Here’s Why Permitting Reform Is on the Table in US Debt-Limit Talks

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(Bloomberg) -- As debt-limit talks come down to the wire, members of Congress and President Joe Biden are also looking for common ground on how to overhaul the national permitting process for big energy projects.

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House Speaker Kevin McCarthy, a Republican from California, confirmed on Thursday that permitting reform remained on the negotiating table. But he declined to offer specifics, noting the situation was fluid. “We don’t have an agreement to do anything until everything is agreed to,” he told reporters in the Capitol on Tuesday.

Permitting reform came into the talks because it represents a rare point of bipartisan interest. Both Democratic and Republican politicians are unhappy with the current process, which they argue is clunky and moves too slowly.

“At the moment, under current federal laws, the permitting process is very complicated and open-ended,” said John Larsen, a partner at the independent energy and climate research firm Rhodium Group. For any given project, whether it’s an offshore wind farm or a natural gas pipeline, there can be multiple statutes, multiple permits and multiple federal agencies involved, each with their own timeline. The longer a permitting process gets drawn out, the greater the chance the project doesn’t happen at all.

Reforming the system could have massive implications for the nation’s progress on reducing emissions to stave off climate change. Fast-tracking permits stands to greenlight new oil and gas pipelines and other fossil fuel infrastructure, a priority for many Republicans and some Democrats in Congress, including West Virginia Senator Joe Manchin. The burning of fossil fuels is the main driver of greenhouse gas emissions into the atmosphere.

But speeding up the pace of approvals for clean energy and transmission projects, a priority for many Democrats and Biden, is also desperately needed to ensure the US can meet its climate goals.

“So there’s kind of different reasons for different sides to want the same thing in principle,” said Larsen, “but when you get into the details, people fight over that.”

The state of play

Long before the debt-ceiling talks began, permitting reform was under heated discussion in Congress. Manchin unsuccessfully proposed legislation on the issue last year. Then in March, House Republicans introduced the issue into the debt-limit negotiations, specifically pushing to fast-track fossil fuel projects and water down the environmental review requirements.

“It was Republicans who first suggested permitting reform as a win they could claim in exchange for raising the debt ceiling,” said Derrick Flakoll, a policy associate with research group BloombergNEF, “while the Biden administration position had always been that Congress should pass a ‘clean’ debt-ceiling increase without any deals, compromises or preconditions.”

Since then, a lot has changed. With no deal yet on the debt ceiling, the Biden administration seems to be engaging in the permitting reform talks even if its official stance is that the issues should be delinked. Moreover, Republicans have now expressed openness to speeding up permitting for all types of energy projects, not just fossil fuel ones.

A remaining sticking point is whether permitting reform should include tweaking a bedrock environmental law, the National Environmental Policy Act. Republicans want to but many Democrats do not.

As of Thursday, a compromise under discussion was to pair modest changes to NEPA, such as setting a mandatory time frame for approving energy projects, with measures to upgrade the nation’s power grid for renewable energy, sought by Democratic Senator John Hickenlooper from Colorado. But it was unclear whether that would be acceptable to progressives.

Representative Raúl Grijalva of Arizona, the top Democrat on the House Natural Resources Committee, led a letter from 83 Democrats to Biden and Democratic congressional leaders urging them to oppose NEPA changes in any debt-ceiling deal. “The growing list of my Democratic colleagues and I couldn’t be more clear: Our environment and health are not the GOP’s bargaining chips,” Grijalva said in a statement.

Even as permitting reform remains a live item in the debt-ceiling talks, there are separate discussions in Congress over how to update the energy permitting system. Multiple bills on the issue have been or will soon be proposed by Republicans and Democrats alike.

“There are parallel processes right now,” said Gregory Wetstone, president and chief executive officer of the trade group American Council on Renewable Energy. “It’s not clear how this plays out. But I think it’s a natural area for bipartisan progress — and there aren’t a lot of examples you can cite on that these days.”

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