Renewable Energy Permitting and the Fiscal Responsibility Act

On June 1, after months of strained deliberation, the Senate finally passed the Fiscal Responsibility Act of 2023. Though the act’s passage comes as a massive relief to a country on the verge of an economic crisis, the law contains a number of energy-related provisions that will have a considerable impact on the expansion of clean energy in the U.S. Whether the impact will be positive or negative remains to be seen. 

The final legislation lays out necessary federal spending caps and slackens environmental reviews for new energy projects by amending the National Environmental Policy Act (NEPA). The act will limit the timeline for most reviews to a year and will require agencies to focus reviews on “reasonably foreseeable environmental effects” instead of future impacts that are more difficult to define and quantify.

Three central energy issues hung in the balance before the act passed the House: the acceleration of permitting for energy projects, the expansion of transmission lines, and the authorization of the Mountain Valley natural gas pipeline in West Virginia.

Increasing transmission capacity in the U.S. is a Democratic priority that would enable key transitional clean energy projects and help to resolve widespread issues with grid congestion. Despite this, negotiators did not secure a provision for building out interregional transmission. Citing lack of experience, the act instead orders a two-year study on the “total transfer capability between transmission planning regions.”

Energy permitting reform has been a longstanding priority topic for Republicans, particularly those whose states house large fossil fuel operations, while many Democrats have been hesitant to vote in favor of legislation that could weaken historic environmental protections.

Democrats and Republicans are in agreement that the U.S. needs to speed up construction of new energy infrastructure (the current average project permit wait time is five years). The question is: will the latest reforms do more to bolster pipelines and other fossil fuel projects, or will they hasten the green transition?

There is concern that despite fragile bipartisan agreement, the latest permitting overhaul will, in the words of Senator Ed Markey (D-Mass.), “fast track dirty fossil fuel projects” and “give polluters a Get Out of Jail Free card.” Unease is warranted: Republican permitting priorities lie with oil and gas pipelines like Mountain Valley.

Optimistic Democrats are framing the study as a “starting point” for future work on transmission, but heated opposition to the legislation highlights differing Democratic agendas, with some wholly endorsing the new legislation as a means to push wind and solar generating projects, and others expressing apprehensions about the current state of transmission capacity and encroachment on critical NEPA protections.

With the passage of the Inflation Reduction Act, investments in renewable energy projects have rapidly grown and could stand to benefit from optimized permitting and expanded transmission nationwide. According to the Lawrence Berkeley National Laboratory, the number of wind, solar, and storage projects currently in line to join electric grids is enough to supply almost 100% of electricity in the U.S. from zero-carbon resources by 2035. However, the sudden and comprehensive approval for the Mountain Valley project gives a taste of what the Fiscal Responsibility Act’s new permitting requirements could mean for future energy projects, renewable or not.

Long waylaid by court challenges, the Mountain Valley project is now protected from new lawsuits. Though the Biden administration justifies the pipeline as a comparatively minor concession necessary to keep Republicans from coming after the IRA, without equal provisions for clean energy, approval for such a controversial pipeline looks more like a major victory for fossil fuel interests.

There is much work to be done to increase capacity for renewable projects, and Democrats have already doubled down on transmission. U.S. Representatives Sean Casten (D-Ill.) and Mike Levin (D-Calif.) have introduced legislation intended to reform the transmission permitting and siting processes. Senator Martin Heinrich (D-N.M.) has introduced two pertinent bills including the Grid Resiliency Tax Credit Act and the Facilitating America’s Siting of Transmission and Electric Reliability (FASTER) Act.

Though insufficient in its provisions for renewable energy, The Fiscal Responsibility Act has reinforced the importance of legislation that will catalyze work on transmission capacity and prioritize clean-energy-generating projects. As the Mountain Valley project moves forward, hopefully so too will the policy reform and research needed to accelerate the U.S.’s energy transition.

Lucy Corlett

Research Associate

Lucy Corlett is a research associate at the Kleinman Center. She assists with research and programming initiatives at Kleinman, working to support visiting scholars, students, and grant recipients.