As the Administration puts new demands on an already strained electric grid through increased electrification goals, the EPA power plant rules, and other policy directives, CEQ updates to the federal permitting process under NEPA make it even harder to invest in the resources needed to meet those demands.
As we do with every federal rulemaking, EPSA takes great care to analyze not only the minute details of the rulemaking but also to place it in a larger context of how it will impact the three critical energy needs: reliability, affordability, and sustainability. In the case of the White House Council on Environmental Quality (CEQ)’s new Phase 2 federal permitting reforms, the rulemaking is a failure on both granular and much broader levels.
The rule seeks to streamline permitting and review processes under the National Environmental Protection Act – but only for renewable energy and transmission infrastructure.
At a time when power demand is projected to skyrocket and the Biden Administration is working tirelessly to electrify every corner of our national economy, CEQ’s work will result in ensuring that our electric grid does not have the dispatchable, firm generation critical to maintaining reliability. EPSA has advocated for permitting reform to support the development of all resources needed for the nation’s energy expansion; these updates fall short of that goal.
The Future Grid Needs Both Renewable and Dispatchable Power
To be clear, EPSA members are playing, and will play, a leading role nationally in developing renewable energy resources and other assets critical to our clean energy expansion – including massive battery storage projects and CCS. We recognize that renewable energy technologies like wind, solar, and battery storage, will continue to comprise a greater share of U.S. electricity production on an annual basis. However, dispatchable assets like natural gas will continue to be needed, and it would be irresponsible to continue to restrict their development as CEQ has done in this rulemaking.
Our nation will need more electricity in the coming years, whether it be to meet the electricity demand stemming from manufacturing, data mining, or artificial intelligence, or to meet White House policy goals like vehicle, home heating, or electrification. As their counterparts in the Environmental Protection Agency (EPA) are engaging in rulemakings making it more difficult for new and existing natural gas plants to operate, CEQ should at the very least recognize the benefits to electric grid reliability from these critical balancing flexible resources – and not be creating additional roadblocks to their development.
Blocking New Investment Prolongs Life of Higher Emitting Resources
The Administration states that advancing environmental justice is a core objective of the rule, but the CEQ should appreciate that restricting investment in new, highly efficient dispatchable resources will actually harm the very communities it seeks to protect. New generation can either be used to meet growing demand or to displace existing, less efficient, higher emitting capacity. If new investment meets growing demand, then significant reliability benefits can be realized. If new capacity simply displaces older, less efficient capacity, then the system becomes less expensive and emissions decline (while reliability is maintained). By restricting new investment, CEQ’s approach in fact makes it harder to incorporate additional electrification efforts while protecting and prolonging the life of higher emitting, less efficient capacity.
Higher Electricity Prices Burden the Most Vulnerable
For many commenting on the Phase 2 rule, “affordability” and “reliability” are buzzwords. It’s easy to overlook (or ignore) that higher electricity prices are an incredibly regressive public policy. Higher electricity rates hit hardest on households least able to afford those increases.
If would-be new projects blocked by regulations are economically competitive, they would push higher cost resources out of the system and have a downward impact on prices while improving reliability. By blocking these investments, CEQ’s rulemaking will shackle communities struggling with their electric bills with an even greater burden, while higher income communities spend thousands of dollars to invest in residential generators and battery storage and can protect themselves from adverse consequences of bad policies.
The Takeaway
Combined with the EPA’s new regulations limiting the development of new natural gas power plants, these rulemakings seem to disregard reality. The aspirational policy of a carbon free future is racing miles ahead of the electric grid’s ability to deliver reliable and affordable power. We continue to encourage leaders in Congress to reach an agreement on permitting reform that injects some realism into the challenges facing the electric grid.
