As the war's first anniversary in Ukraine passed in February, Western pundits and experts turned to the perennial question of “lessons learned.” Energy independence was a popular answer. After the loss of Russian oil, the U.S. stepped in to help Europe weather the storm, becoming a net energy exporter. Whether that leadership is to last depends on how well the U.S. can adapt to the future of energy production, which will require a healthy mix of renewable energy sources and traditional fuels like natural gas. Unfortunately, our byzantine permitting process for new energy infrastructure makes that future unlikely.
If there was any doubt that oil and gas would continue to matter in the 21st century, Russia’s invasion of Ukraine removed it. Late last February, the head of the International Energy Agency urged European nations to remain focused on “conserving and boosting supplies” after Russia’s decision last year to weaponize energy. President Biden echoed that sentiment in his State of the Union address earlier this month, saying, “We’re still going to need oil and gas for a while.” The Biden administration's decision to approve the Willow oil drilling project in Alaska confirms this reality, even though his administration continues to push anti-hydrocarbon policies.
Even as remarkable improvements in technology and energy efficiency occur, economic growth requires the affordability and reliability that only an all-of-the-above energy mix offers. A reliable mix is also important to U.S. national security, which depends on multiple energy sources and raw materials to project power globally and protect U.S. and allied interests.
The debate over our energy future is important, but in some respects, it is akin to counting our chickens before they hatch. The reality is that whether you have net zero by 2050 marked on your calendar or are an oil-and-gas executive, the future of American energy remains hampered by the long delays in constructing new energy infrastructure caused by a labyrinth of environmental regulations from the National Environmental Policy Act (NEPA).
All energy infrastructure projects involving the federal government must undertake environmental reviews as part of the National Environmental Protection Act (NEPA). This 1970 law made sense half a century ago but is now terribly outdated, with most approvals taking longer than it took the United States and its Allies to win World War II. Moreover, the process assumes the best intentions of all stakeholders. Special interest groups and elements outside the mainstream regularly seek to manipulate the law to suit their agenda by producing needless and expensive litigation to delay projects they don’t find agreeable.
As the country moves forward with the energy transition, hydrocarbon and low-carbon solutions alike are held captive by this outdated scheme. Without reform, there is little to no chance President Biden’s ambitious climate goals outlined in the Inflation Reduction Act will make any meaningful progress. A Brookings Institution report found that most wind energy projects are stuck in the permitting phase, and only 21% are under construction. Of all the NEPA-delayed projects, over 80% are for clean energy, while only 19% are for hydrocarbon-related projects.
Earlier this year, the White House Council on Environmental Quality (CEQ) introduced its new NEPA guidance, which requires companies and federal contractors to provide more quantitative analysis and estimates of greenhouse gas emissions annually and over the project’s lifetime. Ironically, the more the government attempts to pass prescriptive bureaucratic policies, the more likely they will have the opposite effect intended.
Models for successful reform have appeared in Congress. Persistent efforts from Senator Joe Manchin (D-WV) sought to prioritize permitting reform by removing the bureaucratic red tape that deters investments. Senator Manchin proposed a two-year limit on NEPA environmental reviews and limits on spurious judicial reviews. Had his provision passed during the last Congress, it could have created an additional $67 billion in energy investments in the oil and gas sector alone.
Even though most Americans support responsible and sustainable energy projects, technocratic NEPA requirements and climate activists seem determined to forestall any reasonable energy infrastructure development—“clean” or otherwise. A reformed permitting law will expedite innovation in infrastructure—including low-carbon-energy projects, reduce investment risk, bolster national security, and help move the U.S. towards our ambitious net-zero energy goals in the coming decades.
This Congress has a once-in-a-lifetime opportunity to pass permitting reform. The sooner members of Congress bring this win-win proposition across the finish line, the better it will be for us all.