Introduction

The Biden Administration and the Democratic-controlled Congress have earned plaudits for enacting unprecedented funding for clean energy incentives and climate protection. These include provisions in the bipartisan infrastructure law (IIJA), the U.S. competitiveness legislation (CHIPS), sections of the Inflation Reduction Act (IRA), and other legislation, totaling approximately $514 billion in new spending on clean energy and climate, not including other related infrastructure funding.^[1] Taken together, these new laws represent the greatest investment in new U.S. energy infrastructure in nearly a century.

And yet, because of regulatory roadblocks and nuisance litigation, it is unclear that this new funding will deliver on its two policy goals:

1)  Rapid, low-cost build out of a powerhouse, world-leading U.S. clean energy sector.

2)  Large reductions in domestic greenhouse gas emissions (GHG) necessary to put the U.S. in a vanguard position to force emissions reductions by other key emitting nations globally.^[2]

 America must lead the world as a whole toward a rapid clean energy revolution and decarbonization.  But a big obstacle stands in our way:

A broken domestic U.S. energy permitting system that imposes tremendously high costs in time and money to build clean energy infrastructure projects, if they get built at all.

Ironically, in the name of environmental protection, a perverse process has set in whereby often unnecessary and duplicative government reviews and nuisance lawsuits have pushed average time for permitting to 4.3 years for transmission, 3.5 years for pipelines, and 2.7 years for renewable energy generation projects. Notably, these numbers don’t include those many hundreds of projects that are abandoned and never built because costs — often in the millions or tens of millions — and delays have become too burdensome for developers.  These long, costly delays and false starts are simply not consistent with a rapid and cost-effective build out of U.S. clean energy generation and transmission, new hydrogen and carbon management infrastructure, or deep reductions in domestic GHG emissions in keeping with U.S. policy goals and climate science. In fact, initial studies note that without permitting and regulatory reforms, projected climate and economic benefits of these recent laws would be artificially limited and fail to meet policy goals.^[3],[4]

Equally, the potential economic and climate upsides for the U.S. of the actions recommended in this report are tremendous. Multiple studies^[5],[6] show the IIJA, CHIPS and especially IRA new laws hold remarkable U.S. economic promise, including:

Growing the overall U.S. economy and new clean energy sector worth trillions each year;^[7] creating millions of good, new jobs;^[8] reducing consumer and business energy costs by 4% or $50 billion by 2050, while saving the average households hundreds of dollars each year;^[9] and expanding U.S. technology and energy exports.

Reducing U.S. greenhouse gas emissions approximately 40% by 2030 below 2005 levels;^[10],[11] the IRA bill alone would enable the U.S. to close 50% to 66% of the emissions gap between business-as-usual emissions and the Biden goal of 50% emissions reduction by 2030.^[12] Together, the three new laws will help cut the near and long-term costs of climate change impacts and lower threats to public safety; protect worker productivity; improve public health and reducing health care costs; ^[13] enhance national and global security; and increase long-term U.S. competitiveness in the fast-growing global clean energy economy that will be worth tens of trillions of dollars during the 21st century.

But major studies that find large economic, clean energy, and climate benefits all assume significant improvements in clean energy project permitting and regulatory streamlining. Respected analysis also finds that to ensure these major benefits occur, and to maximize all potential economic and climate benefits^[14] will require additional actions by the Administration and Congress.

When Senators Joe Manchin, D-W.Va., and Chuck Schumer, D-N.Y., announced that they had come to an agreement to pass the investments in energy and healthcare that became the Inflation Reduction Act, they also agreed to push for reforms aimed at speeding up the lengthy federal environmental review and permitting process. A draft summary of the deal proposes a prioritization process for strategically important projects, changes to review timelines and litigation rules, and reforms for certain projects and project-types.

The Manchin-Schumer proposal offers a path forward for the crucial reforms amid a narrowing window of opportunity for action this Congress. Leading Democratic climate hawks in the Senate, including Senators Brian Schatz, D-Hawaii, Martin Heinrich, D-N.M., and Ron Wyden, D-Ore., who helped designed the clean energy tax credit package that formed the core of the IRA’s climate component, have endorsed the call for swifter regulatory review and permitting of clean energy projects.

Unfortunately, however, the proposal has drawn fire from some far-left environmental groups and progressive activists. In the House, 77 members, most members of the left-wing Progressive Caucus, signed a letter arguing that permitting reform should not be included as part of a must-pass government funding bill, and may undermine efforts to improve environmental justice. Several senators, including Senators Ed Markey, D-Mass., and Bernie Sanders, I-Vt., have leveled similar concerns. Such fears are overwrought. There’s a growing consensus among environment analysts that slow regulatory review in fact creates environmental as well as other costs, and that slowing climate change is the most crucial goal of environmental justice.^[15] Many of the key Manchin-Schumer proposals regarding NEPA administration, electric transmission, and hydrogen merely extend the benefits of existing law on infrastructure permitting, widening the scope of FAST-41 support through the Permitting Council to cover more energy projects and provide additional resources to coordinate and complete their reviews efficiently at a time where timely energy infrastructure deployment is of the utmost economic, political, and climate importance.^[16]

The Manchin-Schumer proposals would not eviscerate environmental protections. Rather, in most cases, it will simply codify existing NEPA and other provisions, like those allowing simultaneous agency reviews, and greater use of the categorical exclusion process, already allowed under current law, as noted by leading Democratic siting expert Daniel Adamson.[17]

The proposal would also bring the U.S. in line with other advanced countries, notably the EU and Canada, which have high levels of environmental protection while maintaining firm deadlines for environmental reviews. ^[18],[19]

For years, most Republicans have advocated reforms not dissimilar to Manchin-Schumer, but Congressional Republicans are so far withholding support for the pending proposal, appearing wary of giving Democrats an additional legislative accomplishment. Now Senate Republicans, led by Senator Shelley Moore Capito, R-W.Va., have unveiled a new permitting reform blueprint, supported by 38 GOP senators. Their approach gives states “sole authority” over regulations on fracking on federal land and would allow states the right to “develop energy resources” on federal land within their boundaries. In general, the Republican approach only indirectly and insufficiently improves problems with renewables or transmission siting while taking a much more aggressive stance on oil and gas development on public lands, banning the Biden administration’s interim Social Cost of Carbon estimate, and codifying many of the Trump administration’s attempted changes to undermine environmental regulation.^[20] These provisions are therefore not serious attempts to further the U.S. clean energy transition or limit greenhouse gas emissions in keeping with needed climate protection.

Our report describes in depth the ways in which our current regulatory systems are fundamentally broken, and concludes with the following recommendations to Congress for accelerating government reviews and permitting, including:

Pass the Manchin-Schumer Permitting Proposal:

The quickest and best step available to speed up permitting immediately and unleash the investments made in the IIJA, CHIPS, and IRA package is to pass the Manchin-Schumer proposal. This must include Reforming Energy Project Permitting and Streamlining Regulatory Hurdles, including under the National Environmental Policy Act (NEPA), as envisioned in pending legislation, specifically for major high voltage electric power lines to carry renewable energy from remote areas of generation to regions of strong demand; Natural gas and CO₂ pipelines; Electricity Storage projects; Electric and other advanced vehicle charging and fuel infrastructure; Carbon Capture and Storage and Direct Air Capture technologies; Advanced Nuclear Power; Advanced Geothermal, and many other new technologies.

Study and Consider Adopting Successful Permitting Reforms — including 2-Year “Shot Clock” — from Other Sectors:

Congress should authorize the study of successful permitting reform in other parts of the economy, including the Federal Communications Commission’s adoption of time limiting “shot clocks” for the siting of cell phone and communications towers, with an eye toward adopting this time limit for appropriate energy projects. Applying these procedures to key green projects like grid-scale solar, wind turbines, battery storage, and transmission lines on public lands will ensure developers of rapid government decision-making that can increase certainty, reduce costly delays, and help speed up deployment. With all of the new resources available to agencies for permitting in the IRA, quick decisions will not undercut thorough examination of any localized impacts from these well-understood and environmentally critical projects.

Pass the SITE Act:

This bill, written by Senator Sheldon Whitehouse, D-R.I., and cosponsored by leading climate advocates Senators John Hickenlooper, D-Colo., and Martin Heinrich, D-N.M., and others in the House, would empower Federal Energy Regulatory Commission as the siting authority for transmission projects that are currently forced to go through lengthy and fragmented approval processes and improve eminent domain procedures. Ideally, these provisions would be included in reform legislation passing Congress this year.

Maximize Exclusions and Programmatic Reviews:

A Categorical Exclusion (CE) is a group of actions that a federal agency has determined, after review by White House Council on Environmental Quality, do not individually or cumulatively have a significant effect on the human environment and for which, therefore, neither an environmental assessment nor an environmental impact statement is normally required. Legislation should seek to expand the use of CE whenever possible, requiring use of the fasted possible review process available under law.

Reforms at the State and Local Levels:

At the state and local levels, policymakers should look for parallel opportunities to reform slow or outdated review, siting, and permitting procedures that in many cases are just as onerous, costly, and counterproductive as federal regulations. State and local jurisdictions are host to many crucial opportunities for clean energy deployment that will not rise to the federal level, including distributed renewable generation, local transportation networks, and denser forms of housing development. In New York, a new Office of Renewable Energy Siting established in 2020 has already improved on the older, more arduous approval process by consolidating and expediting siting and review requirements and empowering the State to override local restrictions on renewable energy that are “unreasonably burdensome”; this model should be emulated more widely by other states, especially California, whose California Environmental Quality Act is notoriously for many years of delaying needed energy infrastructure.

Prevent New Regulations from Hindering New Technology:

New permitting hurdles or regulatory bottlenecks may also emerge as innovative technologies like direct air capture, carbon capture, utilization and storage, CO2 pipelines, hydrogen hubs, advanced nuclear, and advanced geothermal wells scale up. These and other new clean energy technologies may require additional regulatory actions as they are more widely commercialized; however, federal policy makers in Congress and the Executive Branch must guard against the imposition of new unnecessary regulatory burdens especially those that delay needed infrastructure buildout.

A Broken Permitting System and Regulatory Gridlock

With the incentives to deploy clean energy technologies in place following the passage of IIJA, IRA, and partially-funded CHIPS, these permitting reforms are crucial for ensuring maximum economic and climate benefits. In fact, initial studies find that without permitting and regulatory reforms, projected climate and economic benefits of these new law would be severely limited and fail to meet policy goals.^[21],[22] Congress should work quickly to pass them as proposed and continue to search for additional ways to speed up deployment.

The federal environmental review, siting, and permitting process (hereafter summarized as “permitting”) is a complex collection of requirements that oblige project sponsors to submit lengthy documents outlining the project’s impact on the environment and analyzing potential alternative projects. Depending on the type of project, federal law may require analysis under the 1969 National Environmental Policy Act, or NEPA, which can take several forms depending on the type of project and its expected impact. NEPA review can take one of three forms, increasing in stringency from Categorical Exclusions, which are intended to exempt unimpactful projects from unnecessary scrutiny, Environmental Assessments, or EAs, a sort of intermediate review after which a project can be declared to have no significant impact (FONSI), submit a “mitigated FONSI” that lays out steps taken to reduce the project’s impact and ensure that it stays below the threshold for further review, or sent up to the highest level of review, an Environmental Impact Statement, or EIS.^[23],[24] Large projects with expected significant impacts go straight to the EIS stage. Only after the Final EIS is issued can federal agencies make final decisions regarding the project, including determinations made along the way on 64 different types of permit that might be required depending on the nature of a project.^[25]

While initial NEPA reviews were generally brief documents produced quickly, the intervening decades have seen a marked increase in the completion time and page counts of NEPA review documents. In 2020 the CEQ released a report finding that recently published EISs took 4.5 years to complete from formal Notice of Intent to final Record of Decision and ran for an average of 661 pages — not counting the average 1,042 pages of appendices.^[26] And while Categorical Exclusions and Environmental Assessments are quicker and shorter, the federal government is responsible for issuing many more of them, somewhere on the order of 10,000 EAs and 100,000 CEs per year, and so while a comprehensive assessment of their time and financial cost to the government does not exist, the cumulative resources dedicated to them are significant.^[27]

Permitting Council data for a representative sample of energy sector projects from 2010 to 2017 bears out the finding that permitting adds years to these crucial projects: the average time from formal start to final decision averaged 4.3 years for transmission, 3.5 for pipelines, and 2.7 years for renewable energy generation projects.^[28],[29] These reports are costly to produce for both the government and for private developers, not just in staff and consultant salaries, but also by adding years of delay where investment is tied up but cannot be deployed productively.^[30]

These average review times obscure the occasionally devastating impact that NEPA review and equivalent requirements from state governments can have on clean energy infrastructure and other pro-environment projects. Cape Wind, an offshore project that would have been the first of its kind in the U.S., was caught up in litigation for 16 years; another Massachusetts project, Vineyard Wind, is finally going ahead after years of NEPA review and Trump administration-imposed delays.^{[31],[32],[33]} On land, a wind project in Wyoming took 11 years for approval.^[34] New York City’s congestion pricing program, a valuable attempt to incentivize cleaner alternative transport modes and disincentivize traffic that clogs Manhattan’s streets, is being put off for NEPA review as well.^[35] At a time when climate change is exacerbating extreme weather phenomena and brutal wildfires rage in the Western U.S., NEPA delays USFS wildfire prevention by an average of 3.6 to 7.2 years depending on the project type.^[36] Recent analysis finds that U.S. coal fired power plants that have been scheduled to close are staying open, in many cases in order to stabilize regional electricity grids, which are running into regulatory and permitting roadblocks in expanding intermittent wind and solar power.^[37]

Sadly, the problem of environmental review bogging down environmentally critical projects is not exclusive to federal law. At the state level, regulations, such as California’s CEQA, have proved a similar barrier to green projects like high-speed rail between San Francisco and LA and to San Francisco’s bike lanes.^{[38],[39],[40]} Climate-beneficial projects in other states have also encountered this problem, such as the rezoning of Minneapolis to allow denser and more climate-efficient forms of housing which was successfully sued under MERA, Minnesota’s state-level NEPA equivalent.^[41] In Iowa, one analysis has found that local ordinances restricting wind turbines may obstruct more than half of future wind power development needed in the state for U.S. net-zero 2050 goals.^[42] While this paper is focused on federal reforms, many of the issues discussed here also apply to this patchwork of varied and occasionally stifling state permitting processes that require reform as well.

Energy Permitting and the Deployment Challenge

The ability of the new programs laid out in the IIJA, CHIPS, and IRA to achieve their goals and maximize the public benefit depends on our ability to build the infrastructure and technologies they fund. This means rapid buildout of vast new low-carbon electricity generation, which in turn will require significant changes to our electricity grids in the form of long-distance transmission, large-scale storage, and resilience upgrades, along with new technologies to turn this clean energy into useful applications for industry, transportation, and buildings. Now, the funding is in place to make significant progress on this buildout, but the fraction of costs spent on bureaucratic paperwork and time spent waiting with NEPA review, siting decisions, and permits pending remain to be determined.

Just how much new energy infrastructure will be required? The National Academies report, Accelerating Decarbonization of the U.S. Energy System, lays out the scientific consensus on what the U.S. will need to deploy to reach net-zero emissions: far more than is currently in operation.^[43] And all of this new deployment must happen at an accelerating pace.

Expert energy systems modelers have estimated that the IRA will accelerate renewable deployment significantly: The REPEAT Project at Princeton University’s ZERO Lab has projected that, absent permitting and siting obstacles, the IRA could spur 39 GW of wind and 49 GW of grid-scale solar per year by 2025 and 2026.^[44] Energy Innovation, another modeling group, projects that the cumulative wind and solar generation on the grid could reach between 795-1053 GW by 2030 thanks to the IRA funding.^[45] Both modeling reports, however, explicitly call out permitting and transmission capacity as potential bottlenecks that could limit this deployment.

Compared against historical renewable deployment rates, achieving this acceleration and ambitious net-zero targets will be a huge lift. For the last two decades, wind and solar generation have grown rapidly in the U.S. as technology improved, costs declined, and public policy support generally expanded. Between 2001 and 2021, the U.S. installed a total of 130 GW of wind and 95 GW of solar (including distributed and thermal solar — utility-scale PV generation is smaller, and in 2020 nameplate capacity for all of the U.S. was only 46.6 GW).^[46],[47] Annual net capacity additions for the last 10 years in the same data averaged 9 GW each of wind and solar.

In that time, projects as small as 0.1 GW (10 MW) of solar and as large as 3 GW of wind were subject to NEPA reviews counted in the FPISC review, where renewable project permitting times stretched for an average of 2.7 years each. If each fraction of a gigawatt takes almost 3 years to secure federal permits, and the transmission upgrades needed to carry that power to consumers takes over 4 years per project, the modeled effects of the IIJA and IRA will never come to pass. Instead of rapid progress on clean energy, the funding appropriated in these laws will pay for slow-moving projects and countless person-hours of duplicative, unnecessarily burdensome reviews.

And for newer clean energy projects on the cutting edge of technology, like new advanced nuclear power, advanced geothermal, hydrogen hubs, and carbon management infrastructure in the form of capture and storage, direct air capture, and CO2 pipelines will struggle even harder. Because these technologies are newer, they may present novel environmental impact questions that take longer to sort out at first. All the more reason, then, to ensure that permitting staff are able to focus on these new technologies rather than clogging up their agenda with well-understood and environmentally vital renewable energy and transmission projects.

Passage of the Infrastructure Investment and Jobs Act and the Inflation Reduction Act’s clean energy provisions has committed the nation to deploy renewable generation capacity and battery storage at several times the historic pace. Permitting reform can help us step up the tempo of installing new solar panels, wind turbines, and other clean generation; upgrading aging transmission grids and ensuring reliable supplies; millions of new EV charging stations funded with $7.5 billion in the IIJA, improving energy efficiency in mass transit and buildings; and launching innovative new carbon management and clean hydrogen regional hubs. We should demand the highest possible public benefits from these investments.

Modest Steps Forward

The permitting problem is not new and several previous attempts to speed up approvals have helped incrementally improve the process.

Through executive action as well as legislation, the Biden Administration has pushed to speed up the federal permitting process without getting bogged down in controversies that stymied his predecessor’s efforts. The Biden Administration’s permitting timelines have improved by an average of almost four months due to more efficient bureaucratic management.^[48] While an updated set of CEQ regulations is partially complete, the Biden White House released a Permitting Action Plan this past spring that emphasizes efficient processing, coordination across agencies and with relevant state, local, and Tribal governments, and leveraging tools like the Permitting Dashboard and FAST-41 authorities.[49]

The major infrastructure and clean energy legislation passed this Congress also include beneficial steps on permitting. The IIJA included key improvements to existing reform initiatives, turning the Permitting Council from a temporary body under FAST-41 into a permanent program and establishing two-year review goals, shorter documents for surface transportation project reviews of under 200 pages (with exceptions for unusually complex projects), single-document EISs, shorter deadlines for final Records of Decision after the completion of a Final EIS, allows for expanded eligibility for existing Categorical Exclusions, and allowing for the inclusion of a wider range projects on the Council’s Permitting Dashboard.^[50] Many of these changes reinstated aspects of the “One Federal Decision” framework while avoiding some of the more contentious aspects of the Trump administration’s reforms.

The IRA tackled permitting delays from a different angle: As part of its overall clean energy spending package, $735 million will be appropriated to federal agencies to help hire staff, upgrade technical systems, and develop new tools to improve review quality and speed up the process.^[51] The funding is split between the Department of Energy, Interior, EPA, CEQ, FERC, NOAA, the Permitting Council, and the FHWA. This funding is especially important from an efficiency standpoint because the federal agencies responsible for producing and reviewing NEPA documents and issuing permits will need sufficient technical expertise and workforce capacity if the government is to successfully speed up the process in practice. But without firm deadlines, enforcing the expectation that these new resources are used to speed up reviews, the funding will be spent on managing the existing paperwork burden that maintains the status quo to little public benefit.

All of these steps are commendable, but the sheer scale of the clean energy transition requires moving beyond incrementalism. Senators Manchin and Schumer are on the right track with their outlined proposal to take a next step, and Democrats should get on board to match the fiscal commitments the U.S. has made to unleash clean energy abundance with regulatory reforms to enable these investments to translate into rapid progress on the ground. 

Recommendations to Congress on Permitting Reform

As of this writing, an official text of the Manchin proposal has not been released. A one-page summary lists a new procedure for designating high-priority energy projects, firmer enforcement of NEPA review timelines, changes to litigation, categorical exclusions, and some sector-specific changes.^[52]

 

• High Priority Projects: The President would be responsible for designating at least 25 “high priority energy infrastructure projects” of “strategic national importance” for expedited review among a “balanced list of project types, including: critical minerals, nuclear, hydrogen, fossil fuels, electric transmission, renewables, and carbon capture, sequestration, storage, and removal.”
• Timeline Cap: Maximum timelines of 1 year for EAs and 2 years for EISs.
• Litigation Reform: Limit litigation delays by shortening the statute of limitations and requiring quicker responses by agencies in NEPA lawsuits.
• NEPA Exclusions: Actively evaluate potential new Categorical Exclusions to NEPA.

 

The summary also suggests changes for certain project types and one specific project:

• Interstate electric transmission reforms: Grants new ability to the Energy Secretary and FERC to designate projects of national interest, requires FERC to allocate transmission project cost to benefiting consumers, and allows payments to transmission host jurisdictions.
• Clean Water Act Section 401 reforms
• Hydrogen infrastructure placed under clear FERC jurisdiction
• Approving the Mountain Valley natural gas pipeline

 

This proposal would work well with the steps laid out by the Biden Administration and those taken in the IIJA and IRA to help move the ball forward on clean energy deployment that is absolutely necessary to meet U.S. climate goals. Transmission is a particularly important area for reform due to the changing needs of U.S. electricity grids pursuing decarbonization in a rapidly changing climate. The Manchin-Schumer proposal includes several tools that could strengthen landowner protection and retain State input while spurring nationally vital deployment, and we suggest further action to spur grid upgrades below by incorporating the SITE Act into the deal. The proposal would also ensure that U.S. natural gas exports are available to energy-constrained allies in Europe and Asia. At a crucial time in energy markets, U.S. gas exports would be poised to meet global demand with exceptionally low-methane supply thanks to the IRA’s new methane fee and methane reduction funding, helping to avoid the worst-case scenarios of increased coal combustion or severe energy shortages.^[53]

Viewed with skepticism by some on the left — who view any new fossil fuel infrastructure as anathema — the growth of U.S. natural gas exports should be viewed as the best available course of action given the current circumstances of global energy markets. For European allies struggling to replace cut off Russian supplies, the U.S. is effectively the only producer who can scale up to meet their urgent needs. And in the global view, the U.S. has a continued role to play as a supplier of natural gas with less leakage upstream.

This pragmatic approach to position the U.S. as a green supplier in energy markets is not at all limited to natural gas. As the world pushes to expand battery supply chains for new electric vehicles and grid storage facilities, or mine copper, steel, and aluminum for renewables and transmission construction, the energy transition will require growth in all sorts of raw materials production. Rather than use NEPA review as a delay mechanism to try and limit the first-order emissions of U.S. extractive industries, we should look at global supply chains in their totality and expand domestic production or production among like-minded allies with comparable labor and environmental protections to see where we can produce the maximal amount of new clean energy technology at minimal environmental impact.

 

1. Pass the Manchin-Schumer Permitting Proposal with Strengthened Timeline Goals: The quickest and best step available to speed up permitting and unleash the investments made in the IIJA, CHIPS, and IRA package is to pass the Manchin-Schumer proposal. Firming up shorter review timelines and simultaneously dedicating new resources to conduct thorough reviews quickly will help orient the federal government toward meeting the deployment challenges that come with these new investments. While the IIJA’s permitting provisions established 2-year average timeline goals, we recommend 2 years be set as the final goal for key energy projects and commend steps taken to ensure timely litigation and dispute resolution to further reduce uncertainty. Better prioritization will ensure that staff time and contracting funds are spent more efficiently, both by provisioning additional resources to reviews of strategically important projects (that tend to be the most complex) and by expanding eligibility for Categorical Exclusions for projects that ought to require less time under review.

 

1. Study and Consider Adopting Successful Permitting Reforms — including 2-Year “Shot Clock” — from Other Sectors: Congress should authorize the study of successful permitting reform in other parts of the economy, including the Federal Communications Commission’s adoption of time limiting “shot clocks” for the siting of cell phone and communications towers, with an eye toward adopting this time limit for appropriate energy projects. Applying these procedures to key green projects like grid-scale solar, wind turbines, battery storage, and transmission lines on public lands will ensure developers of rapid government decision-making that can increase certainty, reduce costly delays, and help speed up deployment. With all of the new resources available to agencies for permitting in the IRA, quick decisions will not undercut thorough examination of any localized impacts from these well-understood and environmentally critical projects.

 

1. Pass the SITE Act: The Streamlining Interstate Transmission of Electricity Act, introduced by Senator Sheldon Whitehouse, D-R.I., and cosponsored by Senators Martin Heinrich, D-N.M., and  John Hickenlooper, D-Colo., (along with Representatives Mike Quigley, D-Ill., Sean Casten, D-Ill., and Scott Peters, D-Calif., in the House),[54] would empower FERC as the primary siting authority for transmission projects that are currently forced to go through lengthy and fragmented approval processes, and would also grant the ability to use a new eminent domain process for transmission that is updated to include stronger transparency and landowner protections than existing eminent domain authorities for other projects. Transmission deployment will also need to work its way through complex planning and approval processes at the private level, whether through transmission systems operators (RTOs and ISOs) or through utilities, that may benefit from further policy support and political engagement.

 

1. Maximize Regulatory Exemptions and Programmatic Reviews for Clean Energy Projects: The Biden Administration should build on its record of successful permitting improvements and continue to prioritize project delivery with all available administrative tools. Between the new ability to apply some existing Categorical Exclusions more broadly and the Manchin-Schumer proposal’s provision to expand CEs more generally, federal agencies should look for all available opportunities to speed up clean energy projects. Implementation of the Administration’s Permitting Action Plan, especially the use of programmatic reviews that can cover broad areas of analysis to be reused efficiently by individual projects rather than doing individual reviews on a project-by-project, can also ensure that agency resources are dedicated to speeding up project delivery and improving environmental outcomes. IIJA and IRA funding to clean up legacy pollution and provide technical assistance to disadvantaged communities will also help improve outcomes in line with the Biden Administration’s environmental justice goals for new energy deployment and ensure that meaningful public input, especially from disadvantaged communities, occurs early in review processes rather than serving as a source of uncertainty and delay through the courts later.

 

1. Reform at the State and Local Levels: At the state and local levels, policymakers should implement parallel reforms to slow or outdated review and permitting procedures.       State and local jurisdictions are host to many crucial opportunities for clean energy deployment that will not rise to the federal level, including distributed renewable generation, local transportation networks, and denser forms of housing development. In New York, a new Office of Renewable Energy Siting established in 2020 has already improved on the older, more arduous approval process by consolidating and expediting siting and review requirements and empowering the State to override local restrictions on renewable energy that are “unreasonably burdensome”; this model should be emulated more widely by other states.^[55] These actions could unlock even further clean energy investment, emissions mitigation, and economic growth opportunities for ambitious states and localities in the coming decades.

 

1. Prevent New Regulations from Hindering New Technologies: New permitting hurdles or regulatory bottlenecks may also emerge as innovative technologies like direct air capture, carbon capture, utilization and storage, CO2 pipelines, hydrogen hubs, advanced nuclear, and advanced geothermal wells scale up. In new industries, a light regulatory hand can help avoid stifling fast-emerging opportunities out of undue precaution. Congress and the Biden Administration should continue to keep their eye on the ball to seize on new opportunities to speed up deployment, help nurture these new industries, and provide U.S. energy workers and households with abundance.

 

Conclusion

Domestic Permitting Reforms Needed for U.S. Clean Energy and Climate Success 

The unprecedented new levels of U.S. clean energy investment enacted in the last two years hold vast potential for the overall U.S. economy and will spur a new clean energy sector worth trillions each year, creating millions of good, new jobs, saving consumers and business tens of billions in energy costs, and expanding U.S. technology and energy exports. But as this report has demonstrated, these benefits will only accrue fully if sweeping new permitting reforms are enacted quickly, including both in Congressional pending legislation this year and additional federal and state reforms over time.

Meanwhile, if the recommendations in this report are adopted, they can also dramatically improve and increase overall U.S. and global climate protection, reducing U.S. greenhouse gas emissions by approximately 40% by 2030 below 2005 levels, cutting the near and long-term costs of climate change impacts and lower threats to public safety, protecting worker productivity; improving public health and reducing health care cost, and enhancing national and global security. More broadly, they will set the stage for far more effective U.S. and global climate protection.

Equally, however, if these reforms are not adopted, chances are we will face trillions of dollars in annual climate change impact costs in the U.S. and globally, and climate change impacts increasingly undermining domestic and global economic growth and security. The U.S. has made the initial policy investments to set the stage for clean energy and climate change success — now we must help ourselves, and the world, finish the job. No policy actions are more important.

APPENDIX:

SUMMARY OF KEY CLEAN ENERGY AND CLIMATE PROVISIONS IN IIJA, CHIPS, AND IRA BILLS: 

The first two years of the Biden Administration and the 117th Congress have come together to produce a remarkable slate of energy and climate investments across three bills, two passed with significant bipartisan support. Tallied together, the Infrastructure Investment and Jobs Act, CHIPS and Science Act, and Inflation Reduction Act will infuse our energy systems and economy with approximately $514 billion in new funding (though the process is incomplete for CHIPS: In legislative terms, the spending laid out in the bill has been authorized but not yet appropriated). Working in concert, the investments in infrastructure, research and development, demonstration projects, and deployment incentives will help spur investment in technologies at various stages of innovation from basic research to commercialization and mass adoption across a wide cross-section of the U.S. economy.

The three bills work in complementary ways. The IIJA provides investment in infrastructure like the electricity grid, EV charging networks, and rail. The IRA provides broad funding and incentives to mobilize public and private capital together to build out clean energy generation and electrified end-use applications for businesses and households. And CHIPS, while primarily focused on semiconductors and basic science, may end up dedicating a significant portion of its funds to research and development in energy and climate tech that could keep the U.S. at the frontier of energy innovation. Together they represent a triumph for clean energy, American workers and consumers, and the fight against climate change — just how big of a triumph, though, will depend on our ability to turn those investments into new physical infrastructure and clean tech on the ground.

Infrastructure Investment and Jobs Act

Not just a roads and bridges bill, the IIJA will direct tens of billions to lower carbon transportation, innovative climate programs in hydrogen and carbon management infrastructure, and electric grid improvements and innovations. Funding for public transit, passenger and freight rail, ports, and water infrastructure will also bring climate or other environmental benefits such as lower air pollution and cleaner drinking water to the American public.

Out of the $550 billion in new spending, $65 billion will go to electric grid upgrades and energy supply chains like battery materials processing, $47 billion to resilience projects, $7.5 billion for EV chargers, and $7.5 billion for cleaner school buses and ferries. Aging nuclear plants will receive $6 billion in funding to prevent retirement along with $700 million for legacy hydropower. Clean energy research and demonstration projects will receive $21.5 billion in total, split between $8 billion for clean hydrogen, $10 billion for direct-air capture, carbon capture, and storage, and $2.5 billion for advanced nuclear power generation.

Outside of the energy system investments, the IIJA also funds infrastructure programs with other important environmental implications. $105 billion will go to rail and transit. School energy efficiency will receive $2.5 billion in funding and the Weatherization Assistance Program for low-income homes is increased by $3.5 billion. Also important for environmental justice benefits are $1 billion for a “Reconnecting Communities” program to address negative impacts of legacy infrastructure and $21 billion for brownfield remediation.

The climate effects of these spending programs are more difficult to estimate than those of the Inflation Reduction Act, but Princeton’s ZERO Lab expects that the IIJA would reduce emissions by over 100 million metric tons per year in 2030.^[56] Part of this finding stems from the difficulty of modeling the specific programs included, but another factor that leads these models to underestimate the emissions reduction effects of the IIJA’s programs is that they will be working in concert with the IRA by providing the infrastructural foundation for all of the new clean energy generation, transmission, and other technologies funded by the latter bill’s tax credits and new spending programs. For the IIJA programs themselves, the ability to start construction on all of these new infrastructure projects will depend on the effectiveness of the collective effort to reform permitting, including measures in the bill itself discussed below and future steps needed including Senator Manchin’s Proposal. With the right steps on review, siting, and permitting, however, the Infrastructure Investment and Jobs Act is poised to make transformative progress on U.S. infrastructure development in both “traditional” and new clean energy projects.

Inflation Reduction Act

The Inflation Reduction Act, passed by Congress in August of this year, will spend $369 billion to fund new clean energy, transportation, building, and manufacturing programs, as well as new conservation, agriculture, resilience, and air pollution initiatives. The funding is split between tax credits for individuals and businesses and direct government-funded programs. A methane fee will provide oil and gas producers with a strong incentive to reduce upstream emissions of the extremely potent greenhouse gas in their supply chains, and a program to fund methane reduction technologies will help too.

The IRA envisions major climate and energy progress through a suite of new clean energy tax credits. Many of the tax credits build upon existing tax code provisions but extend, expand, and make them technology-neutral so as to encourage the most efficient uptake possible. Financial tweaks to enable direct-pay for some eligible organizations and improved transferability will enable broader uptake of these credits as well. Many of the credits are structured so that the maximum incentives are available only after meeting domestic content and labor requirements.

Zero-carbon generation in the form of solar, wind both on and offshore, existing and advanced nuclear, and geothermal, will all be eligible for the credits. New or expanded tax credits will also be made available for carbon sequestration, existing nuclear power, clean hydrogen, and “advanced manufacturing” of key clean energy tech components. Energy efficiency incentives for individuals and businesses are expanded as well. In transportation, the law seeks to boost the entire supply chain for electric vehicles, encouraging expansion of domestic production in mining and processing raw battery materials, assembling batteries, producing the vehicles, and providing adoption incentives for consumers. All told, JCT estimates that the total expenditure on these credits will total $148 billion through 2031.

On the direct government spending side, the IRA is ambitious. The EPA will receive $27 billion to create the GHG Reduction Fund, a lending facility for green projects. The DOE’s Loan Programs Office, a similar lending program for innovative energy demonstration and commercialization, advanced vehicle manufacturing, and Tribal energy programs, receives major increases in both funding, with roughly $17 billion in new appropriations, and vastly expanded lending capacity. The methane fee will disincentivize leakage of that potent greenhouse gas, which will also be mitigated with $1.5 billion in methane reduction funding. Ports will receive $3 billion to reduce air pollution. In transportation, domestic auto manufacturing is allocated $2 billion in grants to retool for production of EVs, hybrids, and other alternative clean fuel vehicles and $1 billion in grants will be available to state and local governments for heavy-duty vehicles like buses and garbage trucks. Rural energy systems will receive significant upgrades, with $10 billion appropriated for rural electricity cooperatives and $2 billion for clean energy adoption through the Rural Energy for America Program. Conservation, agriculture, and forests receive $20 billion all together, as well.

The climate and energy implications of the IRA are staggering, and modelers agree that the law will enable major emissions reductions over the coming decade. Estimates vary based on assumptions about fossil fuel costs and tech adoption, so each model provides a range of estimates that each vary slightly: Rhodium Group projects 32-42% reductions, Energy Innovation estimates 37%-41%, and Princeton’s ZERO Lab preliminary reports suggests that emissions could fall by an average of 42% across scenarios.^{[57],[58],[59]}

 

Crucially, these models estimate economically optimal responses by individuals and industries covered by the bill’s programs and do not incorporate frictions posed by local siting conflicts or any permitting delays. Much like the goals of the Infrastructure Investment and Jobs Act, the climate and energy outcomes of Inflation Reduction Act depend on the ability of its funds to be spent on the clean energy technologies themselves rather than spending high proportions of project cost on lengthy federal reviews. As will be discussed below, the IIJA and IRA contain limited progress on this front, but work remains for Congress and the White House.

 

CHIPS and Science Act

The CHIPS and Science Act, touted primarily for its role in bolstering the domestic semiconductor industry and seeking to enhance U.S. competitiveness against China, also contains an underappreciated share of support for research in energy and climate. According to an estimate by the Rocky Mountain Institute, as much as $54 billion of the law’s $280 billion overall spending might flow to energy innovation.^[60] Importantly, though, this funding has only been authorized and must still be appropriated by Congress before these funds will be spent.

The CHIPS and Science Act did not include explicit legal changes to permitting, but subsequent moves have acknowledged the importance of reducing permitting barriers in the bill’s policy area. After its passage in August, the Biden administration announced the creation of an interagency working group to coordinate permitting for high-tech manufacturing in light of the issue’s importance for achieving the bill’s goals.^[61] Congress, too, has acted to reduce permitting barriers for high-tech industries, passing a companion bill to CHIPS that allows tech projects such as semiconductor fabs, data storage, and others to take advantage of the FAST-41 process.^[62]

As a science and technology bill, the CHIPS programs are focused on the earliest stages of innovation rather than incentivizing the buildout of market-ready tech like wind turbines or electric vehicles. Instead, the climate contributions in CHIPS flow to important research hubs like the Department of Energy’s ARPA-E program, a newly established Directorate of Technology, Innovation, and Partnerships, and labs like the National Renewable Energy Laboratory along with provisions for STEM education and workforce development. Working through government research labs, universities, regional tech hubs, and in partnership with private-sector entrepreneurs, the law funds  basic energy science, storage, advanced nuclear, clean steel, energy materials, and other research programs with the aim of keeping U.S. researchers at the cutting edge of the energy technology frontier. If fully funded and successful in this aim, the CHIPS and Science Act may end up being viewed as the most important move this Congress made for climate action in the period stretching from 2032 onward.

 

References and Notes:

[1] Lachlan Carey and Jun Ukita Shepard, “Congress’s Climate Triple Whammy: Innovation, Investment, and Industrial Policy,” RMI, August 22, 2022, https://rmi.org/climate-innovation-investment-and-industrial-policy.

[2] There are of course many other actions Congress and the Biden Administration can take to improve the economic and environmental outcomes and implementation of these major climate and energy bills. Three of these opportunities deserves specific mention here, even though they are not detailed topics of this paper: Enhancing workforce, education, and training to match worker skills to new high growth sectors, especially in clean energy. For U.S. workers to benefit maximally from these investments will require new workforce training regimes particularly those directly involving the private sector.

Improving investments in natural resource and agricultural policy, including forest, ocean, and land management. Efforts must increase to improve the role of the U.S. forest public lands and farms in helping to mitigate climate change emissions and impacts, including the potential for civilian Climate Conservation Corps. Finally, taken together these three major laws have very large fiscal and budgetary implications which cannot be separated from their other policy goals.  The U.S. must continue to reduce our debt even as we make these investments.

[3] Jesse Jenkins et al., “Preliminary Report: The Climate and Energy Impacts of the Inflation Reduction Act of 2022,” REPEAT Project (Princeton University ZERO Lab, August 2022), https://repeatproject.org/docs/REPEAT_IRA_Prelminary_Report_2022-08-04.pdf.

[4] Megan Mahajan et al., “Modeling the Inflation Reduction Act Using the Energy Policy Simulator,” Energy Innovation, August 2022, https://energyinnovation.org/wp-content/uploads/2022/08/Modeling-the-Inflation-Reduction-Act-with-the-US-Energy-Policy-Simulator_August.pdf.

[5] Jenkins et al., “Preliminary Report.”

[6] Mahajan et al., “Modeling the Inflation.”

[7] Mahajan et al., “Modeling the Inflation.”

[8] Mahajan et al., “Modeling the Inflation.”

[9] Jenkins et al., “Preliminary Report.”

[10] Energy Innovation analysis estimated the IRA bill would reduce carbon emissions 37% to 41% below 2005 levels by 2030. (Mahajan et al., “Modeling the Inflation.”)

[11] The Rhodium Group study said the bill would cut emissions 31% to 44% in the same period. (Ben King, John Larsen, and Hanna Kolus, “A Congressional Climate Breakthrough,” Rhodium Group, July 28, 2022, https://rhg.com/research/inflation-reduction-act/.)

[12] Mahajan et al., “Modeling the Inflation.”

[13] Mahajan et al., “Modeling the Inflation.”

[14] Jenkins et al., “Preliminary Report.”

[15]  Raul M. Grijalva and Bruce Westerman et al., “Letter to Nancy Pelosi and Steny Hoyer,” Committee on Natural Resources (U.S. House of Representatives, Washington, D.C.), September 12, 2022, https://naturalresources.house.gov/imo/media/doc/2022-09-12%20Group%20NEPA%20Letter%20to%20Pelosi%20and%20Hoyer%20UDPATED%202.pdf.

[16] Maxine Joselow and Vanessa Montalbano, “DNC Weighs Manchin’s Permitting Reform Deal,” The Washington Post, September 7, 2022, https://www.washingtonpost.com/politics/2022/09/07/dnc-weighs-manchin-permitting-reform-deal/.

[17] Daniel Adamson and Paul Bledsoe, “Streamline Power Line Permitting to Achieve Ira Climate Goals,” The Hill, August 18, 2022, https://thehill.com/opinion/energy-environment/3607335-streamline-power-line-permitting-to-achieve-ira-climate-goals/.

[18]   “Article 10: Duration and Implementation of the Permit Granting Process,” Regulation (EU) 2022/869) of the European Parliament and of the Council (Official Journal of the European Union, June 3, 2022), 152/70-71, https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32022R0869&from=EN.

[19] Impact Assessment Agency of Canada, “The Impact Assessment Process: Timelines and Outputs,” Government of Canada, March 24, 2021, https://www.canada.ca/en/impact-assessment-agency/services/policy-guidance/the-impact-assessment-process-timelines-and-outputs.html.

[20] Senator Shelley Moore Capito, “Capito Leads Colleagues in Introducing Comprehensive Regulatory and Permitting Reform Legislation,” September 12, 2022, https://www.capito.senate.gov/news/press-releases/capito-leads-colleagues-in-introducing-comprehensive-regulatory-and-permitting-reform-legislation.

[21] Jenkins et al., “Preliminary Report.”

[22] Mahajan et al., “Modeling the Inflation.”

[23] “A Citizen’s Guide to NEPA,” Council on Environmental Quality, January 2021, https://ceq.doe.gov/docs/get-involved/citizens-guide-to-nepa-2021.pdf.

[24] “National Environmental Policy Act,” Environmental Protection Agency, last updated July 2022, https://www.epa.gov/nepa.

[25] “Federal Environmental Review and Authorization Inventory,” Federal Permitting Improvement Steering Council, September 10, 2021, https://www.permits.performance.gov/tools/federal-environmental-review-and-authorization-inventory.

[26] “Length Of Environmental Impact Statements (2013-2018),” Council on Environmental Quality, June 12, 2020, https://ceq.doe.gov/docs/nepa-practice/CEQ_EIS_Length_Report_2020-6-12.pdf.

[27]“Regulatory Impact Analysis for the Final Rule, Update to the Regulations Implementing the Procedural Provisions of the National Environmental Policy Act,” Council on Environmental Quality, June 30, 2020, https://ceq.doe.gov/docs/laws-regulations/ceq-final-rule-regulatory-impact-analysis-2020-06-30.pdf.

[28] “Recommended Performance Schedules,” Permitting Dashboard (Federal Permitting Improvement Steering Council, April 6, 2020), https://www.permits.performance.gov/fpisc-content/recommended-performance-schedules.

[29] “Baseline Performance Schedules for Environmental Reviews and Authorizations,” Federal Permitting Improvement Steering Council, April 8, 2020, https://www.permits.performance.gov/sites/permits.dot.gov/files/2020-04/FPISCRecommendedPerformanceSchedules2020_04062020.pdf.

[30] While comprehensive cost assessments for the permitting process do not exist, a 2014 GAO report found that DOE contractor costs for NEPA documents prepared between 2003-2012 cost an average of $6.6 million.

“GAO-14-369, National Environmental Policy Act: Little Information Exists on NEPA Analyses” (United States Government Accountability Office, April 2014), https://www.gao.gov/assets/gao-14-369.pdf.; More recent DOE data through 2017 show similar figures, available at: “NEPA Lessons Learned Quarterly Reports, 2013-2017” (United States Department of Energy), December 2017, https://www.energy.gov/sites/default/files/2017/12/f46/2013-2017%20LLQR%20%28reduced%20size%20pdf%29.pdf.

[31] Katharine Q. Seelye, “After 16 Years, Hopes for Cape Cod Wind Farm Float Away,” The New York Times, December 19, 2017, https://www.nytimes.com/2017/12/19/us/offshore-cape-wind-farm.html.

[32] Colin A. Young, “Federal Review Will Further Delay Vineyard Wind,” WBUR News, August 9, 2019, https://www.wbur.org/news/2019/08/09/vineyard-wind-project-delayed.

[33] “Escalating Stakes in Battle for Ocean Wind,” Perkins Coie, February 2, 2022, https://www.perkinscoie.com/en/news-insights/escalating-stakes-in-battle-for-ocean-wind.html.

[34] Matthew Bandyk, “Largest Planned Wind Farm in US Gets Key Federal Approval,” Utility Dive, October 25, 2019, https://www.utilitydive.com/news/largest-planned-wind-farm-in-us-gets-key-federal-approval/565795/.

[35] Christian Britschgi, “New York City Was Supposed to Have Congestion Pricing in January. Federally Mandated Environmental Review Pushed the Start Date to 2023.,” Reason, August 24, 2021, https://reason.com/2021/08/24/new-york-city-was-supposed-to-have-congestion-pricing-in-january-federally-mandated-environmental-review-pushed-the-start-date-to-2023/.

[36] Eric Edwards and Sara Sutherland, “Does Environmental Review Worsen the Wildfire Crisis?,” Poverty and Environment Research Center, June 14, 2022, https://www.perc.org/2022/06/14/does-environmental-review-worsen-the-wildfire-crisis/.

[37] Myles McCormick, “‘Perfect Storm’ Energy Crunch Lengthens Life of Coal Power in U.S.,” Financial Times, August 31, 2022, https://www.ft.com/content/0be5163f-5ac4-4d0d-979a-ba97477f9cea.

[38] Jeff Davis, “Court Rulings May Delay California High Speed Rail,” Eno Center for Transportation, last updated August 4, 2017, https://www.enotrans.org/article/california-supreme-court-ruling-may-delay-high-speed-rail/.

[39] Ralph Vartabedian, “California Bullet Train Authority Gets U.S. Permission to Handle Its Environmental Reviews,” Los Angeles Times, July 27, 2019, https://www.latimes.com/california/story/2019-07-26/bullet-train-environmental-approvals.

[40] Matthew Roth, “SF Responds to Bike Injunction with 1,353 Page Enviro Review,” Streetsblog San Francisco, December 11, 2008, https://sf.streetsblog.org/2008/11/28/sf-responds-to-bike-injunction-with-1m-1353-page-enviro-review/.

[41] Susan Du and Liz Navratil, “Court Orders Minneapolis to Cease Implementation of 2040 Plan,” Star Tribune,  June 15, 2022, https://www.startribune.com/court-minneapolis-ordered-to-cease-implementation-of-2040-plan/600182511/.

[42] Casey Kelley et al., “Hawkeye State Headwinds,” ClearPath, July 14, 2022, https://static.clearpath.org/2022/07/hawkeye-headwinds-2-pager.pdf.

[43] “Accelerating Decarbonization of the U.S. Energy System,” National Academies of Sciences, Engineering, and Medicine, (The National Academies Press, Washington D.C.), 2021, https://doi.org/10.17226/25932.

[44]Jenkins et al., “Preliminary Report.”

[45] Mahajan et al., “Modeling The Inflation.”

[46] “Statistics Time Series: US Electric Capacity Net Additions,” International Renewable Energy Agency, July 20, 2022, https://www.irena.org/Statistics/View-Data-by-Topic/Capacity-and-Generation/Statistics-Time-Series.

[47] “Table 4.3. Existing Capacity by Energy Source, 2020 (Megawatts),” U.S. Energy Information Administration, October 2021, https://www.eia.gov/electricity/annual/html/epa_04_03.html.

[48] Kelsey Brugger, “NEPA Reviews Moving Faster under Biden,” E&E News, February 22, 2022, https://www.eenews.net/articles/nepa-reviews-moving-faster-under-biden/.

[49] “Fact Sheet: Biden-Harris Administration Releases Permitting Action Plan to Accelerate and Deliver Infrastructure Projects on Time, on Task, and on Budget,” The White House, May 11, 2022, https://www.whitehouse.gov/briefing-room/statements-releases/2022/05/11/fact-sheet-biden-harris-administration-releases-permitting-action-plan-to-accelerate-and-deliver-infrastructure-projects-on-time-on-task-and-on-budget/.

[50] Infrastructure Investment and Jobs Act, H.R. 3684, 117th Congress (2021-2022), https://www.congress.gov/bill/117th-congress/house-bill/3684/text.

[51] Sections 40003, 50301, 50302, 50303, 60115, 60402, 60505, and 70007 of the bill are all dedicated to review and permitting funding: Inflation Reduction Act of 2022, H.R. 5376, 117th Congress (2021-2022), https://www.congress.gov/bill/117th-congress/house-bill/5376/text.

[52] Senator Joe Manchin and Senator Charles Schumer, “Energy Permitting Provisions ,” July 2022, https://www.manchin.senate.gov/imo/media/doc/energy_permitting_provisions.pdf?cb.

[53] Paul Bledsoe and Clayton Munnings, “The Role of Natural Gas in Reducing Asia’s Greenhouse Gas Emissions,” Progressive Policy Institute, July 2022, https://www.progressivepolicy.org/wp-content/uploads/2022/08/PPI-Asia-Emissions-Final-1.pdf.

[54] SITE Act, S. 2651, 117th Congress (2021-2022), https://www.congress.gov/bill/117th-congress/senate-bill/2651.

[55] ​​“About Us,” Office of Renewable Energy Siting (New York State), accessed September 2022, https://ores.ny.gov/about-us.

[56] Jesse Jenkins et al., “Summary Report: The Climate Impact of Congressional Infrastructure and Budget Bills,” REPEAT Project (Princeton University ZERO Lab, February 28, 2022), https://repeatproject.org/docs/REPEAT_Summary_Report_022822.pdf.

[57] John Larsen et al., “A Turning Point for US Climate Progress: Assessing the Climate and Clean Energy Provisions in the Inflation Reduction Act,” Rhodium Group, August 12, 2022, https://rhg.com/research/climate-clean-energy-inflation-reduction-act/.

[58] Mahajan et al., “Modeling the Inflation.”

[59] Jenkins et al., “Preliminary Report.”

[60] Lachlan Carey and Jun Ukita Shepard, “Congress’s Climate Triple Whammy: Innovation, Investment, and Industrial Policy,” RMI, August 22, 2022, https://rmi.org/climate-innovation-investment-and-industrial-policy.

[61]  “Fact Sheet: CHIPS and Science Act Will Lower Costs, Create Jobs, Strengthen Supply Chains, and Counter China,” The White House, August 9, 2022, https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/09/fact-sheet-chips-and-science-act-will-lower-costs-create-jobs-strengthen-supply-chains-and-counter-china/.

[62] S. 3451, 117th Congress (2021-2022), https://www.congress.gov/bill/117th-congress/senate-bill/3451.

EXECUTIVE SUMMARY

Asian countries consume nearly half of the world’s energy and 70% of the world’s coal. China burns more coal than all other countries combined and plans to build an additional 80 new coal plants in coming years. The United States Energy Information Administration (EIA) projects that heavy coal use will continue in many parts of Asia throughout 2050 even in a “low demand” scenario.¹ Asia’s dependence on coal works at cross purposes with the global consensus to limit warming to under 2 degrees Celsius as set forth in the Paris climate agreement, as well as pledges by major Asian countries to cut their carbon emissions.

For example, China has pledged to achieve carbon neutrality before 2060.² India set a similar net-zero emissions goal by 2070.³ Since Asia emits well over half of the world’s annual greenhouse gas emissions, any realistic strategy to bend down the global emissions curve relies on reducing Asian emissions deeply over time.⁴ The construction of new coal plants — which typically operate for 40 years or more — raises serious doubts about the climate commitments of leading Asian nations. China’s annual greenhouse gas emissions alone are now more than 30% of the global total, greater than all developed nations combined. Asia’s large and growing countries must transition to a cleaner fuel base to stand a chance at meeting their climate targets while sustaining economic growth. In addition, Asia’s reliance on coal also undermines efforts to reduce local air pollution, which led to over 30 million premature deaths in China alone between 2010 and 2016.⁵ How can Asia reduce its coal use while also ensuring continued prosperity and sustainability across the continent? Substituting cleaner-burning natural gas for coal offers one key strategy to cut emissions deeply, but only if Asian countries recognize that natural gas is not created equally from a climate change perspective.

For example, Russia and the United States both increasingly export natural gas to Asia. However, studies show that the United States produces natural gas that has far lower lifecycle greenhouse gas emissions than Russian gas. That’s due to America’s greater performance on all three dimensions of effective methane control: (1) measurement, (2) validation, and (3) policies.

In fact, this paper will show that:

• Due to its very high fugitive emissions of methane, Russian gas delivered through pipelines to China emits slightly higher lifecycle greenhouse gas emissions than Chinese coal itself based on this best available data. Thus, any pretense by China that using Russian gas reduces overall greenhouse gas emissions is false.

 

• This fact undermines the climate change rationale of the recently announced new, second major natural gas pipeline project from Russia to China. Increased Chinese imports of Russian gas will only subvert Asian and global climate protection goals.

 

•  In contrast, due to lower lifecycle emissions of methane, U.S. liquefied natural gas delivered to China has on average 30% lower lifecycle greenhouse gas emissions than does Chinese coal.

 

On this basis, we argue that Asia should not only increase its use of natural gas to displace coal, but do so particularly by purchasing liquified natural gas (LNG) imports from the United States and other lower methane emitting sources, rather than sourcing natural gas from Russia.⁶ We find that lower methane emissions gas systems give the United States a significant competitive advantage versus other sources of gas as Asian countries shift from coal to gas to cut their carbon emissions.

But these U.S. advantages will only continue if the federal government and domestic energy companies work together to lower methane emissions from its production, transportation, and exportation of natural gas. We urge the Biden administration to set an explicit national goal to work toward making America the cleanest natural gas producer in the world. Not only would that boost U.S. LNG exports, it would also pressure other exporting countries to reduce their methane and lifecycle emissions if they want to be remain competitive.

This paper offers a three-tier framework for a comprehensive comparison of methane emissions by Russia and the United States. We explore how each country measures its methane emissions, the extent and effectiveness of third-party validation of emissions estimates, and the role that policy frameworks play in creating incentives for cleaning up gas production.

We note that Russia’s obsession with secrecy makes a comprehensive comparison of methane emissions between the United States and Russia difficult. The bottom line is that Russia’s insistent lack of transparency compared to the U.S. means Russian emissions are likely far higher even than the existing estimates used in the paper. We also note that from an economic and national security perspective, the U.S. has an opportunity to partner with key Asian nations in providing cleaner natural gas while reducing the influence of petro-states like Russia. This is imperative is an especially crucial given Russia’s invasion of Ukraine and other expansionist policies. However, this is not the main focus of this paper.

All these factors suggest that it is strongly in the U.S. and global climate protection interest for America to continue to expand its LNG exports into Asia, while making sure U.S. regulations drive down methane emissions to work toward being the world’s cleanest producer of natural gas. This report will offer a series of specific recommendations for how to accomplish these goals.

INTRODUCTION

Natural gas consumption in Asia has risen steadily in recent years, a trend expected to increase more dramatically to meet Asia’s projected increase in energy consumption over the next thirty years, as displayed in Table 1a and 1b. Economic growth in the region, particularly in China and India, is expected to drive demand for a wide range of energy sources, including natural gas. In addition, calls for cleaner sources of energy has motivated commitments by governments in the region to begin shifting away from coal and towards natural gas and renewable energy.

This vision was directly reflected in China’s 2016- 2020 “energy revolution” plan, which featured growth in natural gas as part of its “three-pillar approach” to sustainable energy. Specifically, the plan included increasing the share of natural gas in primary energy consumption to 10% by 2020 and 15% by 2030 and in urban dwellings to 50-55% by 2020 and 70% by 2030.^{7 8}Natural gas continues to feature prominently in China’s 14th Five-Year Plan, spanning years 2021 through 2025,⁹ and will continue to do so in light of China’s carbon neutrality by 2060 pledge.¹⁰ India is following a similar trajectory, with a recent announcement committing to net-zero carbon emissions by 2070.¹¹ In line with this new ambitious policy direction, India has set out to increase the share of natural gas in the country’s energy mix from just over 6% at present to 15% by just 2030.¹²

Due to limited domestic supply of natural gas in Asia, natural gas imports are also projected to increase steeply, roughly quadrupling from 4.1 trillion cubic feet (Tcf) in 2020 to 16.1 Tcf in 2050.¹³ China and India are projected to receive roughly half of these dramatically increased imports.¹⁴ Liquified natural gas (LNG) imports specifically are similarly projected to increase over this time period, representing as much as 72.5% of the total demand for natural gas in the Asia-Pacific region by 2050.¹⁵ This is especially the case for India, which has experienced a decline in domestic natural gas production. Indeed, India has been the fourth largest importer of LNG since 2011 and continues to rely on these imports, which represented 50% of the country’s natural gas supply in 2019.¹⁶

 

Three of the world’s largest natural gas producing regions (the United States, Russia, and Middle Eastern exporters) are expected to increase natural gas production to meet growing demands in Asia, as displayed in Figure 2. However, at least prior to its invasion of Ukraine, Russian production of natural gas (which may reach 14 Tcf by 2050) has been expected to significantly outpace exportation from other regions, positioning Russia to become the largest net exporter of natural gas through 2050.¹⁷ And while these estimates were made prior to the EU’s announced embargo on Russian gas, and are likely therefore to be too high, the EU is still importing gas from Russia, as are other nations.

Crucially, Russia has already taken steps to secure its natural gas foothold in China even as its market in Europe is now threatened by its invasion of Ukraine. The Power of Siberia-1 pipeline, which began operating in 2019, is Russia’s first natural gas pipeline to China. The $400 billion contract, the largest contract in the history of Russia’s natural gas company Gazprom, calls for Russia to supply China with 38 billion cubic meters of natural gas annually for 30 years. The impact for China is also significant, with the amount of natural gas supplied enabling China to displace coal in China’s northwest region over that period.¹⁸ Russia’s President Vladimir Putin and China’s President Xi recently held a high profile event during the Beijing Winter Olympics at which they announced an additional agreement calling for another Russian gas pipeline to China, known as the Power of Siberia-2 pipeline, which is expected to have an export capacity of 50 Bcm per year¹⁹ and is scheduled to commence operations in 2030. At the February 2022 event in Beijing, Russia and China announced another 30- year contract to supply 10 billion cubic meters of natural gas to China through this new pipeline.²⁰

Russia has also begun making a natural gas footprint in India. Although India currently only accounts for 0.2% of Russia’s natural gas exports,²¹ India recently entered into a 20-year contract with Russia to supply it with 2.5 million tons of LNG.²² Both countries have expressed commitments to deepening their ties and boosting LNG activity^.23

As with Russia, net exports of natural gas from the United States are expected to spike through 2050. The United States just recently, in late 2021, became the world’s largest LNG exporter. Asia has been the largest destination for U.S. LNG exports since 2020, with South Korea, China, and Japan being the largest buyers in both 2020 and 2021, although the recent pledge by President Biden to supply more U.S. LNG to Europe to displace Russian gas suggests that both Europe and Asia will be receiving greater U.S. LNG shipments in coming years.

While Japan has been the largest LNG importer in the world for the past 50 years, China is poised to surpass Japan to facilitate its transition away from coal.²⁴ The year 2021 marked this transition, as Japanese LNG imports fell 4 million tons short that of China. The U.S. recently surpassed Qatar and Malaysia as the second largest source of LNG imports to China, after Australia. The United States further cemented its relationship with this import partner in the third quarter of 2021, when China signed four long-term LNG contracts with leading U.S. LNG producers following a Chinese government directive to secure LNG at any price.^{25, 26} 

While India has historically received most of its LNG from Qatar due its geographic proximity, India is still one of the primary destinations of U.S. LNG, ranking seventh in 2019. New commercial contracts with U.S. LNG companies will continue to sustain this relationship.

 

COMPARING NATURAL GAS FROM THE UNITED STATES AND RUSSIA

Russia’s invasion of Ukraine jolted the European Union out of its complacency surrounding energy imports, exposing how the EU addiction to Russian gas has been funding Putin’s malign regime at ever greater levels, in the hundreds of billions of dollars annually, even since Russia’s 2015 annexation of Crimea. Apart from the wide-ranging geopolitical costs of the EU reliance on Russian oil and gas, the invasion of Ukraine is also suddenly forcing the EU to recognize the huge additional methane emissions of Russian gas, contributing to the EU determination to cut its dependency on Russian natural gas imports.

Asia should follow suit, on both ethical grounds to protest Russia’s unlawful invasions, but also on environmental grounds. Without a dramatic fuel shift from coal to cleaner natural gas, Asian countries have no plausible way to meet their climate commitments.

Natural gas emits about half the carbon dioxide emissions as coal when combusted. However, natural gas producers emit significant amounts of greenhouse gas in the form of methane by venting, inefficient flaring, and fugitive emissions through leaks in wells, transportation in pipelines and equipment.²⁷ These emissions have a disproportionately large impact on the climate because the primary component of natural gas, methane, warms the atmosphere 86 more times per molecule than carbon dioxide emissions over a 20-year timeframe.²⁸ Therefore, high fugitive methane emissions can more than offset the climate gains of switching to natural gas from coal. Studies show that gas is more climate friendly than coal only so long as methane emissions are kept below 2.7% of gas production, although some estimates range to more like 3.5% leakage rates.^{29, 30}

In the context of Asia, natural gas imports with high methane leakage rates result in higher carbon emissions than anticipated, and in some cases, are no better from a climatic perspective than continuing the use of coal. Ultimately, Asia should not purchase any natural gas that does not have low enough methane emissions to provide climatic benefits over coal.

Moreover, Asia should prioritize the lowest verifiable methane emitting option from a lifecycle perspective, over any other natural gas alternative. Without Asia’s leadership in cutting emissions of coal and using lower-emitting natural gas, it will be difficult for the planet to stay on track for a 2 degrees Celsius goal. As this paper will discuss, leakage rates vary considerably based on the geographic location of the natural gas source, including across and within national boundaries. Therefore, comparing the climatic benefits or costs of exports of natural gas from the United States and Russia into Asia requires significant analysis.

This paper addresses the unique opportunity and associated challenges for Asia to substitute coal with low-leakage natural gas, specifically, LNG sourced from the United States. This cleaner natural gas will not only allow Asia to deliver on its policy commitments, but will also reap real and significant benefits for the climate as well as for human health, both of which have been severely threatened by decades of coal use throughout most of Asia. The decisions Asian countries make today to secure their future gas supply have enormous bearing on both their economic and social development and on climate change. Where they source their gas from is crucial to ensure high-quality natural gas imports with low leakage rates for methane emissions.

This paper is organized around a three-tiered framework for assessing the climate impact of natural gas exports from the United States and Russia. Section 3 introduces and discusses this framework at length with a comparison between the United States and Russia. Section 4 offers policy recommendations for Asia and the United States

Measuring methane emissions from the natural gas lifecycle is notoriously difficult. Methane emissions can happen anywhere along the supply chain from initial production to final consumption. In addition, a small minority of leaks often explains the vast majority of any observed emissions, thereby earning the moniker of “super” or “ultra” emitting sources. For these and other reasons, there are wide uncertainties in many estimates of methane emissions, making comparing national emissions inventories alone a necessary yet insufficient step in assessing the climatic impact of different natural gas sources. Countries also put varying degrees of diligence and skill into validating national emissions. Finally, countries adopt very different policies and incentives to encourage the reduction of methane emissions. More specifically, we conceptualize three tiers of comparison as follows:

 

• Government Emissions Inventories: Countries collect and maintain their own national data on emissions, sometimes including methane emissions from the oil and gas sector, but the accuracy of this data varies widely. In addition, countries periodically submit national inventories to the United Nations for assessment under the Framework for Climate Change. This tier ranks the accuracy of the measurements provided by national data or inventories.

• Third-Party Validation Efforts: Over the last decade, academics, and nonprofits started inventing new methodologies for measuring methane emissions from the oil and gas sector to test the validity of government data. The overall level of effort put into validating government inventories by these third-parties, the effectiveness of their methods, and the results of their findings are all taken into consideration under this tier.

• Methane Policy Mix: Countries adopt widely varying policies for reducing methane emissions from the oil and gas sector. Clearly, while measuring and validating emissions are pertinent for current methane emissions, a country’s policy mix largely determines the level of its future methane emissions. Therefore, this tier accounts for the trajectory of methane emissions. We also report on recent political announcements that shed light on the future direction of each country’s methane emissions trajectory.

 

Figure 3 summarizes our main results from applying this conceptual framework to LNG exports from the United States and natural gas exports from Russia. While there is ample room for improvement in both countries, the United States clearly offers a strong relative advantage by offering a lower carbon natural gas product in the form of LNG exports. In particular, U.S. measurement of methane emissions is more accurate, the validations of those measurements are more rigorous, and the methane policy framework is more aggressive. We believe these realities confer a substantial competitive advantage on U.S. natural gas.

At the same time, we recognize that geopolitics will sometimes supersede climate protection considerations. But if climate and geopolitical considerations are not given appropriate value, Russia could wind up being the key gas supplier to what some are calling the “axis of autocracy” — countries with rulers who may favor Russia against free and democratic nations. Since Russia’s invasion of Ukraine, this group has clearly included not only China, but in some cases India. But for Asian countries struggling to grow and do their part to slow down the overheating of our planet, the evidence points overwhelmingly to the superiority of cleaner U.S. gas. These nations must be called to account on the negative climate implications of using Russian gas, especially given the increasing availability and price competitiveness of lower emitting LNG alternatives from the U.S.

Finally, recommending imports of cleaner natural gas as baseload power and heating in Asia to displace higher-emitting natural gas sources and coal should be in way no detract from aggressive efforts among Asian nations to expand production of renewable energy, nuclear power, hydrogen and other near-zero emitting sources.

 

Government Emissions Data 

In both the United States and Russia, government emissions inventories have historically likely underestimated methane emissions from the oil and gas sector compared to independent estimates, which the next section discusses in detail. A central, but not the only, reason for this is that these inventories rely on bottom-up measurements, which make assumptions regarding the quantity of equipment used (known as “activity factors”) and their emission rates (known as “default factors”) that are inherently prone to underestimation. Therefore, government emissions inventories should be taken with a grain of salt.

Figure 4 shows government inventories of methane emissions from the oil and gas sector compared to a selection of recent independent estimates (denoted as yellow triangles) as well as how those inventories changed over time (denoted by the dotted lines). On the first dimension, Figure 4 shows (a) that Russia initially overestimated emissions before significantly underestimating them, leading to a widening gap between government inventories and independent estimates. It also shows (b) that the United States likely underestimates emissions but that the gap between government inventories and independent estimates is quickly closing, with several academic studies roughly agreeing with the government inventories. In both cases, the notable exception outlier is IEA (2021) which accounts for ultra-emitters, an analysis that we describe in detail later in this report.

Regarding changes in government inventories over time, a recent investigation by The Washington Post shows that Russia has repeatedly and arbitrarily lowered its estimates for methane emissions from its oil and gas sector. As displayed in Figure 4A, these estimates have dropped by nearly an order of magnitude over the last 15 years with frequent revisions. According to the Post investigation, experts believe that Russia is massively underestimating its methane emissions.³¹ Similarly, Russia’s own estimates of methane emissions from the oil and gas sector are remarkably low in relative terms. For example, Gazprom reported a methane leakage rate of three-tenths of one percent in 2015, a number widely viewed as unbelievably low by experts,³² while the United States reported a 1.54% methane leakage rate in 2017.³³ Taken together, the trend of constant downward revisions and remarkably low leakage rates immediately raises deep suspicion over the quality of Russia’s emissions inventory.

Beyond the estimates from the annual inventories, the process for making estimations is drastically different between the United States and Russia. For example, as displayed in Figure 4B, the United States also lowered its estimate for methane emissions from its oil and gas sector over the last 15 years, although to a much lesser degree than Russia. Importantly, these changes are much more gradual and accompanied by a coherent and public technical explanation in the Environmental Protection Agency’s (EPA) annual greenhouse gas inventory report. As part of this reporting process, the EPA invites and responds to public feedback — including from academics, nonprofits, and businesses — on its methodology and potential updates. On the other hand, to our knowledge, Russia does not have any such a transparent process. As such, there is no plausible explanation for why Russian estimates change so drastically or frequently, except political expediency. In addition, the Post reports that Russia does not impose substantial fines for noncompliance and that third-party audit reports in Russia cannot be trusted.³⁴

Based on the United States Greenhouse Gas Inventory and Reporting Programs, the National Energy Technology Laboratory conducted a comprehensive study comparing the lifecycle greenhouse gas emissions from different sources of energy. As illustrated in Figure 5, the study finds Russian gas piped to China has up to 5% more greenhouse gas emissions (GHGs) than Chinese coal based on a 20-year global warming potential. In contrast, liquefied natural gas (LNG) shipped to China from the United States has only 72% of the GHGs compared to Chinese coal based on a 20-year global warming potential. From a 100-year global warming potential perspective, Russian gas piped to China has about 11% more GHGs compared to United States LNG shipped to China.^{35, 36.}

A major caveat is that, within each country, there is massive variance in leakage rates. In particular, both the United States and Russia have localized “super” or “ultra” emitting sources, as discussed in detail by a recent academic article published in the journal Science. ³⁷ Within these regions, researchers have observed spikes in methane leakage well in excess of what would make natural gas a reasonable substitute for coal from a climatic perspective. For example, a recent study in the United States estimates that methane emissions leakage rates from the Permian Basin, a major producing region in Texas, were 3.7% of production in 2018 and 2019, suggesting a significant disadvantage from using natural gas from this region over coal.³⁸ Approaches that account for ultra-emitting sources, such as IEA (2021), will therefore tend to yield higher estimates of methane emissions. This speaks to the importance of independent estimates, which we will turn to next.

Third-Party Validation Efforts 

Independent actors, including academic and environmental organizations, are another vital source of data about methane emissions from country to country. As described in detail in Appendix 1, we focus primarily on collecting independent estimates across the two countries that are comparable. These approaches primarily rely on either “top-down” satellite-based studies or “bottom-up” emissions factor studies. Particularly in the United States, there are dozens of excluded studies that use airplanes, trucks, sensors, and in-person assessments to provide detailed geographical estimates of methane emissions. These methodologies require a certain level of governmental or corporate permission to study methane emissions and, to our knowledge, this permission tends to be granted in the United States and not granted in Russia. This is one of the reasons why we know so much more about methane emissions in the United States compared to Russia.

In an effort to make reliable comparisons, we have focused only on studies that employ the same methodology to ascertain national-level estimates in the United States and Russia. Our analysis reveals that the average leakage rate reported in Russia is 2.80% (ranging between 1.54 and 4.14%), substantially higher than the 1.74% average rate in the United States, (ranging more narrowly from 1.12 and 2.19%.)

Most recently, the International Energy Agency recently launched a Methane Tracker Database.³⁹ This initiative aims to blend country-level inventories with satellite-based measurements to track methane emissions over time. It also complements the International Methane Observatory (IMO), which is expected to increase the quality of methane estimates overall.⁴⁰ We calculate a methane leakage rate originating from this database equal to 2.19% for the United States and 3.02% for Russia in 2020, making Russia’s methane emissions nearly 40% higher than those from the United States. Again, the uncertainties around Russia’s methane emissions are much greater, since there are many more independent estimates conducted in the United States.

Previous academic efforts to estimate country-level methane emissions from oil and gas reflect similar trends. An article published in Atmospheric Chemistry and Physics estimates methane leakage rates of 2.11% in the United States and 2.49% in Russia for 2012.⁴¹ Another academic article published in 2017 by the journal Environmental Research Letters estimates methane leakage rates of 1.57% in the United States and 3.42% in Russia for 2012. We were unable to find any third-party country-level estimate that estimates the United States emitting at a higher methane leakage rate than Russia.⁴²

There is also a distinction between the overall effort put in by third-parties, such as academics and nonprofits, in validating government emissions inventories. In the United States, these researchers have produced well over several dozen major studies estimating methane leakage ratios at different geographies and scopes spanning the last decade. Importantly, there is a diverse array of methods including airplane, drone, sensor, and satellite data.

In contrast, there is far less activity in Russia, with only a handful of academic studies independently estimating methane emissions. Those typically find that inventories are underestimated. For example, a 2021 article published in the journal Atmospheric Environment employs satellite imagery to estimate methane emissions from one particular region in Russia that are much higher than official figures. The authors identify widespread flaring, even though this activity was supposed to be illegal, and argue that more satellite imagery is required to validate Russia’s underestimated national data.⁴³ Taken together, not only are third-party validation efforts more commonplace in the United States, but those validation efforts that allow for comparisons with Russia show lower comparative methane leakage rates for the United States. This means that validation efforts are stronger in the United States when compared to Russia. Of course, both countries should improve further on facilitating validation efforts, since there are large gaps between estimates from government inventories and independent estimates at local and national scales in both countries.

Methane Control Policies 

We are not aware of any significant policies in Russia to incentivize reductions in methane emissions. Moreover, while President Putin has called for cuts to methane emissions, Russia has not signed onto any of the recent international efforts to reduce methane emissions including, for example, the Global Methane Pledge launched by the United States and the European Union.⁴⁴ For these reasons, we are unable to credit Russia with any effective policy for mitigating methane emissions.

In contrast, the United States has recently furthered its effort to reduce methane emissions from the oil and gas sector as part of its Methane Emissions Reduction Plan.⁴⁵ Importantly, the United States Environmental Protection Agency is updating rules for new and existing oil and gas sources, which it estimates will reduce methane emissions by approximately 75% from covered sources. These sources will include those previously unregulated including oil wells with associated gas.

Bipartisan infrastructure legislation that President Biden signed into law also contains $16 billion in new funding to cap old or existing wells and mines that leak methane. In addition, the Bureau of Land Management will further reduce venting, flaring, and leaks on public lands and waters. This is notable because one of the main hotspots for methane emissions in the United States, the Permian Basin in New Mexico, would be subject to these regulations.

Finally, the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) is implementing the bipartisan PIPES Act, passed in December 2020, with the potential to reduce 20 million metric tons of carbon dioxide emissions per year by reducing or eliminating leaks or ruptures of oil and gas pipelines. Interestingly, PHMSA is proposing a rule this year to strengthen standards for LNG facilities, particularly from large scale incidents and storage tanks.

Policy Recommendations – Key Actions by Major Stakeholders 

1. Asian governments should phase down and then halt the importation of Russian gas based on climate change, humanitarian, and geopolitical grounds.

2. Asian nations should also suspend and cancel the construction of natural gas pipelines from Russia since they increase lifecycle greenhouse gas emissions and are therefore inconsistent with climate goals.

3. In particular, China should cancel a proposed new gas pipeline from Russia (the so-called “Power of Siberia 2”) given its high lifecycle emissions.

4. Asian nations should construct LNG infrastructure to facilitate imports from countries with lower methane emissions, including the United States.

5. Asian countries that have carbon prices (including China, Japan, and South Korea) should, in time, consider adding a greenhouse gas import tax that regulates natural gas imports based on their lifecycle methane emissions. Carbon prices can and should be redesigned to give priority to low leakage natural gas.

6. Major greenhouse gas emitting Asian countries, especially China and India, who have not already done so should join the U.S., EU, and over 100 countries in the Global Methane Pledge to cut methane emissions from all national sources by 30% by 2030. It is notable that Russia has not joined this Pledge.

7.  U.S. lawmakers and regulators (at the federal and state levels) should continue improving management of methane emissions — including measurement, validation, and policy frameworks — to work toward achieving the lowest leakage rates of any gas-producing and gas-exporting country in the world. U.S. regulators should specifically improve measurements of methane emissions by incorporating new methods, including satellites and other airborne measurements. A strong national inventory will bolster the effectiveness of any policy aimed at reducing methane emissions. U.S. regulators should pay special attention to ultra-emitters among oil and gas producers, including small producers and those in the Permian Basin.

While more aggressive regulation is necessary, the U.S. government should also use incentives and fees to challenge domestic oil and gas producers to a “race to the top” when it comes to controlling methane emissions. Several U.S. LNG exporting companies have taken measures in this direction, including “tagging” or disclosing the full lifecycle emissions of its LNG export cargoes in 2023, and new efforts to capture and store carbon at one of its U.S. export terminals.

In order to make greater amounts of natural gas available for export both Europe and Asia and to improve global climate outcomes and geopolitics while limiting domestic price, the United States must also expand the production of additional clean energy sources including renewable energy, nuclear power, geothermal and related technologies including electricity storage, carbon capture and storage, direct air capture and other advanced energy. As the Progressive Policy Institute noted in its previous reports from 2020 and 2021 on the role of natural gas in cutting domestic greenhouse emissions and those in Europe, the U.S. should enact $325 billion pending legislation to dramatically expand clean energy tax incentives this year, as well as invest in increase domestic production of gas, including expanding gas pipelines as needed.

Both gas exporting and importing governments should challenge oil and gas companies to show steady progress in reducing their methane emissions, including by encouraging companies to consider bundling their LNG shipments with carbon offsets that would enable exporters to achieve lower carbon status over the long-run, while ensuring offsets are high-quality. In time, importing nations are likely to reward these efforts with greater demand for low-emissions gas delivery.

International climate oversight bodies (including U.N. Framework Convention on Climate Change and International Panel of Climate Change) should strongly encourage all nations to provide accurate data on actual methane emissions from all sources, including oil and gas production. These organizations and IEA should also continue deploying methodologies capable of improving estimates of methane emissions in all countries, and particularly emphasize remote measurements in countries, such as Russia, that do not have robust independent estimates or transparent public processes for estimating inventories. Parties to the Paris Agreement are required to submit nationally determined contributions (NDCs), and the UNFCCC Secretariat should require each Party’s national climate plans to include plans to cut methane emissions from oil and natural gas, whether through production, exports and/or imports.

Independent third-party entities, such as nongovernmental organizations, should continue to conduct research into Russian methane emissions to fill the data gap that inhibits a thorough understanding of the magnitude of the emissions.

Appendix: Estimates of Russia and Untied States Oil and Gas System Methane Emissions from Existing Studies/Inventories and Derived Emissions Rates 

Reported volumes of estimated methane emissions across sources come from the International Energy Agency (IEA) 2021 Methane Tracker Database and the IEA 2022 Methane Tracker Database that compiled estimates across published studies and inventories.^46,47 The authors retrieved the data compiled by the IEA 2021 database in February 2022 and the data from additional studies reported by the IEA 2022 database in April 2022. IEA 2021 interactive figures reported what year the reported emissions covered and both IEA 2021 and 2022 databases report volume breakdowns by the segments of the oil and gas systems that were included in each study (e.g., upstream oil, upstream gas, downstream gas). As such, all estimated methane emission volumes included in our tables are the reported numbers for national totals across the entire oil and gas systems.

To calculate a derived percent of the country’s natural gas production lost as methane emissions based on the findings from each study, the authors divide the IEA 2021 and IEA 2022 compiled methane emission volumes by the total dry natural gas production volumes for the respective countries and base years reported by U.S. Energy Information Administration (EIA) datasets. Production data for both Russia and the U.S. comes from EIA’s International data set for all years of interest except for one. The U.S. volume for 2021 comes from EIA’s dry production data series.⁴⁸ Before dividing, we convert the reported kt of methane for each source to billion cubic feet (assuming 1 kiloton of methane equals 0.051921 billion cubic feet of methane).

For example, Maasakkers et al 2019 estimate that in 2012 Russia emitted 10,413 kt (or 541 Bcf) of methane from across the country’s oil and gas system.⁴⁹ EIA reports that in 2012 Russia produced 21,742 Bcf of dry natural gas. The authors then calculate the emission rate by dividing the total methane from Russia’s oil and gas systems in 2012 as estimated by Maasakkers et al 2019 by the Russian dry natural gas volume reported by EIA for 2012 (541/21,742= 2.49%).

NETL 2019 calculate the cradle through delivery emission rate of Russia natural gas via pipeline to Shanghai as 5.1% and of U.S. LNG to Shanghai, assuming gas comes from Appalachia, as 1.2% (see exhibit 6-8).⁵⁰ This study may underestimate LNG methane emissions because NETL 2019 assumes Appalachian upstream methane emissions for its U.S. LNG calculation that may be lower than the upstream methane emissions for other major natural gas regions in the United States.

 

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ABOUT THE AUTHORS

Paul Bledsoe is a strategic adviser for PPI, working on intersection of U.S. and global energy, climate, and economic policy. He is also a Professorial Lecturer at American University’s Center for Environmental Policy. Paul served as communications director of the White House Climate Change Task Force under President Clinton, as special assistant to U.S. Interior Secretary Bruce Babbitt, and communications director of the U.S. Senate Committee on Finance under former Chairman Daniel Patrick Moynihan.

He was formerly senior policy advisor to the Presidential Commission on the BP Oil Spill, director of strategy for the National Commission on Energy Policy, and a teaching fellow at Oxford University’s School of Geography and the Environment. Paul has been a leading figure in shaping two major climate agreements — the Paris Climate Agreement of 2015 and the Kigali Agreement to phase out HFCs of 2016. He writes often on climate and energy in the New York Times, Washington Post, Financial Times, Politico, USA Today, LA Times, The Hill and other leading publications. Paul received a B.A. with honors and a M.A from Ohio State University.

Clayton Munnings is a widely published environmental economist with over three dozen scholar articles and policy papers focused on carbon pricing and methane emission policies. He holds an A.S. from Monroe Community College, a B.S. from Cornell University, and an M.S. from UC Berkeley. He is completing his PhD at UC Berkeley with a focus on novel methods to create and identify high-quality carbon offsets.

Clayton currently serves as Strategic Advisor to the International Emissions Trading Association, Expert to Perspective GmbH’s International Initiative for Development of Article 6 Methodology Tools, and Board Member at Eartshot Now. He operates a consulting firm that provides advice to countries, corporations, and startups abating greenhouse gas emissions through carbon pricing, climate finance, and carbon offsets.

He has written climate laws for top-emitting countries, built carbon offset quality assurance frameworks for large companies, and designed investment strategies for novel approaches to climate finance. Previously, Clayton held roles as Researcher and Portfolio Manager at Kepos Capital LP, Economist in the Executive Office of the California Air Resources Board, Senior Research Associate at Resources for the Future, Short Term Consultant at the World Bank, and Youth Delegate to the UNFCCC for SustainUS.

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