Overcoming Local Roadblocks to Energy Transport and a Cleaner New Energy System
American Enterprise Institute
August 18, 2022
Key Points
- Unlike traditional energy sources such as oil and coal, cleaner energy sources such as natural gas, hydrogen, and electricity depend on building long-distance linear infrastructure: pipelines and power lines.
- State and local governments continue to prevent the construction of crucial infrastructure for energy transport, including by blocking key permits and preventing the use of eminent domain.
- Congress and the courts must act to ensure commonsense development of energy infrastructure by securing free trade in the energy market.
Introduction
In the years leading up to the 2020 pandemic, the United States experienced the largest energy bonanza the world has ever seen, powered by three simultaneous booms in oil, natural gas, and renewable power production. New technology unlocked abundant and affordable energy—so affordable that natural gas and wind power are often free at the wellhead and wind turbine. American companies are now producing so much natural gas and power that at times they even pay to have it taken away.
Historically, the global economy relied mostly on oil and coal for energy. Oil is still the world’s largest energy source overall, and coal is still the largest electricity source. The great advantage of oil and coal is that they are easy and affordable to transport: They can be shipped by many different means, including ship and rail. But the world is moving toward new energy sources, such as clean-burning natural gas and solar and wind power.
Unfortunately, these cleaner energy sources are much more expensive to transport, requiring pipelines and power lines that often cost billions to build. So with the transition to natural gas and renewable energy, the central challenge in energy law is no longer how to extract energy at an affordable price; it is how to transport this abundant energy to the consumers who need it at an affordable price. How can we build the pipelines, power lines, and liquefied natural gas terminals to ensure that all consumers benefit from this American bounty?
At this crucial moment, state and local governments are erecting new roadblocks to energy transport, preventing these new resources from reaching the consumers who need them. These governments are denying permits for transporting energy sources to assert their authority over other states’ and countries’ production and consumption decisions. And they are increasingly denying use of eminent domain to build necessary infrastructure such as pipelines and power lines to serve out-of-state customers.
These local roadblocks threaten to squander the American energy boom’s benefits. Congress and the courts should act now to ensure Americans retain the benefits of free trade in energy.