Energy Permitting Reform Act of 2024: What does it mean?
At a Glance
- On Monday, July 22, US Senators John Barrasso (R-WY) and Joe Manchin (I-WV) introduced the Energy Permitting Reform Act of 2024, which aims to accelerate the permitting process for energy and infrastructure projects within the US.
- The lawmakers argue this legislation will create jobs, lower energy prices, and secure American energy and critical mineral reserves all the while speeding up the process of bringing new energy projects online by easing the permitting process for transmission.
- With AI, data centers, and a host of other factors creating an increased demand for electricity, this legislation is positioned to have a net positive impact on the US economy and strengthen American competitiveness by ensuring that demand can be met. Further, the legislation can ensure that the American electrical grid is more resilient in the face of climate change.
- Proponents of the bill suggest that the legislation maintains affordable and reliable energy systems in the US, a boon for small businesses and families. The bill has the backing of prominent clean energy trade associations as well, noting that the legislation will speed progress on bringing online renewable energy sources.
- The environmental community is split on the legislation, with those focused on clean energy viewing the bill favorably but those focused on conservation opposed. Many are concerned that the legislation will expose more federal lands to drilling with less review and will bring online more gas export projects. The Sierra Club, for example, is calling for passage of the Clean Electricity and Transmission Acceleration Act in lieu of this legislation.
Overview
On July 22, 2024, Senators Joe Manchin (I-WV) and John Barrasso (R-WY), the Chairman and Ranking Member, respectively, of the Senate Energy and Natural Resources Committee, introduced the Energy Permitting Reform Act of 2024. This bill comes after two years of negotiation between the two lawmakers and pervasive doubts from Senate leadership about the possibility of reaching a consensus. Senate Majority Leader Chuck Schumer (D-NY) said in May that it would be “virtually impossible” to reach permitting reform legislation.
The overarching goal of this bill is to shore up domestic energy capabilities and reduce reliance on foreign countries, including China, by modernizing the permitting process for critical mineral and energy projects. The legislation includes mechanisms to enhance US capacity to build interstate electric transmission lines, integrate renewable energy into the grid, and accelerate the approval process for projects after environmental reviews are completed.
Key Takeaways
- These reforms will create new standards to ensure electric transmission planning is coordinated across regions. Clear standards will be established to outline how the project costs will be distributed among benefiting customers all the while speeding up permitting. And the reforms provide a standardized process for individuals to apply for a national-interest transmission development project. It sets a goal for permitting 50 GW of renewable energy projects on federal land.
- Federal approval for onshore energy and mineral projects will be accelerated. But leasing and permitting decisions will still be required to undergo environmental and land use reviews.
- It also imposes additional requirements on the Department of the Interior. The Secretary of the Interior will be required to conduct at least one offshore wind lease sale, one offshore oil sale, and one gas lease sale annually from 2025 through 2029, subject to minimum acreage requirements.
- The Federal Energy Regulatory Commission (FERC) and North American Electric Reliability Corporation (NERC) will be required to assess future federal policies that affect power plants. Furthermore, they must provide formal comments to federal agencies regarding their impact on electric reliability. FERC will also now have the authority to provide start dates for existing hydropower projects.
- This bill will reverse the Biden administration’s current pause on new liquified natural gas (LNG) export approvals. If signed into law, companies will be able to resume submitting new LNG exports for approval to the Department of Energy, whose Secretary will have 90 days to grant or deny LNG export applications after environmental reviews were completed. If the Secretary of Energy fails to meet the deadline, applications are considered approved.
- Opposition groups have already called out the bill for catering to oil companies and reversing progress on the energy transition. They are proponents of electrical transmission reform but argue that the rest of the bill negates success in mitigating the effects of climate.
“We’re pleased to see bipartisan recognition that we must quickly and efficiently build out transmission capacity to keep pace with America’s growing electricity demand.”
— Abigail Ross Hopper, president and CEO
of Solar Energy Industries Association (SEIA)
How will this affect business?
- Opportunities for New Projects
- Mandating annual offshore wind and oil and gas sales creates new avenues for energy firms to research and develop resources. Companies will also no longer be limited to three bids between 2025 and 2029, a Biden regulation, and will now have multiple opportunities to do so. Moreover, they will be able to extract fossil fuels from public land and establish renewable energy projects there. This means increased competition for federal and state energy projects as companies ramp up bids.
- Reduced Costs and Timelines
- Faster federal permit approval processes mean companies can cut through red tape and break ground faster than before. And new policies around electric transmission lines will enable companies to better plan and forecast project costs and profits as a result of new standards for distributing project costs among benefitting customers. Accelerated timelines also mean environmental activists will have less time to take legal action against energy firms.
- Need for Compliance
- Even with these proposed reforms, businesses will still face stringent environmental reviews and policies to get projects approved. And individuals aiming to develop electric transmission projects will face more red tape in securing approval due to a new standardized application process.
For additional information, reach out to Daniel.Workman@edelmanega.com
