Stimulating Clean Infrastructure Through NEPA Reform
Congressional momentum on a stimulus package has stalled, but disagreements over public spending should not hold clean energy infrastructure back. Rather than pursue expenditures with temporary results, policymakers should pivot to regulatory reform that will endure. One such solution is already on the table: reform the National Environmental Policy Act (NEPA).
The Trump Administration has shown that it is up to the task. In January, the Administration announced a notice of proposed rulemaking to modernize NEPA implementation to reduce unnecessary delays and promote better decision-making. It aims to rectify what previous administrations did not.
Over the decades, NEPA’s influence in delaying projects has expanded. Originally, NEPA reviews were supposed to take less than a year. Now, average preparation time exceeds five years, not to mention the legal risk the process creates. This harms a variety of projects, including clean infrastructure. By artificially raising the cost of capital, it runs contrary to the objectives of the burgeoning corporate sustainability movement, where Wall Street wants to see policy that accelerates “speed to market.”
The private sector has amassed an immense appetite for clean energy, and it’s only growing hungrier. For example, wind and solar comprise 95% of the power generation projects seeking to come online in New England. Clean energy dominates new project queues in the Midwest, Great Plains, Texas and on the West Coast as well. But a variety of red tape hold these projects up, not to mention the transmission projects necessary to get energy to population centers.
NEPA is a major impediment to every class of zero-emission energy technology. Analyses by the American Action Forum and R Street Institute reveal that nuclear and hydroelectric resources face lengthy, duplicative and costly barriers from NEPA. Indeed, NEPA has been a thorn in the side of the solar industry as well –– authoring environmental impact statements (EISs) that “[strain] the limits of a reader’s comprehension.”
As such, the clean energy industry generally views the direction of the Trump Administration’s proposal as on-point. Those involved with solar project permitting call the Administration’s proposed changes “welcome and necessary.” The American Wind Energy Association went so far to say that modernizing the process “would both strengthen our economy and enhance environmental stewardship.”
Wins such as this have energized conservative free market groups, many of whom filed in support of the proposed NEPA reforms. But it also fits a bigger strategy. As noted by the Heritage Foundation, an infrastructure package should be fiscally sound and include enduring regulatory reforms that enable timely development of new projects. Specifically, Heritage highlights NEPA reform as a crucial first step to reduce regulatory barriers. This is a compelling clean energy narrative consistent with their conservative identity; regulatory reform in lieu of public spending.
But this takes some convincing in other camps. Progressives have called on the Trump administration to delay its environmental reform agenda in light of the pandemic. Modest delays for certain regulatory reforms, depending on their stage, may be reasonable. But the NEPA public comment period closed over a month ago and is a leading impediment to the very type of clean investment progressives seek in the pandemic response. Recall that, despite objections from certain environmental groups, the Obama Administration found it “essential” to exempt 179,000 clean energy projects from NEPA review to implement its clean stimulus package from 2009.
It’s an ironic theme for Earth Week that landmark environmental statues like NEPA can have a perverse effect on environmental outcomes. As the tension between clean energy developers and environmental groups over NEPA escalates, it presents an opportunity to strike a new environmental compact. As private capital is increasingly motivated to go green, an associated right-sizing of the regulatory state is only appropriate.
Disagreements around the particulars of NEPA reform are to be expected. But the base case to reform NEPA should not be controversial. Expedited but thoughtful NEPA reform is something all sides should rally around.
Congress may be deadlocked on a stimulus package, but the private sector is ready to go, if only projects weren’t delayed by years of excessive review. We should rally around thoughtful regulatory reform, spearheaded by a NEPA overhaul, to expedite the clean energy economy and improve our fiscal outlook to boot.
