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It’s not the pipeline. It’s the power lines.
At first glance, the bipartisan deal to raise the debt ceiling seems pretty good for the climate.
Most importantly, it preserves the Inflation Reduction Act, President Joe Biden’s flagship climate law. That alone is a monumental victory, cementing Biden’s legacy (for now) and allowing his administration to continue its experiment with green industrial policy.
When climate advocates have spoken against the deal, they’ve focused their ire on the Mountain Valley Pipeline, a 304-mile conduit that will link West Virginia’s booming natural-gas fields to the rest of the country. The deal essentially approves the pipeline and exempts it from judicial oversight, all but ensuring its eventual completion. Senator Joe Manchin, a West Virginia Democrat, won the White House’s support for the pipeline when he agreed to the IRA last year.
Yet despite the chatter, the pipeline was not, in fact, the most important climate concession exacted in negotiations. The deal also made a number of changes to federal permitting law, especially the National Environmental Policy Act, or NEPA. These changes have been described as relatively small, common-sense reforms to the federal process — and in some cases they are. But they also represented critical leverage that Democrats just lost.
Democrats might have secured many other objectives in the debt-ceiling talks, including minimal cuts to some federal programs and a potential expansion of food stamps. But the deal’s permitting reforms are an uneven trade in which Democrats gave up much more than they gained and made virtually no progress on one of their biggest goals: making it easier to build long-distance power lines. When Congress revisits permitting reform in the next few months — as Speaker of the House Kevin McCarthy has promised – Democrats will find that they have little room to bargain.
The National Environmental Policy Act, or NEPA, requires that the federal government conduct an environmental study before it does much of anything. It also sets the rules by which the government decides whether to approve large-scale infrastructure. If a state wants to build a new highway with federal funds, it must apply to the government, which then runs a “NEPA process” to determine whether to grant funding. Virtually every major government project — whether a new mass-transit hub or an offshore wind farm — requires a NEPA study and a NEPA process.
Republicans have long wanted to tinker with NEPA. But while NEPA was once widely understood by progressives as a bedrock of federal environmental law, some on the left have recently become more open to reforming it. Fighting climate change will require building a lot of new infrastructure, they have argued, and NEPA could slow down that process. At the same time, virtually all Democrats want to simplify the process of building new long-distance power lines, which will lower electricity prices while ushering more renewables onto the grid. If America doesn’t double its rate of new transmission construction, then 80% of the IRA’s carbon reductions will be squandered, according to Jesse Jenkins, a Princeton engineering professor.
So a trade of sorts took shape: Democrats would open up NEPA, accomplishing a long-sought GOP goal, in exchange for easing the path for new power lines. When Senator Manchin proposed a permitting-reform bill last year, that’s essentially what it did.
The debt-ceiling deal inherits many of the NEPA reforms first contemplated in Manchin’s bill. Today, the strictest type of NEPA review takes 4.5 years to complete, although some studies can take much longer. The deal will impose a one-year deadline for most environmental-review studies and a two-year deadline for the strictest types. If an agency overruns these deadlines, then a project’s sponsor can sue the agency to get an accelerated decision.
The deal also imposes new page limits on NEPA studies. Today, the most stringent NEPA studies run to more than 500 pages on average. The deal would cap most NEPA studies to 150 pages, and the most complicated reviews to 300 pages.
To be sure, these reforms don’t go as far as the GOP wanted. Under one Republican proposal, for instance, the penalty for overrunning a NEPA deadline would have been a project’s immediate and irrevocable approval. But the deal also declines to provide more funding for NEPA agencies to hire staff, which some progressives have argued is the most important driver of NEPA delays.
The deal also narrows some of NEPA’s most important language, reducing the number of federal actions that require the most elaborate kind of environmental-impact study. An agency will now get to determine whether a project requires the highest level of NEPA review. That is “really problematic” because it could let officials do an end-run around the NEPA process, Kym Meyer, the litigation director at the Southern Environmental Law Center, told me.
Some of the deal’s most important consequences may not be visible in the legal text. The deal, for instance, says that projects qualifying for certain federal small-business loans do not need NEPA approval. That could effectively exempt many factory farms from the NEPA process, Meyer said.
The deal repeatedly inserts the words “reasonable” in NEPA, at one point limiting the types of environmental impacts that agencies must study only to those that are “reasonably foreseeable.” That may all sound, well, reasonable, and it could ultimately work out alright for environmentalists. But the courts — and the sharply conservative Supreme Court — will get to decide exactly where the lines of that reasonableness fall. “One thing we know for sure is that we’re gonna see a lot of litigation out of this,” Meyer said.
Which is not to say that Democrats failed to win concessions. Every NEPA study must now consider the environmental consequences of a project not happening — a new tool against NIMBYs who fight clean-energy projects. And energy-storage facilities, such as big batteries that store renewable electricity on the power grid, now qualify for an accelerated approval process.
The bill enacts a lot of what has been “circling around as a bipartisan set of permitting ideas for a couple of years now,” Xan Fishman, the director of energy policy at the Bipartisan Policy Center, a moderate think tank, told me. “It’s a lot of stuff that people on both sides of the aisle have called for, a lot of common-sense stuff. But there’s still a lot of stuff to do.”
The problem is that the bill makes all these changes without altering transmission policy at all. It funds a study on whether the United States should expand its long-distance transmission — ironic given that building new power lines already requires too many studies — but makes no substantive changes.
I’m sympathetic to the case for permitting reform, and I would describe the law’s changes to NEPA as aggressive but acceptable under the right circumstances. There’s some good stuff, some bad stuff, and much in between. But looking at the package in the context of this deal, I am more worried. By acceding to these changes, Democrats have surrendered their greatest leverage in future permitting-reform talks. Achieving transmission reform will now require much more profound changes to NEPA than many progressives may be willing to accept.
“They took care of the low-hanging fruit and there may not be a ladder high enough to get to the rest,” Rob Gramlich, a political consultant and one of the nation’s foremost transmission experts, told me.
That’s because Republicans want three major changes to federal environmental law, all of which could empower fossil fuels. First, lawmakers want to ease the way for international oil and natural-gas pipelines, limiting a president’s ability to block them under federal law. Second, Republicans want to revise the Clean Water Act so states can’t use it to block pipelines for climate-related reasons.
Finally, Republicans want to impose even stricter time limits on NEPA, adding a statute of limitations and a deadline for how long a NEPA-related lawsuit can drag on. This would require the biggest gamble of all: By time-delimiting NEPA fights, Democrats would keep NIMBYs from fighting clean-energy and mass-transit infrastructure, allowing a rapid low-carbon buildout. (As Ezra Klein has argued, NEPA hobbles the government’s power to build big public projects more than it limits private companies’.) But in doing so, Democrats would deprive environmental litigators of the time-sapping tactics that they use to slow down fossil-fuel projects.
Democrats, meanwhile, have more modest goals in any future permitting fight: They want long-distance power lines to be as easy to build as natural-gas pipelines. Right now, an interstate power line must win approval from dozens of state and local governments before it can be built, while a natural-gas pipeline only needs to be approved by a single federal agency. Democrats want to give that agency authority over transmission. Pending that, Democrats would require the grid in each region of the country to connect with its neighbors, guaranteeing a minimum amount of transmission capacity nationwide.
Suffice it to say that these are not equal goals. Republicans now want much deeper changes to NEPA than Democrats seek for transmission law. This is going to make any dealmaking much harder. It would have been a fair trade, once, to link transmission reforms to some of the permitting changes in the debt-ceiling deal. It would have been a savvy trade to package the deal’s modest reforms with some of the more aggressive proposals from each party, so as to make the ultimate “winner” of the negotiations more obscure. With those easy trades off the table, only hard choices remain.
So Democrats will soon have to make a much weightier gamble: Should they accept Republicans’ significant changes to NEPA in exchange for transmission reform?
That might feel like trading “a Taylor Swift ticket for a high-school baseball ticket,” Gramlich told me. If Democrats accept it, they will be making a world-historic bet: that decarbonization is all but assured, and that no amount of preferential treatment for pipelines or fossil fuels could change the market’s embrace of a low-carbon future. They might decide that weakening NEPA’s judicial reforms would enable a green buildout, not a gray one, allowing new IRA-subsidized infrastructure to flourish across the country. Or more darkly, they might decide that only a massive transmission mandate can secure the IRA’s carbon-reduction benefits, and that such a prize is worth a few new pipelines.
But I’ll be honest that I don’t see it happening. The party does not seem ready to make such a cosmic gamble on the future of the American energy system. Climate advocates couldn’t accept the Mountain Valley Pipeline by itself; how could they accept making it easier to build any pipeline going forward? A miracle could happen, of course, but for now, the hope of transmission reform seems dead.
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A conversation with Mike Hall of Anza.
This week’s conversation is with Mike Hall, CEO of the solar and battery storage data company Anza. I rang him because, in my book, the more insights into the ways renewables companies are responding to the war on the Inflation Reduction Act, the better.
The following chat was lightly edited for clarity. Let’s jump in!
How much do we know about developers’ reactions to the anti-IRA bill that was passed out of the House last week?
So it’s only been a few days. What I can tell you is there’s a lot of surprise about what came out of the House. Industries mobilized in trying to improve the bill from here and I think a lot of the industry is hopeful because, for many reasons, the bill doesn’t seem to make sense for the country. Not just the renewable energy industry. There’s hope that the voices in Congress — House members and senators — who already understand the impact of this on the economy will in the coming weeks understand how bad this is.
I spoke to a tax attorney last week that her clients had been preparing for a worst case scenario like this and preparing contingency plans of some kind. Have you seen anything so far to indicate people have been preparing for a worst case scenario?
Yeah. There’s a subset of the market that has prepared and already executed plans.
In Q4 [of 2024] and Q1 [of this year] with a number of companies to procure material from projects in order to safe harbor those projects. What that means is, typically if you commence construction by a certain date, the date on which you commence construction is the date you lock in tax credit eligibility, and we worked with companies to help them meet that criteria. It hedged them on a number of fronts. I don’t think most of them thought we’d get what came out of the House but there were a lot of concerns about stepdowns for the credit.
After Trump was elected, there were also companies who wanted to hedge against tariffs so they bought equipment ahead of that, too. We were helping companies do deals the night before Liberation Day. There was a lot of activity.
We saw less after April 2nd because the trade landscape has been changing so quickly that it’s been hard for people to act but now we’re seeing people act again to try and hit that commencement milestone.
It’s not lost on me that there’s an irony here – the attempts to erode these credits might lead to a rush of projects moving faster, actually. Is that your sense?
There’s a slug of projects that would get accelerated and in fact just having this bill come out of the House is already going to accelerate a number of projects. But there’s limits to what you can do there. The bill also has a placed-in-service criteria and really problematic language with regard to the “foreign entity of concern” provisions.
Are you seeing any increase in opposition against solar projects? And is that the biggest hurdle you see to meeting that “placed-in-service” requirement?
What I have here is qualitative, not quantitative, but I was in the development business for 20 years, and what I have seen qualitatively is that it is increasingly harder to develop projects. Local opposition is one of the headwinds. Interconnection is another really big one and that’s the biggest concern I have with regards to the “placed-in-service” requirement. Most of these large projects, even if you overcome the NIMBY issues, and you get your permitting, and you do everything else you need to do, you get your permits and construction… In the end if you’re talking about projects at scale, there is a requirement that utilities do work. And there’s no requirement that utilities do that work on time [to meet that deadline]. This is a risk they need to manage.
And more of the week’s top news in renewable energy conflicts.
1. Columbia County, New York – A Hecate Energy solar project in upstate New York blessed by Governor Kathy Hochul is now getting local blowback.
2. Sussex County, Delaware – The battle between a Bethany Beach landowner and a major offshore wind project came to a head earlier this week after Delaware regulators decided to comply with a massive government records request.
3. Fayette County, Pennsylvania – A Bollinger Solar project in rural Pennsylvania that was approved last year now faces fresh local opposition.
4. Cleveland County, North Carolina – Brookcliff Solar has settled with a county that was legally challenging the developer over the validity of its permits, reaching what by all appearances is an amicable resolution.
5. Adams County, Illinois – The solar project in Quincy, Illinois, we told you about last week has been rejected by the city’s planning commission.
6. Pierce County, Wisconsin – AES’ Isabelle Creek solar project is facing new issues as the developer seeks to actually talk more to residents on the ground.
7. Austin County, Texas – We have a couple of fresh battery storage wars to report this week, including a danger alert in this rural Texas county west of Houston.
8. Esmeralda County, Nevada – The Trump administration this week approved the final proposed plan for NV Energy’s Greenlink North, a massive transmission line that will help the state expand its renewable energy capacity.
9. Merced County, California – The Moss Landing battery fire is having aftershocks in Merced County as residents seek to undo progress made on Longroad’s Zeta battery project south of Los Banos.
Anti-solar activists in agricultural areas get a powerful new ally.
The Trump administration is joining the war against solar projects on farmland, offering anti-solar activists on the ground a powerful ally against developers across the country.
In a report released last week, President Trump’s Agriculture Department took aim at solar and stated competition with “solar development on productive farmland” was creating a “considerable barrier” for farmers trying to acquire land. The USDA also stated it would disincentivize “the use of federal funding” for solar “through prioritization points and regulatory action,” which a spokesperson – Emily Cannon – later clarified in an email to me this week will include reconfiguring the agency’s Rural Energy for America loan and grant program. Cannon declined to give a time-table for the new regulation, stating that the agency “will have more information when the updates are ready to be published.”
“Farmland should be for agricultural production, not solar production,” Cannon wrote – a statement also made in the USDA report.
REAP is a program created in 2008 that exists to help fund renewable energy and sustainability projects at the level of individual farms and has been seen as a potential tool for not only building more solar but also more trust in agriculturally-focused communities. It’s without question that retooling REAP to actively disincentivize awardees from building solar on farmland could have a chilling effect, at least amongst those who receive money from the program or wish to in the future. This comes after Trump officials temporarily froze money promised to farmers, too.
As we’ve previously written in The Fight, agricultural interests can at times present as much a threat to the future of solar energy as any oil-funded dark money group, if not more so. Conflicts over solar production on farmland make up a large portion of the total projects I cover in The Fight every week, and it is one of the most frequently cited reasons for opposition against individual renewables projects. (Agricultural workforces are one of the most important signals for renewable energy opposition in Heatmap Pro’s modeling data as well.) I wrote shortly after Trump’s inauguration that I wondered when – not if – he would adopt this position.
It’s unclear what exactly led USDA to dive headlong into the “No Solar on Farmland” campaign, aside from its growing popularity in conservative political circles, but there is reason to believe farming interests may have played a role. USDA has stated the report was the product of discussions with farming groups and an industry roundtable. In addition, per lobbying disclosures, at least one agricultural group – the Pennsylvania Farm Bureau – advocated earlier this year for “congressional action and/or executive orders” to “balance renewable and conventional sources of energy” through “limit[ing] solar on productive farmland.” (The Pennsylvania Farm Bureau denied this in an email to me earlier this week.)
There’s also reason to believe some key stakeholders were caught off-guard or weren’t looped in on the matter.
American Farmland Trust has been trying to cultivate common ground between farmers, solar companies, and various agencies at all levels of government over the future of development. But when asked about this report, the nonprofit told me it couldn’t speak on the matter because it was still trying to suss out what was going on.
“AFT is meeting with the Trump administration to learn more about what they are planning in terms of policy and programs to implement this concept,” AFT media relations associate Michael Shulman told me.