 homes with clean energy—was delayed for years; another Cape Cod wind farm was canceled after 16 years of NEPA delays and hundreds of millions spent in sunk costs; and it took 11 years of NEPA delays before a big wind project in Wyoming was finally approved.

Read More: How Amazon Became the Largest Buyer of Renewable Energy in the World

Mass transit authorities have great difficulty getting projects approved in a timely manner. It’s partially why New York’s Second Avenue subway was delayed; it’s next three phases will each require a separate review. California’s high speed rail system has been delayed for a nearly a decade because of lengthy procedural delays. The federal government cannot even put solar panels on its roofs without triggering a NEPA review.

Even forest fire prevention suffers: Congress recently tried to pass a specific NEPA carve out in the Save Our Sequoias Act because the Forest Service’s wildfire prevention projects are delayed an average of 3.5 to 7.2 years.

Federal agencies are risk averse, and they often err on the side of a conservative review rather than risk a federal court throwing it out as deficient. The nature of NEPA’s citizen lawsuit provision allows anyone to bring a challenge to an agency’s procedure—which has had the effect of allowing special interest groups to jump in and often get projects killed as a result of delays. The costs of major infrastructure and energy projects are concentrated but the benefits are diffuse, so NEPA too often allows small groups to destroy good public projects that would benefit many, many people.

Properly reforming NEPA is a generational question. Right now we have process-based environmental protections with mixed results. Reform would reimagine a substance-based environmental protection regime that takes the entire planet into consideration. The NEPA was passed in the 1970s, when localized environmental damage like toxic waste was the key concern. Today our challenges are global, but the manner in which NEPA is commonly interpreted and applied can favor the status quo and disfavor developing land for renewable energy projects. One important recent quantitative analysis of NEPA from Trevor Salter of the University of California, Davis, argues that current law advances land preservation interests too far at the expense of renewable energy project development.

Opponents of red tape reform will point out that more community input is critical, which was the original purpose of NEPA. But today, the reality is that NEPA has become a tool of regulatory capture. True, it allows any citizen to bring a lawsuit to halt a project, but a recent study found that only 3 percent of NEPA litigants were Native American tribes or local residents. Instead, the vast majority of litigants were special interest groups, sometimes from shell organizations funded by fossil fuel interests.

The irony is that NEPA actually hampers renewable energy much more than fossil fuels and highway repaving. Fossil fuels development is altogether exempt from many NEPA review and older incumbents have had decades to work the process in their favor: 42% of the Department of Energy’s (DOE) active NEPA projects are related to clean energy, transmission or conservation, while only 15% are related to fossil fuels. Specifically, The 2005 Energy Policy Act created a loophole for oil and gas exploration on federal land exempting many oil and gas projects across the Western United States from having to comply with NEPA. Unbelievably, carbon-free geothermal projects do not get the same treatment, they must file NEPA reports essentially dooming them against their dirtier competitors.

The Institute for Progress has outlined a list of policy suggestions to prevent NEPA from being used to harm the environment including giving clean energy the same regulatory treatment that fossil fuels already receive, establishing limits on judicial review arising from NEPA, establishing “energy security corridors” to incentivize state and local governments to streamline their own permitting and review processes.

Permitting reviews should have a 16-month window with more strict litigation review guidelines because certainty, whether a project is approved or not, helps redeploy capital rapidly to productive uses but limbo kills. Finally, dark money interest groups — often funded by competitors to a clean energy project—should not have standing to challenge a publicly beneficial project.

In the United States, a long history of perceived sacrifice to achieve environmental goals has led to a belief that economic growth and the environment are locked in a zero-sum game, that growth suffers from decarbonization. To build support for a lasting environmental movement, we need to decouple environmentalism from a perceived drop in standard of living. Speeding the way for an environmental agenda focused rapidly creating an abundance of clean energy accomplishes just that.

Reforming the permitting process to make it easier to fight global warming is a moral obligation, even if it means letting a fossil fuel project go forward like the one Mr. Manchin wants in West Virginia.

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