Iran war reignites debate over US energy-permitting reform

Hello from Houston.

The hostilities between the US and Iran have escalated dramatically with President Donald Trump threatening to destroy bridges and power plants as he attempts to assert American control over the Strait of Hormuz. 

The ratcheting-up in tit-for-tat strikes between Washington and Tehran sent the price of Brent crude to $94 on Wednesday, with threats from the Houthis to impose a naval blockade against Saudi Arabia raising the risk of another supply route being closed.

The Iran war has given fresh urgency to the debate over permitting reform in the US that would enable energy infrastructure to be built faster in order to bolster the country’s energy security. 

I had the opportunity to chat with John Arnold, the billionaire gas trader turned philanthropist, who through Arnold Ventures is campaigning for reform to deploy vital energy and electricity infrastructure. 

The problem is straightforward: over the years, various legislation in the US has made it cumbersome to get projects built as energy became increasingly politicised. The Biden administration halted fossil fuel projects, while the Trump administration has cancelled solar and wind projects.

Even after the permitting process is finished, projects can be tangled up in litigation for years. By the time they are approved, projects are often more expensive because of legal fees and inflation.

“There’s a realisation that we need to modernise,” Arnold told me over the phone earlier this month. “Development is necessary for the economic vitality of America, of the world, and if you increasingly make things more difficult to build, they start having real ramifications for quality of life for people and for the cost of living.”

He warned: “We will continue to see the cost of electricity increase in this country if we cannot build the good infrastructure that’s necessary.” 

Not only was the country’s energy security at stake but its competitive position, said Arnold. “AI is highly competitive globally and America is in the lead today, both with the technology and the capital, but in order to maintain that lead we have to be able to build the data centres and the data centres in America.” 

Over the years, permitting had gone from a more straightforward process that took a few months to a year to one that takes more than four years on average, said Xan Fishman, vice-president of the energy programme at the Bipartisan Policy Center.

“It’s relatively easy right now for an individual state to block a transmission line or to block a natural gas pipeline through different mechanics in law,” said Fishman. “A deal would make it harder for states to do that.”

Democrats and Republicans re-engaged in detailed permitting negotiations this month, said analysts at Rapidan Energy Group, who added they were sceptical that the talks would progress owing to the lack of trust between the two parties and a tight legislative calendar before the midterms.

“A post-election lame-duck session is the only window — however unlikely — for enactment this year, with the possibility of a deal during this period contingent on Republicans keeping control of Congress,” said Rapidan analysts in a recent note.

Martin Heinrich, from the Senate energy and natural resources committee, and Sheldon Whitehouse, from the environment and public works committee, have been actively negotiating the deal, which centres on reforms to the National Environmental Policy Act, permitting adjudication and transmission.  

“This is one of those issues where there’s fingers to point on all sides,” said Rich Powell, the chief executive of CEBA, a business association with members that include the world’s largest energy buyers. “We need a grand bargain that fixes this system and provides energy certainty and neutrality.” 

Powell added: “We hope we can get out of that vicious cycle and get to a more neutral system.”

Power Points

• The US has signed an agreement to help Saudi Arabia develop a civilian nuclear programme, in an arrangement long sought by Riyadh.

• The Trump administration has collected more than $13bn in revenues from Venezuelan oil sales this year, according to FT calculations, but has said almost nothing about what has happened to the money.

• Greek shipping company Dynagas will be allowed to continue carrying Russian LNG under fresh sanctions against Moscow set to be agreed by EU countries.

Energy Source is written and edited by Jamie Smyth, Martha Muir, Alexandra White, Rachel Millard, Malcolm Moore, Ryohtaroh Satoh and Stephanie Findlay with support from the FT’s global team of reporters. Reach us at [email protected] and follow us on X at @FTEnergy. Catch up on past editions of the newsletter here.