Marty Hall, a senior policy fellow at the Citizens for Responsible Energy Solutions (CRES) Forum, led the first panel discussion during National Clean Energy Week about the shifts in the energy, climate, and tax policy landscape since the passage of this year’s budget reconciliation bill, which cut many clean energy tax credits.
Beth Viola, chair of the energy and natural resources group at Holland & Knight, expressed her belief that despite murmurs, it is unlikely that another reconciliation bill will progress during this calendar year, but that there is potential for one in the first half of next year. She explained, “I think the only way it really happens, though, is if the White House really puts its muscle behind it and says they need to get something done.” She suspected that such a call would be in response to, for example, a macroeconomic shock. Viola did not mourn this: not just because of the grueling six months that defined the reconciliation process this year, but also because she believes such a package offers more challenges than opportunities for energy.
Despite some of the bad news that came out of reconciliation for energy, Pioneer Public Affairs President Joe Britton painted a picture of the exponential demand growth hitting the industry at this moment, with approximately 80% driven by data centers, 10% by electric vehicles, and 10% by advanced manufacturing. “Given all the headwinds that this sector faces, the best news is that demand is growing,” he said. Additionally, he noted that the clean energy sector is the only one with projects that are actively dispatchable, whereas many others remain tied up for years. This has given clean energy a chance to prove itself; according to a chart from the American Clean Power Association (ACP), states with the most deployed renewables are seeing their energy rates decrease, while those with the least deployed are seeing their prices increase, Britton claimed.
Hall, meanwhile, pointed out that the conversation around energy is experiencing an ongoing shift from a focus on financing and resources to one focused on removing obstacles that hinder the deployment of infrastructure or energy. He labeled it as a distinct change from the past, when a lot of money and investment were coming in, but it could take up to two decades to complete a project. The current focus, he said, is on a broader agenda of “building more American manufacturing, winning the AI race, using more American resources, both domestically and for exporting, and at the same time meeting this growing demand… That all is a big challenge, and it starts with the ability to build.”
Kellie Donnelly, executive vice president and general counsel at Lot Sixteen, described permitting reform as a crucial component in actually completing projects. However, “we’ve learned that you cannot AirDrop permitting reform proposals into reconciliation,” she described. Under the Senate’s Byrd Rule, the topic did not pass muster as having a budgetary connection. Therefore, she acknowledged that any permitting reform will need to be implemented through traditional congressional avenues, ultimately needing to achieve bipartisan support. Donnelly noted that some bills are moving forward in the House of Representatives. For example, House Committee on Natural Resources Chairman Bruce Westerman (R-AK-04) and U.S. Rep. Jared Golden (D-ME-02) are moving forward their bipartisan Standardizing Permitting and Expediting Economic Development (SPEED) Act, which aims to reform the National Environmental Policy Act (NEPA). “But in the Senate, they are much further behind,” Donnelly acknowledged.
All of the panelists were pessimistic about the odds for meaningful permitting reform by the end of this Congress. Donnelly said that the landscape will be very busy with the midterms on the horizon next near and all the component pieces that would need to be executed to see success: “Each committee is going to have to go on their own timetable; they’re going to have to work through their process; they’re going to have to come up with, at least in the Senate, bipartisan proposals.” At the same time, crazy things can happen at the end of the session, “or in a lame duck situation. That’s when the Energy Policy Act of 2020 was passed, so it’s certainly a possibility.”
Regarding an all-of-the-above resetting of tax policy, Britton was not very optimistic for its prospects right now, but he said, “The pathway is an energy generation portfolio that diversifies across the country,” both in terms of where it is produced and its deployment. He added that it will be harder and harder to have a black and white view of energy, as a diversified energy mix becomes ever more necessary to meet growing demand. Donnelly added that the process needs to be taken out of the partisan exercise of reconciliation, where both the Inflation Reduction Act and the One Big Beautiful Bill were created: “If you can take it out and do it through the regular course, it has more bipartisan buy-in and it has more durability.”
