Work in Progress by Sam Dumitriu
1,961. That’s the number of documents contained within a single planning application for a wind farm off the northeast coast of England – capable of powering around 1.5 million homes. The environmental impact assessment and environmental scoping documents alone totalled 13,275 pages. To put that into context, that’s 144 pages longer than the complete works of Tolstoy combined with Proust’s seven volume opus In Search of Lost Time.
This is by no means an outlier for the UK, nor much of the developed world. Developers must prepare mountains of documents to win approval to build new offshore wind farms, nuclear power stations, or transmission lines – the very things needed to keep the lights on and prevent disastrous rates of climate change. Uncertain, slow, and costly approval processes now represent the main barrier to clean energy, but this sclerotic status quo is neither inevitable nor effective.
EDF Energy had to produce 44,260 pages of environmental documentation for Sizewell C, a new nuclear power station to be built on the same site as two existing nuclear power stations in Suffolk, England. Somewhat surprisingly, relatively little of the environmental statement related to the risk of radiation and the disposal of nuclear waste. More ink was spilled on the impact to marine ecology.
As these are private companies applying for permissions, we lack data on the cost of going through this process. However, a Freedom of Information request from New Civil Engineer magazine recently revealed that the UK’s National Highways agency spent £267 million preparing a planning application to build a 23-kilometer road. The planning application, which featured 30,000-plus pages of environmental documentation, was the longest ever prepared.
Excessive admin requirements not only increase costs for infrastructure projects (and fees for well-remunerated lawyers), they also lead to long delays. On top of the time spent preparing an application, developers must wait for government officials to review it.
In theory, most UK projects should be reviewed within 20 or so months. But in recent years, more than half of all energy projects have seen this target missed. Even when a decision is reached, it is by no means guaranteed the outcome is positive. This lack of certainty over when and if a project can go ahead deters investment.
This uncertainty is also an underlying cause of the growth in defensive admin. One leading lawyer specializing in infrastructure projects told me that it is unlikely any one individual will read a project’s full environmental statement from cover to cover, and large parts of what are submitted are legally unnecessary. However, the risk of legal challenges causing further delays creates an incentive to cover every base.
These examples are from the UK, but the problem is not limited to one country. Thankfully, neither is the desire to fix it.
In a recent speech, France’s president, Emmanuel Macron, complained that it took ten years for France to build its first offshore wind farm due to local objections: ‘We have to reduce delays. I want us to go at least twice as fast for renewable energy projects.’ The European Union is debating measures to exempt new renewable projects in ‘go-to areas’ from the requirement to carry out environmental impact assessments.
In the US, the National Environmental Policy Act (NEPA) requires that any major federal action is submitted to environmental review. Federal agencies take around four and half years to produce the required environmental impact statement (EIS), but some reviews can take much longer. On top of that, even when an agency produces an EIS in a timely manner, the process can still drag on due to litigation.
Lengthy delays due to NEPA may have been less costly in the past, when most new energy projects were based on fossil fuels. Back then less infrastructure at least meant less dirty infrastructure. This is no longer the case. Almost three times as many energy projects undergoing NEPA review are related to clean energy, transmission, or conservation than are related to fossil fuels. In fact, nearly 20 times as much offshore wind power is held up in permitting as is currently in operation or under construction.
America’s Inflation Reduction Act provides $369 billion worth of funding for green projects. Green tech such as heat pumps and battery production will benefit from substantial tax breaks, and investments in solar and offshore wind projects receive a 30 percent refundable tax credit. Many of the investments encouraged by these will come up against the impact review barrier.
One independent estimate of the Inflation Reduction Act’s impact suggests it would deliver a 1.6 billion–ton reduction in annual emissions by 2035 – a 42 percent reduction relative to 2005. But that reduction depends on the US being able to deliver a massive increase in grid capacity, to allow people to shift away from fossil fuels to renewable electricity. In order to hit that reduction the grid would need to expand 50 percent faster than it is now.
It takes, on average, ten years for an electricity transmission project to be completed. But before you get to that point, it can take as long as 13 years just to get approval for the project. For example, Harvard’s Belfer Center cites the case of the 732-mile Transwest Express high-voltage transmission line. It applied for its permit in 2007, but did not receive full approval for construction to begin until 2020. It’ll come online in 2026, 19 years after that first permit application was filed.
This means that whether or not the Inflation Reduction Act can deliver the large emissions reductions it promises in time depends in large part on whether Congress can find ways of speeding up approvals and environmental review. As it stands, legislative efforts in the US have been unsuccessful, with a bipartisan permitting reform bill yet to win support at the time of writing.
It wasn’t always this way
Less than 25 years after Cockroft and Walton split the atom, and five years after the Experimental Breeder Reactor-I produced enough energy to power four light bulbs, Queen Elizabeth II opened Calder Hall nuclear power station in Cumbria, in the northwest of England. It was the world’s first full-scale commercial nuclear power station. A further nine nuclear plants were built over the decade that followed in Britain.
The UK’s rollout was impressive by today’s standards, yet it pales in comparison to what happened across the Channel. France responded to the oil shock of 1973 with the beautiful slogan: ‘In France, we do not have oil, but we have ideas’. Over the next 15 years, the French built 56 nuclear reactors. To this day, France gets more than two thirds of its electricity from nuclear power and is the world’s largest net exporter of electricity.
It would be inaccurate to blame the decline in nuclear construction on planning alone. Jack Devanney argues persuasively that excessive safety regulations, such as ALARA, the requirement that background radiation levels are made ‘as low as reasonably achievable’, essentially ensured that all productivity gains would be plowed into making a very safe technology even safer. As a result, nuclear costs have not fallen in the same way we have seen solar and wind costs fall, because they have all gone toward ever-lower levels of background radiation instead of cheaper energy.
But uncertain planning policy probably hasn’t helped. South Korea, where nuclear construction costs have gradually declined, built its power plants as part of a fleet using the same design. This is only possible with a consistent and predictable planning system.
Or consider the construction of Britain’s national electricity grid in the 1920s–1930s. In the space of three years, Britain devised a plan to connect over 100 of the UK’s most efficient power stations into seven local grids across the country, and passed legislation needed to enable the plan and begin work on it. It took five more years for the project to be completed, with 4,000 miles of cables running across 26,000 pylons around the country. A year after the seven local grids were built, a group of impatient and rebellious engineers decided it was easier to ask for forgiveness than permission, and switched on the connections between the seven grid areas themselves to form a single national system. That national system remains to this day.
It is hard to imagine projects of similar scale taking place today at similar speeds. The Hinkley Point C nuclear power station, capable of powering six million homes with low-carbon electricity, was originally expected to be in operation this year. In fact, it will not be completed until 2027, despite developer EDF applying for planning permission in 2011. Likewise, the Aquind Interconnector, based on 150 miles of undersea cables connecting Great Britain’s and France’s national grids, was blocked three years after its planning application was first submitted. The secretary of state’s ruling cited traffic during construction and the impact on the views from a historic cottage as reasons for refusing the undersea cable, which would have been able to transfer 17 terawatt-hours of electricity each year.
John Myers argues that the question of how to accelerate progress can be divided into two broad questions:
1. What systems would work best to generate progress, i.e., what institutional and other systems should we adopt to create more progress?
2. How do we actually engineer getting there, including changing laws, institutions, and society as necessary?
Clearly, the status quo in energy rollout isn’t working. It’s not hard either to design a better system for deciding whether or not energy projects ought to go ahead. Almost all of the proposals for reform on the table – whether they be the EU’s go-to zones or the White House–backed permitting reform bill that was debated in the last Congress – would be improvements over the status quo. The challenge is actually putting them into law. As it stands, none have succeeded, and while the EU’s proposals will likely advance in some shape, they have already encountered significant opposition from environmental groups.
The challenge for reformers is that the extensive permitting requirements attached to major infrastructure are responding to a real political demand. People have become more concerned about air pollution, hygiene, and environmental degradation, and will probably not accept reforms that disregard them. As societies become wealthier the costs individuals can impose on one another grow – and the costs people are willing to bear shrink.
On top of that, environmental campaigners are able to point to the fact that on many measures biodiversity levels really have fallen dramatically. One recent citizen science study in the UK highlighted the dramatic decline in insect numbers, with researchers discovering that the number of bug splats on car windows has fallen by two thirds in under two decades. The growth in environmental restrictions may not have halted these declines, but campaigners would argue these declines would have been steeper without them. In this context, reforms that are seen to weaken environmental protections are unlikely to succeed, if we even wanted them to.
Win-wins are possible
The assumption underlying many of the obstacles described above is the belief that there is a straight trade-off between environmental protection and infrastructure delivery. Yet this is a false choice. It is possible to develop win-win solutions that deliver more infrastructure and better environmental protection. It is useful to break apart what is actually problematic about the status quo.
The barriers to faster infrastructure delivery can effectively be placed into four rough buckets:
Delays are self-explanatory. Delays in granting permission to build new infrastructure mean energy costs and emissions stay higher for longer. This is particularly important in a world where energy costs have spiked and a failure to bring down emissions swiftly will have catastrophic impacts on the climate.
Bureaucracy is similarly easy to grasp. Preparing thousands upon thousands of pages of legal documents is expensive and time-consuming, as is conducting environmental studies and consultations, even when the project eventually goes ahead. The above example where National Highways spent more than a quarter of a billion pounds on a single, as of yet unfinished, application for a 23 kilometer–long road, suggests businesses face large costs in the UK. Estimates in the US of average legal costs are typically lower, but legal costs for complex project submissions can still cost in the tens of millions.
Quantifying the aggregate costs of bureaucracy is difficult as data reporting is inconsistent and some organizations, such as private infrastructure developers, do not publish their data at all, but they are almost certainly very large. We can make a rough estimate using the National Highways’ figures for the Lower Thames Crossing. It costs £267 million to produce a planning application with a 32,072-page environmental statement, which translates to a per-page cost of £8,325. Using the average environmental page count from a sample of 18 projects (11,756) gives us an average per-project cost of £98 million. And that’s before the projects have put a single spade in the ground and before any spending on environmental mitigations has taken place. Think what could be achieved with even half of that nearly £100 million cost per project.
Uncertainty is harder still to quantify but may be the most significant cost of all. The large amount of discretion involved in assessing projects, the risk of legal challenges, and hard-to-predict delays makes it near impossible to plan investment decisions. Part of the reason the costs are hard to quantify is that we never read about the projects that are never applied for in the first place because there’s a fair chance they will be rejected. The fact that relatively few projects are blocked once they are put forward for environmental review is not evidence of a predictable system any more than relatively few Base jumping deaths in absolute terms is evidence that Base jumping is a low-risk activity.
In the UK, where planning decisions for housing are decided on a case-by-case basis and often encounter unexpected delays, housebuilders respond by building up a large ‘land bank’ of planning permission as a buffer. This is not only expensive for the developer, but it makes it harder for cities and towns to plan complementary investments in infrastructure as they cannot accurately forecast growth in the housing supply.
Uncertainty also contributes to the prior two problems. To avoid legal challenges, developers and regulators become overcautious, leading to a gradual ratcheting up of bureaucratic requirements.
Alongside the three harms above, there’s stringency – the cost of actually implementing the environmental mitigations required as part of the planning process. This might mean siting projects away from nesting birds or agreeing to height limits for wind turbines. This usually costs money and at the margin will mean some projects are not viable. But this is the bit that actually protects animals and the environment.
There is no necessary connection between the first three costs and the last one. It should be possible to have a system that is more predictable, less costly to navigate, and quicker while still insisting on the same, or even higher, levels of stringency. If the first three costs are reduced, the public can insist on higher standards without making infrastructure even more costly. The benefits of moving to a simpler and more predictable planning system that generates more win-wins are numerous.
Offset markets for biodiversity and environmental services offer one such win-win solution. Take the impact of wind farms on endangered birds such as bald eagles. Under the status quo, the US Fish and Wildlife Service issues permits allowing a maximum number of incidental deaths. The maximum levels are an attempt to balance the benefits of more wind farms with the need to protect endangered species, but they are inefficient. Wind farm developers have strong incentives to keep the number of deaths beneath the maximum permitted level, but possess little incentive to reduce deaths even further. If instead permits were tradable, developers would have a financial incentive to invest in preventative measures beyond the bare minimum when they identify low-cost options. They can sell their remaining quota as offsets to other developers that don’t have low-cost mitigations available.
In parts of the UK, many rivers are polluted with high levels of nitrogen, which is caused by the runoff of fertilizers and animal waste from farmland. This leads to algae blooms, which kill off fish populations by depriving them of oxygen. As a result of a legal requirement that new developments in affected areas are ‘nutrient neutral’ (in layman’s terms, they don’t make the problem worse) nearly 100,000 homes are being blocked across the country. Developments are blocked even though it’s agreed by everyone that the new housing would have only tiny and marginal effects on nutrients, but would still not be completely ‘neutral’.
The challenge for housebuilders is that developing solutions to reduce nutrient pollution as part of the development is costly and complicated. In many cases, their ability to solve the problem depends on whether the site under development contains large open spaces that can house alternative waste management solutions, which is often not the case. In some areas that are otherwise suitable for new housing, it may simply not be possible to make new developments entirely ‘neutral’, meaning that current rules stop the housing from being built there altogether.
New nutrient markets are being trialed to resolve the problem. The key driver of nutrient pollution is farming, causing much worse problems than housing. Some types of land use, such as animal agriculture, are much worse for rivers than others. The Solent Nutrient Market pilot allows farmers to sell ‘nutrient credits’ in return for shifting their farmland near rivers to less nitrogen-intensive uses.
As a result, developers can buy nutrient offsets, allowing house building to go ahead, meaning developers can specialize in what they’re actually good at (i.e., building homes) while nutrient pollution is reduced at a much lower cost off-site, delivering the same or even larger benefits than if the housing development’s low nutrient output had been brought to zero.
The UK is considering a similar approach for offshore wind. Putting together measures to compensate for habitat loss is particularly difficult in the marine environment, where boundaries are, pardon the pun, fluid. Instead of requiring developers to design project-specific solutions, which can involve expensive scoping and legal costs, they could instead be allowed to contribute to a government-created fund that delivers large nature protection projects, such as restoring shellfish beds or repurposing redundant infrastructure as nests for marine birds.
Developers would still have the option of developing their own solutions in-house, as they are required to under the current rules, but there are a few reasons why outsourcing the task to an external regulated fund is likely to be attractive. First, it provides speed and certainty by avoiding the need for developers to craft and then negotiate specific measures. Second, it allows us to shift funding to most impactful nature protection projects, which are not necessarily (or likely) to be located close to any given energy project.
And on top of that, it also enables new, larger projects that would not be possible, or at least would be very difficult, for multiple offshore wind developers to work on together. For example, collaboration will often require the sharing of commercially sensitive data on marine wildlife, which is hard to value and therefore hard to agree on compensation for.
There is no reason why this approach could not be applied more widely to other types of projects that encounter similar problems, such as onshore wind farms, nuclear power stations, or long-distance transmission lines.
Merely moving to a system of offset markets and strategic compensation will not bypass every regulatory barrier to infrastructure deployment, of course. Clearly environmental concerns are not the only reason why people object to new developments. This change will not be enough to stop people who fear that a wind farm will disrupt their view or reduce their home’s value from objecting. But it will generate the credibility to address other issues such as cutting the length of environmental impact assessments or suspending them altogether in certain cases.
In many parts of the world, developers already compensate communities to win their consent to develop. For example, Ørsted, the Danish state renewables business, funds a range of community, training, and environmental projects in the UK when they build new offshore wind farms. By reducing the cost of winning permission to build, it will create new avenues to compensate people who are worried about losing out from new infrastructure. A less bureaucratic system will allow developers to divert attention (and resources) from compliance to addressing local objections, whether that’s through direct cash payments to compensate, discounts on energy bills, or by support for community projects.
What’s attractive about this approach from an environmental perspective is that instead of fretting about new marginal pressures, it allows us to address the root causes of nature degradation. For example, instead of worrying about a housing development making a polluted river slightly worse, we can target the harmful farming practices that made it polluted in the first place.
And it allows us to do this at a much lower cost to boot. This should enable us to raise our ambitions on the environment. Instead of focusing on stopping further biodiversity declines, the focus can shift to reversing them altogether. Over time infrastructure developers and environmentalists will become allies, changing the political economy of development in the process.
Addressing climate change and reducing the West’s reliance on authoritarian regimes to meet its energy needs will require building more energy infrastructure, but the regulatory direction of travel has been to make it harder, slower, and more expensive to do this. Many of the environmental review processes do not even succeed on their own terms – this needs to change. Instead of stressing about preventing any potential harm to the environment, we need a new approach that prioritizes investments in nature aimed at not only halting biodiversity losses, but reversing them altogether. And in the process, we can change the political economy of infrastructure by bringing environmentalists into a new pro-development coalition.