latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/white-house-proposal-would-require-tougher-climate-reviews-for-energy-projects-66964034 content esgSubNav
In This List

White House proposal would require tougher climate reviews for energy projects


Insight Weekly Labor market recovery hurdles power market integration nonbank MA hunt


Q&A: Q2'21 Power Forecast: Overheated Power Markets are Here – Who Wins, Who Loses, and Why?


ESG & Technology: Impacts and Implications


Essential Energy Insights - October 2021

White House proposal would require tougher climate reviews for energy projects

  • Author Corey PaulZack Hale
  • Theme Energy

SNL Image

Proposed energy infrastructure projects such as natural gas pipelines could face closer scrutiny under a new Biden administration proposal.
Source: photosbyjim/Getty Creative via Getty Images

The Biden administration on Oct. 6 proposed to roll back Trump administration-era changes to a longstanding environmental permitting law that critics have argued would allow major energy infrastructure projects to escape a thorough analysis of climate impacts.

Under former U.S. President Donald Trump, the White House Council on Environmental Quality, or CEQ, issued a final rule in July 2020 that sought to speed up permitting of energy facilities and other infrastructure under the National Environmental Policy Act, known as NEPA. The Biden administration's changes would direct federal agencies to take a harder look at climate change impacts associated with permitting decisions, expand the agencies' ability to require mitigation measures or project alternatives, and give them wider latitude to tailor NEPA procedures to agency goals.

NEPA reviews are designed to avoid or mitigate harmful environmental impacts, but they can also lead to yearslong project delays by giving opponents the chance to wage lengthy legal battles.

Executive branch agencies such as the U.S. Environmental Protection Agency are required to follow CEQ guidance in crafting their own rules for implementing NEPA. Independent agencies such as the Federal Energy Regulatory Commission, which permits interstate natural gas pipelines, LNG terminals and hydropower facilities, are not bound by the CEQ guidance but could be influenced by it.

The Trump administration's final rule did not eliminate the option for federal agencies to consider the effects of a project's greenhouse gas emissions, but the rule dropped the definition of cumulative impacts and left agencies to consider only the "effects" of those emissions.

Proposal would restore 1978-era definitions

In a move cheered by environmental groups, the Biden administration proposal would restore the CEQ definitions of "direct" and "indirect" effects, as well as "cumulative impacts," from the original 1978 NEPA regulations. The CEQ described the proposal as the first step in a two-phased approach, with a separate notice of proposed rulemaking expected to follow that further addresses the Biden administration's environmental, climate change and environmental justice goals.

Interstate gas pipeline companies and other infrastructure developers had pressed the Trump administration to streamline the permitting process under NEPA after a series of major legal setbacks for oil and gas projects upended billions of dollars in spending.

Electric transmission projects also face serious permitting obstacles that come with building interstate infrastructure in the U.S., according to renewable industry researchers, analysts and legal experts. They have said opponents to renewables infrastructure projects may be able to use some of the same legal tactics that have proven successful in blocking pipeline development.

Siting gas transportation infrastructure is closely regulated by the federal government under the Natural Gas Act. The federal government does not have the same authority over siting electricity infrastructure, something left mostly to the states under the Federal Power Act. But large transmission lines often require some sort of federal permitting, which triggers NEPA reviews.

SNL Image

"The basic community safeguards we are proposing to restore would help ensure that American infrastructure gets built right the first time, and delivers real benefits — not harms — to people who live nearby," CEQ Chair Brenda Mallory said in a statement. "Patching these holes in the environmental review process will help reduce conflict and litigation and help clear up some of the uncertainty that the previous administration's rule caused."

CEQ sees potential boon for renewables

The proposal indicated that restoring the CEQ's original definitions for "direct" and "indirect" effects could be a boon for renewable energy developers as the Biden administration seeks to decarbonize the U.S. power sector by 2035.

A utility-scale solar installation, for example, could have short-term adverse effects on land, the proposal noted. But the CEQ said it could also have long-term positive effects such as displacing greenhouse gas-intensive energy sources like coal and natural gas for years or decades into the future.

"Consistent with CEQ's proposed restored definition, such indirect effects could be caused by the action to authorize a new solar facility, and would be later in time or farther removed in distance yet still reasonably foreseeable," the CEQ said. "Fully evaluating the effects of the facility would require identifying and evaluating both the direct and indirect effects of the proposed action."

Gregory Wetstone, president and CEO of the American Council on Renewable Energy, said recognizing the varied benefits of renewable power is fully consistent with NEPA's underlying objectives.

"The renewable sector has long supported strong environmental protection and believes core environmental statutes like NEPA can and should be administered in a way that fully recognizes the multiple benefits of renewable power," Wetstone said in an email.

The Oct. 6 proposal was nevertheless silent on its potential impact on electric transmission development, which will be required on a massive scale to meet President Joe Biden's goal of decarbonizing the U.S. economy by midcentury.

SNL Image

JC Sandberg, the American Clean Power Association's chief advocacy officer, said the trade group expects to continue engaging with the Biden administration on NEPA reforms.

"We look forward to working with the administration and the Council of Environmental Quality as it seeks to further refine the National Environmental Policy Act to ensure an appropriate level of review of the environmental implications of energy projects, while allowing clean energy developers to bring clean, affordable, and reliable power to the U.S. in a timely manner — creating hundreds of thousands of jobs along way," Sandberg said in an email.