This study estimates the potential loss in economic value of 351 proposed solar, wind, wave, bio-fuel, coal, gas, nuclear and energy transmission projects that have been delayed or cancelled due to significant impediments, such as regulatory barriers, including inefficient review processes and the attendant lawsuits and threats of legal action.
These energy projects were reviewed and catalogued by the U.S. Chamber of Commerce as part of its Project No Project initiative and are available at www.projectnoproject.com. To be clear, we do not believe that all of the subject projects ever would or necessarily should be approved, constructed, and operated.
However, the Project No Project initiative and our independent research, which is summarized in this study, demonstrate that impediments such as regulatory barriers to energy projects can substantially reduce and impair private investment and job creation. After a year of research on these projects, the following are the major highlights of our study:
- In aggregate, planning and construction of the subject projects (the “investment phase”) would generate $577 billion in direct investment, calculated in current dollars. The indirect and induced effects (what we term multiplier effects) would generate an approximate $1.1 trillion increase in U.S. Gross Domestic Product (GDP), including $352 billion in employment earnings, based on present discounted value (PDV) over an average construction period of seven years. 1 Furthermore, we estimate that as many as 1.9 million jobs would be required during each year of construction.
- The operation of the subject projects (the “operations phase”) would generate $99 billion in direct annual output, calculated in current dollars, including multiplier effects, this additional annual output would yield $145 billion in increased GDP, $35 billion in employment earnings, based on PDV, and an average 791,200 jobs per year of operation. Assuming twenty years of operations across all subject project types, we estimate the operations phase would yield a potential long term benefit of $2.3 trillion in GDP, including $1.0 trillion in employment earnings, based on PDV.
- Therefore, the total potential economic and employment benefits of the subject projects, if constructed and operated for twenty years, would be approximately $3.4 trillion in GDP, including $1.4 trillion in employment earnings, based on PDV, and an additional one million or more jobs per year.
As noted above, we do not believe that all of the subject projects will be approved or constructed even in the absence of any legal and regulatory barriers. Also, as with all economic forecasts, we recognize that there is an element of uncertainty. This could be true here because, to our knowledge, this is the first empirical study to quantify the macroeconomic and employment impact of the regulatory barriers imposed on the development and operation of so many energy projects. Consequently, we believe additional work is needed to improve the list of energy projects and to refine this study’s methodology. Among other things, future work could attempt to quantify other potentially lost benefits such as the economic impact of increased domestic energy supplies and associated reductions in consumer prices due to greater amounts of available energy.
Notwithstanding the above caveat, we believe this study provides an instructive and statistically defensible picture of the potential for corrosive economic and employment impacts that can arise from significant project obstacles such as inefficient regulatory processes, including attendant lawsuits and threats of legal action. Moreover we believe the data demonstrates these impacts are substantial. Furthermore, because we have, for example, excluded domestic on-and off-shore oil and many natural gas projects from our study cohort, we have substantially underestimated the impact of the regulatory barriers and other project impediments. In other words, this is a conservative analysis.
At a minimum, our study demonstrates that private investors and developers are prepared to fund, build and operate energy projects that could materially increase GDP and create many jobs. However, in view of project obstacles such as regulatory inefficiencies, this investment may only come to fruition if policymakers take the steps needed to streamline and improve existing regulatory processes so that projects can be given a fair opportunity to secure a final permit based on the soundness of the project, and not on the ability to withstand a tortured permitting process. Potentially, these and other similar projects offer substantial economic opportunities, but these opportunities can only be realized if these projects are reviewed and evaluated in an efficient, effective, and timely manner.2 Based on our review of the circumstances of the 351 projects identified, we conclude that, absent policy action aimed at constructive reforms to the regulatory process, there is substantial risk that economic progress and opportunity will to continue to be denied for millions of American citizens.