Today, the Obama Administration released the initial installment of its Quadrennial Energy Review (QER). The report, prepared by a White House Task Force supported by the Department of Energy (DOE), provides an assessment of the current status of energy transmission, storage, and distribution (TS&D) infrastructure in the U.S. and identifies specific recommendations for policy improvements and spending programs. Of particular relevance to project developers, the QER identifies specific recommendations for addressing the environmental impacts and improving the siting and permitting of TS&D infrastructure. Key recommendations in these areas include:
- Launching a Research and Analysis Program at DOE to improve the quantification of emissions from natural gas TS&D infrastructure, including by updating the Greenhouse Gas inventory estimates of methane emissions from natural gas systems, in coordination with EPA;
- Investing in a number of research and development programs, including programs for developing continuous emissions monitoring equipment to detect leaks and improve safety of natural gas systems; programs for the beneficial use or disposal of dredged material; and programs to detect and reduce losses from natural gas TS&D systems;
- Creating financial incentives for the construction of carbon dioxide (CO2) pipelines and carbon capture technology, including the Administration’s proposed Carbon Dioxide Investment and Sequestration Tax Credit, and working with states to promote best practices for regulating and siting CO2 pipelines;
- Allocating resources to key federal agencies involved in the siting, permitting, and review of infrastructure projects to facilitate efficient and coordinated federal reviews;
Expanding landscape- and watershed-level mitigation and conservation planning;
- Authorizing and funding an Interagency Infrastructure Permitting Improvement Center to improve coordinated permitting and review across agencies;
- Adopting the Administration’s FY16 budget proposals for additional cost recovery authority for federal agencies involved in the review and permitting of infrastructure projects;
- Leveraging state and federal programs to facilitate the development of renewable energy generation and transmission projects.
These proposals provoke a number of important policy questions: What is the need for a federal role in the upgrading and siting of natural gas and electric transmission facilities? Can an interagency effort to streamline federal permitting for infrastructure projects produce results absent additional resources? Is there a continuing need for the Strategic Petroleum Reserve given the significant increase in domestic reserves? With the ample, low cost supplies of domestic energy, can continuing efforts to promote CO2 capture and storage succeed? There are no easy answers to these questions, but at a minimum the QER has brought them to the fore of the energy infrastructure policy debate.
The ability of the QER to effect lasting change will depend in part on what Congress does next. Many of the proposals outlined in the QER will require Congressional action and the appropriation of additional funds before they can be implemented. In all, the QER proposes more than US$15 billion in new spending programs or tax credits over the next 10 years to support a variety of TS&D infrastructure, including:
- US$2.5 billion to US$3.5 billion for a competitive grant program to accelerate natural gas pipeline replacement and maintenance programs;
- US$3 billion to US$5 billion program to provide competitive grants to states for enhancing TS&D infrastructure resilience and reliability;
- US$1.5 billion to US$2 billion to improve the Strategic Petroleum Reserve’s emergency response capability;
- US$3.5 billion for an interagency effort to modernize the grid;
- US$2 billion to US$2.5 billion DOT investment to improve transportation infrastructure used by the industry.
How Congress responds to these proposals in the current fiscally tight climate remains to be seen. Secretary of Energy Moniz will get an opportunity to present these recommendations to members of the U.S. Senate directly in a testimony before the Energy and Natural Resources Committee next Tuesday.