Helping American Petroleum Institute navigate permitting reform

A surge of new data centers and other large loads are creating challenges to reliability and affordability in electricity and natural gas markets across the United States. Permitting reform has emerged as a priority for the federal government and regulators to speed the development of energy infrastructure needed to meet growing demand.

Challenge

With growing energy reliability and affordability concerns driving renewed federal interest, API needed to understand the implications of permitting reform on their policy advocacy efforts—and how they could play a role in shaping the final policy.

Simple market modeling would not suffice. API sought a broad picture for how a defined set of permitting reforms would impact U.S. electricity and gas markets, energy affordability and reliability, economic growth and job creation, and greenhouse gas emissions.

Solution

We used our ability to integrate gas and power market models and our broad expertise to partner with API on a complex study assessing the impact of federal permitting reform on 22 states of interest for the 2026-2035 period.

API set the assumptions for the federal permit reforms to be modeled, and ICF delivered integrated models based on those assumptions, using the same data analytics-based approach and processes that ensure quality for federal agencies and regulatory bodies. Our modeling and analysis included:

• Natural gas market modeling
• Wholesale power market modeling
• Residential retail electricity rate analysis
• Economic impact analysis
• CO₂ emissions analysis

For the study, we modeled a Reference Case, which reflects the current U.S. permitting environment and policy landscape, and a Policy Case, which assumes the passage of permitting reforms to federal statutes that have historically slowed the development of energy infrastructure, such as electric transmission lines and natural gas pipelines. Specifically, the reforms specified by API apply to the National Environmental Policy Act and Clean Water Act and allow for faster development of energy infrastructure projects by reducing delays and denials to water and air quality permits.

Results

Our analysis found that the permitting reforms modeled in the Policy Case deliver significantly more energy infrastructure by 2035 compared to the Reference Case—primarily in the form of 22.3 Bcf/d of additional natural gas pipeline capacity and an increased buildout of renewable energy and natural gas-fired generation.

Showcasing the integrated nature of the modeling, we then used the Policy Case assumptions for increased energy infrastructure development to estimate impacts on natural gas and power markets, which in turn were inputs into the economic impact and greenhouse gas emissions modeling.

We predict that Henry Hub gas prices would be on average about 60 cents/MMBtu lower throughout the study period (with larger seasonal reductions at Henry Hub and across other regions), driven by a more integrated and stable gas market with fewer transportation bottlenecks. Wholesale power and capacity prices also fell compared to the Reference Case in every market evaluated in the study.

For API, among the most important findings in the study were the consumer and economic impacts. Our analysis estimates $55 billion in cumulative residential retail electricity bill savings across the 22 states included in the study, with household savings ranging from $26 to $260 per year from 2026 to 2035, depending on location. The infrastructure development unlocked by permitting reform is expected to support an additional 700,000 jobs above the Reference Case nationally by 2030, as well as $10 billion in additional tax revenue. We predict greenhouse gas emissions would be reduced by 367 million metric tons of CO₂ by 2035, or 2.4% annually, thanks to natural gas generation displacing coal and an accelerated buildout of renewables.