Energy and Infrastructure Bill: How will it solve traffic jams and help nuclear and hydrogen industries? | Saul Ewing Arnstein & Lehr LLP
The Infrastructure Investment and Jobs Act, which was enacted by President Joseph Biden earlier this month, includes a significant and ongoing streamlining of the federal environmental approval and review process for large infrastructure projects. The $ 1.2 trillion legislative package also includes an incentive package for the country’s ailing nuclear power plants, and it offers a brighter future for the country’s hydrogen production efforts.
What would you like to know
- The new law on investment in infrastructure and employment offers a range of new opportunities in a wide range of industries.
- The bill includes many energy and environmental initiatives as the Biden administration seeks to curb climate change and have a carbon-free power grid by 2035 and a carbon-free economy by 2050.
Mechanism for Streamlining Infrastructure Projects – A Federal Decision
Known as “A Federal Decision” or “OFD,” this inclusion has been fairly eclipsed among the bill’s headlines (it comprises about 15 of the 2,700 pages), but it has the potential to have an impact. deep on the opportunity to carry projects. Upon completion. It codifies and combines previous executive orders of the Trump administration, which were revoked by the Biden administration, but are now agreed to with bipartisan and construction industry support. He was generally seen as a key factor in attracting Republicans’ support for the comprehensive bill, which also amends and expands an Obama-era law called the Fixing America’s Surface Transportation (FAST) Act.
In recent decades, large infrastructure projects have faced authorization delays with regard to, for example, the National Environmental Protection Act (NEPA), often ranging from five to ten years. , resulting in huge amounts of unnecessary costs for homeowners and contractors as they navigate up to 30 different federal statutes. OFD effectively reduces the timeframe for obtaining federal authorizations for infrastructure projects from a maximum of ten years to a maximum of two years through a framework requiring, among other elements, (a) that the agencies immediately coordinate and create a common timeline, (b) an agency to lead the process, (c) agencies should work at the same time and not take turns waiting, (d) generate a readable review document with a number of pages limited, and (e) production of a “Decision Record” or “ROD” within 90 days of the completion of the document review.
As an indication of the magnitude of OFD’s potential, a 2015 study found that six-year delays in authorizing only roads, railways and bridges accumulated more than $ 1.65 trillion in additional costs. . In other words, simply correcting the authorization process could result in savings greater than the total cost of the invoice and does not require waiting to see how the new funds under the invoice will be allocated. Additionally, even if the review results in a project being rejected, removing years of waiting for a response will free up capital and bandwidth for further development.
Nuclear power plants get $ 6 billion helping hand
Ailing nuclear power plants are intervening in Biden’s infrastructure bill in the form of a $ 6 billion tax credit program. The nuclear power incentive program for nuclear reactors threatened with closure will be spread over a four-year period and cannot exceed a plant’s projected average annual operating loss in dollars per megawatt hour. The credit will be available for a small number of nuclear power plants in the country, as operators will have to show that they are losing money even after receiving funds from the state.
However, federal credits are good news for factories in states that do not offer subsidies. For example, this legislation could be used to support two Ohio nuclear power plants that were to receive $ 150 million in state subsidies as part of a now defunct program. Nuclear power plants in Maryland and Pennsylvania could also benefit from this program, as neither state has a nuclear facility subsidy program.
The nuclear power industry faces high operating costs and cheaper power producers like natural gas and renewables. The number of nuclear reactors in the United States has grown from 104 to 93 over the past two decades. However, the Biden administration said nuclear power is key to enabling the country to have a carbon-free power grid by 2035 and a carbon-free economy by 2050.
The legislative package includes $ 8 billion to create four regional “clean hydrogen hubs” that will produce fuel for manufacturing, heating and transportation. The potential energy sources for these poles will come from fossil fuels, renewable energy, nuclear energy and possibly coal. The hubs will demonstrate the production, processing, delivery, storage and end use of hydrogen, with plans to turn the hubs into a national hydrogen grid, the bill says.
The Energy Secretary will oversee the program and solicit proposals for regional hubs. The four hubs must be located in different regions of the country, with at least two hubs located in regions “with the greatest natural gas resources,” the bill says. The $ 8 billion is allocated for fiscal years 2022-2026 to the new Office of Clean Energy Demonstrations.
The bill also provides an additional $ 1 billion for research grants to reduce the cost of hydrogen produced by electrolysis. This research will help produce hydrogen while reducing the environmental impact of this process.