Stalled Energy Projects Costly, Regulatory Barriers to Blame

A U.S. Chamber of Commerce study says that a number of energy projects, many of them for renewable power, have been stymied by NIMBY, a poor permitting process, and lawsuits.

As part of its Project No Project initiative, the U.S. Chamber of Commerce released an economic study identifying 23 stalled energy projects in Texas that, in aggregate, are costing the state’s economy $191.7 billion in GDP and 311,100 jobs a year that could be created during the construction phase of these projects alone.

“This study should serve as a wake-up call for legislative action to improve the permitting process,” said William Kovacs, U.S. Chamber senior vice president of Environment, Technology and Regulatory Affairs. The TeleNomic Research study, "Project Denied: The Potential Economic Impact of Permitting Challenges Facing Proposed Energy Projects", was conducted by Steve Pociask, president of the American Consumer Institute, and Joseph Fuhr, professor of economics at Widener University and Senior Fellow at the American Consumer Institute.

The study estimates the potential loss of investment and jobs in the 351 proposed renewable, coal, natural gas, nuclear, and transmission projects in 49 states — including 23 in Texas — that have been delayed or canceled due to “Not in My Back Yard” (NIMBY) activism, a broken permitting process, and a system that allows for limitless lawsuits by opponents. The study features a state-by-state analysis that details the economic output and jobs that could be created by acting on these stagnant projects.

Among the Texas projects highlighted in the study is a plan BP announced in 2004 to build a liquefied natural gas (LNG) terminal on Pelican Island, near Galveston. The project was expected to send out 1.6 billion cubic feet of natural gas per day and was expected to go into operation sometime between 2016 and 2021. However, the project met stiff opposition from local citizens and environmental groups. Opponents argued that the facility would be located where Texas A&M University studies marine biology, would threaten marine and estuary habitats and beaches, and would harm Galveston’s tourist industry. Other residents opposed the project due to terrorism risks or general safety fears. In 2004 and 2005, island residents filed lawsuits against the project, alleging public entities violated open meetings laws when they negotiated in private with BP for a lease option agreement. The litigation placed the project on hold and prevented BP from filing a permit application with the Federal Energy Regulatory Commission. On Aug. 22, 2006, BP announced that it was stopping the Pelican Island LNG project indefinitely.

“In going through the study, the results were simply startling,” said Peter Morici, former chief economist at the International Trade Commission, and the study’s peer reviewer. “We anticipated the impact all the projects collectively would have on jobs and the economy. But the real surprise was how positively Texas could be affected if it moved forward on just one or two projects.”
Among the notable findings of the study is the fact that almost half of the projects identified in the study are renewable energy projects. Other highlights include:

  • Investment Phase – Planning and construction of the study’s projects would generate $577 billion in direct investment and would result in an approximately $1.1 trillion increase in U.S. Gross Domestic Product (GDP). An estimated 1.9 million jobs would be required during each year of construction.
  • Operations Phase – Operation of the study’s projects would generate $99 billion in direct annual output and would yield $145 billion in increased GDP annually. An estimated average of 791,200 jobs would be created per year of operation.
  • Total Benefits – If constructed and operated for 20 years, the study estimates a total benefit of $3.4 trillion in GDP, including $1.4 trillion in employment earnings and an additional one million jobs per year.

The Chamber recognizes that moving forward on all the projects is highly unlikely. To address that, the study includes a sensitivity analysis, which examines the jobs and economic data if only some projects were approved.

“The numbers tell the story,” said Kovacs. “Moving forward on a significant number of these projects could mean millions of jobs and do wonders for our economy."

Source: U.S. Chamber of Commerce

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