The United States has the resources to lead on energy, but without regulatory and permitting reform, that potential will continue to stall.
As the Senate rushes to meet leadership’s goal of passing a reconciliation bill before the July 4 recess, several outstanding policy disagreements could result in Congress blowing through that deadline. SALT and Medicaid are among the most significant sticking points, but so too are the Inflation Reduction Act’s (IRA) energy tax credits. Fierce lobbying efforts are underway to defend parochial interests, and it remains to be seen whether Congress ultimately takes a scalpel or a sledgehammer to the tax credits.
Despite the rhetoric that energy tax credits are essential to energy dominance, the real obstacle holding back energy investment and deployment is regulatory bottlenecks at the federal, state, and local levels. Policy reforms that unlock all forms of energy development can enhance energy affordability and grid resiliency at a significantly lower cost to taxpayers.
Encouraging and Sobering Statistics on the State of American Energy
When it comes to energy, the United States is already dominating. According to the Energy Information Administration,the United States produced more energy than ever before in 2024. According to the Monthly Energy Review, natural gas, crude oil, natural gas plant liquids, biofuels, solar, and wind all set domestic production records last year. With an abundance of natural resources and technological advancements in innovative technologies, such as advanced geothermal energy, modular nuclear reactors, and long-duration storage, the United States is in an enviable position to maintain and expand its global energy leadership.
However, energy developers of all stripes have been frustrated by outdated, bureaucratic laws and frivolous lawsuits that curtail investment, increase project costs, and significantly lengthen project timelines. For instance, Williams CEO Alan Armstrong told an audience at Cambridge Energy Research Associates (CERA) week that the permitting cost for one of his company’s pipelines cost twice the price of building the pipeline itself. A recent report from S&P Global found that it takes 29 years for a mine to come online in the United States, the slowest in the world, only behind Zambia. Speaking about the importance of transmission upgrades at the Energy Imperatives Summit, Energy Secretary Chris Wright said, “I can’t find anyone who is optimistic that we can build something in the next five years.”
The National Environmental Policy Act (NEPA), enacted in 1970, was designed to ensure federal projects consider environmental impacts. But today, NEPA’s cumbersome review process can delay projects for decades. Environmental impact statements can span thousands of pages, costing millions and inviting endless litigation, a process that alone takes an average of 4.2 years. Data show that renewable and transmission projects (62 percent) are subject to a more cumbersome NEPA review than fossil fuel projects (16 percent).
Mounting Delays Undercut Development
Meanwhile, the wait time for generating sources to connect to the grid is becoming more like Disneyland without the Fast Pass. For projects built between 2000 and 2010, the average wait time was 2.1 years, which increased to 3.7 years between 2011 and 2021. For the last few years, the wait time has risen to an average of five years, except in Texas. In addition to generator interconnection, many state and local governments cranked up the “not in my backyard” (NIMBY)ism, making it challenging to site and permit everything from solar arrays to natural gas pipelines. The three leading causes for wind and solar project cancellations from 2016-2023 were local ordinances, interconnection timelines, and community opposition (including lawsuits). Lack of funding represented a small percentage of the cause and rankedeighth out of eight on the list of reasons. Similarly, companies made investments in more than 40 electric vehicle (EV) and battery manufacturing facilities before the enactment of the IRA.
Further, nine states still have statewide bans on new nuclear power plants, and federal regulations increase capital costs, stifle innovation, and slow deployment. Add in other self-inflicted wounds, such as the Biden administration’s pause on LNG exports and closing off opportunities for energy development on federal land, and that is how we transition from energy abundance to energy scarcity.
This is why it is often said that there are many regulatory kinks in the hose that prevent investment capital from flowing and developers from building. It is also noted that the IRA tax credits turn up the pressure on that kinked hose. With the projected taxpayer cost of the IRA to balloon to two to five trillion if left untouched and the aforementioned regulatory bottlenecks, there are two critical takeaways from an environmental perspective. First, as detailed by findings from the R Street Institute, “subsidies for wind, solar, and EVs clocked in at an abatement cost of $375 per metric ton of CO2. This is multiple times higher than any credible social cost of carbon, indicating that the IRA leaves society worse off on a climate-only cost-benefit test.” Second, a separate analysis by R Street finds that the emissions benefits from permitting reform could be greater than those projected in the optimistic IRA scenarios.
Reforms for an Energy-Dominant America
Our energy future demands innovation, investment, and deployment. Yet bureaucratic red tape and outdated regulations stifle progress. To power our nation’s growth, provide energy security, and supply American families with affordable, dependable power, the paradigm must shift to empower energy companies to build. In the current reconciliation fight and beyond, policy should:
- Swap subsidies for immediate expensing. As Josh Smith of the Abundance Institute and I wrote, expensing for capital investment is a proven, pro-growth policy that would simplify the tax system and supercharge private investment. This simple change would encourage broad-based investment, including in clean energy infrastructure and research and development, without the market distortions created by subsidies. Replacing green subsidies with full expensing will support the economy and the environment more effectively, at a lower cost to taxpayers.
- Deliver on permitting reform. Neither Democrats nor Republicans should politicize energy development; instead, they should embrace an abundance agenda that welcomes all cost-competitive energy technologies. Open, competitive markets and public policy should allow for access to energy development, whether it is a solar project on federal lands or a liquefied natural gas export project. If a project is financially viable and meets rigorous environmental standards, the federal government should not arbitrarily stand in its way. Instead, policymakers should adopt an energy abundance agenda that facilitates investment and infrastructure development to deliver affordable, reliable, and cleaner energy. Federal permitting reform should not tinker around the edges—legislative initiatives should narrow the scope of NEPA and rein in excessive litigation. State and local policymakers must follow suit to enable the development of more energy generation and linear infrastructure, such as transmission and pipelines. Transmission and distribution permitting reforms should improve affordability and reliability at the lowest possible cost, while ensuring that those who benefit from transmission expansion and upgrades are the ones who pay for it.
- Strengthen the innovation pipeline at the Department of Energy (DOE). Congress and the administration should expand opportunities for the private sector to de-risk and scale up promising energy technologies. Programs such as Advanced Research Projects Agency-Energy, the Advanced Reactor Demonstration Program, the Loan Programs Office, and the Milestone-Based Fusion Development Program can advance early-stage technologies and promising projects that would not receive private financing. To the extent allowed by law, Energy Secretary Chris Wright should streamline, reform, and standardize the processes and improve the coordination and efficacy of DOE’s basic and applied programs. Furthermore, Congress and the private sector should also leverage the agency’s new non-profit, the Foundation for Energy Security and Innovation (FESI). FESI should play a pivotal role in enhancing energy security, driving environmental progress, and accelerating the commercialization of transformative technologies.
- Wind down the tariffs. The Trump administration has long maintained that tariffs are a cudgel to achieve strategic policy objectives. One of those stated objectives is to remove tariffs and trade barriers that other countries place on the United States. Consumers, businesses, and the environment have benefited from open economies. To the extent the administration’s trade talks are successful in lowering barriers to investment in other countries and ultimately reducing the taxes we pay on imports, the better off American energy companies and consumers will be.
America’s energy future hinges on our ability to act decisively. Permitting reform isn’t about lowering the bar for environmental safeguards—it’s about empowering innovators and developers to reach the bar faster to meet America’s rapidly growing energy needs.
About the Author: Nick Loris
Nick Loris is the Executive Vice President of Policy at C3 Solutions. Loris studies and writes on topics related to energy and climate policies, including natural resource extraction, energy subsidies, nuclear energy, renewable power, energy efficiency, as well as the ways in which markets will improve the environment, reduce emissions, and better adapt to a changing climate.
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