The Climate Conundrum

This Week's Trend In Brief:

• Spurred on by the energy transition, and with the passage of legislation like the Inflation Reduction Act, and the Infrastructure Investment and Jobs Act, there is more opportunity to build new energy infrastructure than ever before.
   

• Yet despite all this opportunity, in the country that built the Hoover Dam, the Transcontinental Railroad, and the New York City Subway in six years or less, it is harder than ever to build energy infrastructure projects – and certainly not in a reasonable timeframe given the federal and state permitting maze facing projects today.
   

• Indeed, as we saw just this week, not even a direct act of Congress can ensure projects like Mountain Valley Pipeline can escape challenges from highly sophisticated energy infrastructure opponents; neither can traditionally friendly territory like Texas help avoid intense legal challenges like those facing Texas LNG.
   

• The long sagas of projects like Vineyard Wind and the Gemini Solar Project show how even green energy projects cannot escape delays and disruptions from opponents.
   

• To help energy developers and investors navigate these challenges, we’re releasing Generating Opportunity, a proven playbook based on years of working on traditional and renewable projects to help firms understand what it takes to ensure success in today’s heated operating landscape.

Digging Deeper:

 
With the passage of  IRA and the IIJA, there is more opportunity than ever for energy infrastructure development across a broad range of technologies. The Inflation Reduction Act and the Infrastructure Investment and Jobs Act combined to create billions of dollars in new incentives via loans, grants, and tax credits for energy infrastructure developers. Spurred on by the energy transition, these dollars will support firms investing in emerging technologies like hydrogen and carbon capture, traditional renewables like wind and solar, nuclear, hydropower, electric vehicles, and grid infrastructure.
 

Yet despite this opportunity, in the same country that built infrastructure projects like the Hoover Dam and the Transcontinental Railroad in six years or less, it regularly takes modern infrastructure developers far longer than that to bring energy projects online. Beginning in 1863, builders only took six years to complete the Transcontinental Railroad. The New York City Subway System was completed in 1904 after only four years. Starting in 1931, builders completed the Hoover Dam in 1936, two years ahead of schedule. Yet today, it takes nearly five years on average to complete an Environmental Impact Statement, and one in four takes more than six years. Similarly, the typical project that needs to connect to the grid spent five years on average in the interconnection queue.
 

In part, these challenges are the result of an extremely cumbersome permitting system, created by a myriad of environmental and climate laws at the state and federal level. In the years since the completion of projects like the Hoover Dam, Congress and state legislatures have passed a myriad of environmental laws, that while well intentioned, created new permitting hurdles – particularly in the hands of increasingly professionalized activists. For example, The Federal Water Pollution Control Act became law in 1948, before ultimately becoming the Clean Water Act as we know it in 1972. NEPA, “the first major environmental law in the United States,” became law in 1970. The Clean Air Act, which initially became law in 1955, had major revisions in 1970, 1977, and 1990. As a result of these laws, and a variety of others, energy infrastructure developers must now navigate a multi-level regulatory maze, featuring a plethora of federal agencies, each with layers of offices or bureaus, coupled with state regulatory bodies that are often empowered to delay or deny not just projects within their states, but interstate projects as well.
 

Exacerbating these challenges are the increasing sophistication of energy infrastructure opponents, and a variety of post-permitting hurdles, recently exemplified by delays and disruptions facing both traditional and renewable projects. In today’s operating landscape, it is no longer enough to be a good neighbor. Developers must navigate increasingly professionalized, nationally-backed, and uncompromising activists who frequently oppose projects whose goals ought to align with their professed objectives. Even when developers can successfully navigate these challenges and get permits approved, the hurdles don’t stop, as groups like Earthjustice stand ready to challenge projects long after the permits have been issued. In recent months, this trend has shown up on a range of projects, including the Mountain Valley Pipeline, which despite a literal act of Congress, has been halted again and could end up before the Supreme Court for a second time. Similarly, Texas LNG is facing new lawsuits this week after receiving permits in April. Yet this challenge is not limited to traditional projects. The Vineyard Wind project off the coast of Massachusetts has faced a number of legal challenges since receiving its permits, while the Gemini Solar Project has navigated years of resistance from environmental groups concerned about its effect on the desert tortoise. These same activists are now gearing up to stop plans for a number of innovative carbon emission reducing or eliminating technologies bolstered by the IRA and IIJA such as hydrogen or carbon capture.
 

To help your firm navigate these challenges, we are releasing Generating Opportunity, a proven playbook to avoid delays and disruption we have refined over years of working with energy infrastructure developers and investors. At Delve, we have worked with energy infrastructure developers, their investors, and their trade associations for years, helping firms navigate these challenges and anticipate delays and disruptions. From understanding where a firm’s risks exist, to identifying the key stakeholders and securing an information advantage, to building a system to avoid surprises, we’re here to help. Download your copy of the playbook now, and reach out if we can help support your efforts to build the energy future.

Trends in Energy is your weekly look at key trends affecting the energy industry, brought to you by the competitive intelligence experts at Delve. As the political and regulatory landscape continues to shift, reach out to learn how our insights can help you navigate these challenges.