By Stuart Levenbach

It seems counter-intuitive that more government regulation is necessary to accelerate the clean energy economy. Yet, that is precisely what is needed. As a salutation to the final day of Spring, the Biden Administration released its latest edition of the Unified Regulatory Agenda (Agenda). Addressing climate change features prominently among this edition’s priorities, with pending rulemakings that would reduce methane emissions, increase royalty rates on oil and gas production, and improve energy efficiency. But the real guidelines necessary to build the next generation of clean energy infrastructure and achieve net zero greenhouse gas (GHG) emissions by 2050 were few and far between.

Case in point is clean hydrogen development, which was jump-started by $8 billion of funding in the Infrastructure Investment and Jobs Act (IIJA). Hydrogen is a versatile, energy-dense fuel that has perhaps the greatest potential to reduce GHG emissions in certain hard-to-abate industries such as cement and steel. But in the words of the Pipeline and Hazardous Materials Safety Administration, “having adequate codes and standards for all aspects of a ‘hydrogen economy’ is a major institutional barrier.”

How’s this for a patchwork: The Federal Energy Regulatory Commission (FERC) is charged with siting, construction, and operation of interstate natural gas pipelines and storage. However, FERC has not utilized this authority to regulate pipelines that exclusively transport hydrogen and may not have the jurisdiction to do so under existing law. Meanwhile, although the underground storage of hydrogen offers a potential solution to capturing excess energy from intermittent sources such as wind and solar for future dispatch to the grid, it is unclear whether the Environmental Protection Agency’s (EPA) current regulations for underground injection wells must be revised. Without a clear understanding of federal agencies’ jurisdictions and applicable requirements, it may take many years for the projects funded by the IIJA to be approved.

Carbon capture, utilization, and storage (CCUS) is another technology in dire need of better regulatory guidance. CCUS will be a critical component of the emerging lower carbon energy system. And while Congress has incentivized CCUS in the IIJA, appropriating approximately $10 billion for CCUS infrastructure projects, the permitting of geologic storage sites for captured carbon dioxide remains a major bottleneck. Permits are required from EPA to injectcarbon dioxide on land, but EPA has only approved two such permits to date. Two states have been approved by EPA to manage injection well permitting and several states are in the process of seeking that approval to help address the bottleneck. Further complicating the matter is that states must sort out a variety of issues including clarifying pore space rights and long-term liability for stored carbon. Fortunately, this edition of the Agenda does include a planned rulemaking by the relevant agencies in the Department of the Interior to regulate offshore carbon sequestration. These obstacles must be overcome, and quickly, for long-term geologic storage of carbon and hydrogen to make a significant contribution to the U.S. commitment to the Paris Climate Agreement.

While more regulation is needed in some places, the permitting process in the U.S. stubbornly remains among the most challenging in the world, averaging 4.5 years to complete an environmental impact statement under the National Environmental Policy Act (NEPA). Roughly one-quarter of major projects are litigated, adding another 2 years until construction commences. Frequently sited on federal lands, geothermal energy projects are among the most challenging to develop, triggering six different NEPA analyses and taking approximately 7 to 10 years. The Agenda includes an update to the Bureau of Land Management’s regulations for geothermal operations, but much more must be done to shrink the current timeline.

The Department of Energy recently released a timeline for the construction of hydrogen hubs and estimated permitting would be completed in 2 to 3 years. If that sounds rosy to you, you’re right. Frustratingly, the Council on Environmental Quality has already reversed a portion of the actions taken in 2020 to accelerate permitting under NEPA and more improvements are expected to be undone in a forthcoming rule. In a bit of good news, last year Congress codified a “One Federal Decision” framework, setting a goal of two years for all agencies to complete their respective authorizations. However, improvements in management alone are unlikely to be sufficient to achieve this timeline. 

The consequence of inadequate regulations could be a distortion in the marketplace, where the technologies that are easiest to permit dominate instead of the ones that achieve the greatest reduction in emissions at the lowest cost. These challenges can be addressed by conducting a comprehensive review of the federal and state regulations necessary to construct clean energy infrastructure and then completing the necessary rules. This process is best led by the Department of Energy, whose new Office of Clean Energy Demonstrations will be administering over $20 billion in funding pursuant to the IIJA and reinforced by participation from relevant White House offices.

As the Unified Regulatory Agenda demonstrates, the regulations necessary to build the next generation of energy infrastructure will compete for resources with thousands of other regulatory priorities. Clear, consistent, and efficient regulations are needed to take energy forward.

Stuart Levenbach, PhD, worked in four offices within the Executive Office of the President across three administrations, and is currently an Executive for Energy Transition Policy and Funding at Baker Hughes.

via Real Clear Energy

June 28, 2022

Thousands of Regulations, But Not the Ones Needed to Build Clean Energy | RealClearEnergy