Stay informed with free updates
Simply sign up to the Renewable energy myFT Digest — delivered directly to your inbox.
One of the few bright spots to come out of the COP28 climate summit over the past couple of weeks was a promise by 118 countries to triple the world’s renewable energy capacity by 2030.
But in the US, a pledge by the Biden administration will not be enough to get companies fully on board with the energy transition without further help on untangling bureaucratic red tape. Permitting delays and complex state and local regulations are already ensnaring wind farms, solar fields and alternative fuel projects in large numbers, driving up the costs and making some nonviable, despite Washington’s enthusiasm and significant subsidies from the Inflation Reduction Act and other federal agencies.
Consider efforts to encourage hydrogen fuel cell technology. The White House recently announced plans to spend $7bn on seven regional clean hydrogen hubs in hopes of catalysing more than five times as much private investment.
Yet there is a significant obstacle to using the technology in the densely populated New York metropolitan area, where it might otherwise be very welcome. There is a simple reason why: the Port Authority of New York and New Jersey categorically bans most hydrogen-powered vehicle from the tunnels into Manhattan, citing the potential safety risk to its elderly infrastructure.
Even the state of New Jersey admits the rule makes the public introduction of hydrogen vehicles “impossible”, and commercial operators say it has forced them to look elsewhere. “How could you develop fuelling if you can’t drive on the major corridors?” asks James Kast, senior director of hydrogen business development at gas group Iwatani.
Instead, the Japanese company has focused on California, teaming up with Chevron to build 30 hydrogen fuelling stations by 2026. Chevron has also bought control of a huge proposed green hydrogen storage facility aimed at serving the same market.
Both groups seek to profit from California’s much friendlier regulatory regime. Under a new state rule that comes into effect next month, only zero-emissions drayage trucks can get new permits to haul shipping containers into and out of the state’s busy ports. Existing permits were grandfathered, but transport companies now have a concrete reason to invest in hydrogen fuel-cell technology.
The adoption of green technology is also being slowed by local permitting rules for all kinds of projects. It took 17 years before construction finally broke ground in Wyoming on what is expected to be the US’s largest onshore wind farm. Meanwhile, in Virginia, new rules for connecting midsized solar projects to the power grid were so onerous that a coalition of developers and environmentalists got the state to block them because projects were being cancelled.
The problems trickle down to ordinary homeowners who want to install rooftop solar panels and electric vehicle chargers. One California study suggests that permitting delays, costs and uncertainties can add as much as 20 per cent, or more than $5,000 to the cost of a residential solar system with both rooftop panels and battery storage. The hassle is a big reason why one in 10 US homeowners who wants to install solar energy ends up cancelling, and the US adoption rate of 3 per cent for the technology lags so far behind Germany at 11 per cent and Italy at 23 per cent.
“There is a major disconnect between what is needed and what is happening on the ground,” says Nick Josefowitz, who left a California urban planning think-tank to focus on permitting. “If you don’t have a strategy to implement goals across government as a whole, you are not going achieve them.”
The US’s federal system complicates efforts to push through a nationwide strategy, but Americans have something to learn from the way Japan’s government is helping Taiwanese group TSMC build a giant semiconductor plant in Kikuyo. While there have been labour shortages and traffic problems, the Ministry of Economy, Trade and Industry has set up a special war room that checks in with the project several times a day to identify and break up logjams.
Indeed, when the US government turns its mind to removing local impediments, it already can have a significant impact. The Department of Energy funded the development of a special app that automates permitting for rooftop solar and makes approval instantaneous. Hundreds of cities have already adopted it. Even the NY/NJ port authority is not immune to Washington’s blandishments: it signed on to participate in the north-eastern outpost of the hydrogen hub project and has started researching whether its tunnels could be retrofitted with modern sprinkler systems. If the Biden administration is serious about its pledge, it needs to do a whole lot more.
brooke.masters@ft.com
Follow Brooke Masters with myFT and on social media
