Gathering Steam: Unlocking Geothermal Potential in the United States

Geothermal companies need to experiment. Regulatory barriers stand in their way.

This is the winning entry in the CSPI Essay Contest: Policy Reform for Progress.

In 1904, an Italian prince from a small township in Northern Italy lit five lightbulbs with power from a novel source: hot steam that leaked from the ground. His name was Prince Piero Ginori Conti. He had inherited his family’s boric acid business, which harvested and processed the chemical around hot springs in Larderello, near Florence. Around the turn of the century, Conti got curious about using the steam from the hot springs to generate electricity. And, after a few years of tinkering, he succeeded in a very small way.¹

Geothermal energy, a term later developed to name what Conti discovered, has the potential to be a major player in the post-fossil fuel world. It’s carbon-free energy without the regulatory hurdles of nuclear, the intermittency of wind and solar, and the ecological damage of hydropower. But for geothermal to play a significant role in America’s quest for reliable, carbon-free electricity in the near future, we need to significantly alter the way we regulate companies seeking to produce geothermal energy.

We should exempt geothermal exploration on federally owned lands from the requirements of the National Environmental Protection Act, an exemption the government has already made for the oil and gas industry. The best thing would be for Congress to pass a law, but federal agencies could also make the exemption themselves. Making it easier for companies to look for the hot rocks they need to create utility grade power would set off a cascade of innovation by lowering the risks to forming new companies and experimenting with new technologies. With better policies surrounding geothermal exploration, the heat within the Earth itself could one day power millions of lightbulbs, and much more, all over America.

Geothermal energy takes a variety of forms, but the premise is simple. The inside of the Earth is staggeringly hot, and with the right technology in the right places, that heat can be used to power human activities. One estimate by Stanford's Global Climate and Energy Project suggests it exceeds the combined energy of every other stored energy source, like fossil fuels or uranium, 41 times.² If we could capture all of it, we’d be able to power all of human civilization for hundreds of years.

Right now, all we can do is capture a fraction of the fraction that is closest to the surface in certain locations. In Iceland, 65% of primary energy, or energy harvested directly from natural resources, comes from geothermal.³ The island nation sits on a fault line, allowing magma from the Earth’s core to creep toward the surface. That warms water, which in certain places flows to the surface at high enough temperatures that it can be used to create electricity and heat buildings.

The Svartsengi Power Station, a geothermal power plant in Iceland. Source.

Most places aren’t like Iceland. In most places, all that heat is buried under too much rock and soil to access. But with new technologies, that could change. Instead of needing steam leaking from the crust, Enhanced Geothermal Systems (EGS) drill into the crust to reach hot rocks below.⁴ One pipe pumps water into the hole, where it gets hot, and another brings it back to the surface where it is converted into electricity. Other systems use fluids that heat faster and hotter than water, making it easier still to get those fluids to temperatures that can create electricity. Still others use closed loops to pump fluids into the rock, heat them, and then back up into the plant to create power.

There isn’t a clear line between traditional geothermal energy, like what’s used in Iceland, and EGS. The big difference is that EGS doesn’t need to be as close to a fault line or volcanic activity as traditional geothermal, opening up more places where it can be used. While much of this technology is promising, it’s still in its infancy. What these companies need is license to experiment, try new things, and improve their techniques.

But regulatory barriers stand in their way. One of the biggest is that geothermal companies must file environmental assessments under the National Environmental Protection Act (NEPA) to drill exploratory wells on federal lands. Companies can’t drill just anywhere and find hot enough rocks to create power plants. They must, like oil and gas companies, drill down to see what exists below the surface and whether or not it’s worth spending time and money to extract it. And, according to an analysis by the National Renewable Energy Laboratory (NREL), much of the land with geothermal potential in the United States is in the West, where the federal government manages a large portion of it.⁵

Having to file NEPA reports, which can run hundreds of pages and take years to review, only to see if the area has geothermal promise makes progress difficult and financing even harder. Ideally, companies would not be subject to lengthy NEPA processes until they have found a real resource and want to build a plant. Requiring NEPA filings for exploration significantly slows down an industry America needs to grow.

There’s a simple fix. The 2005 Energy Policy Act created a loophole for oil and gas exploration on federal land in Section 390 of the bill.⁶ If the exploration area is under five acres and the total site of the federal lands lease is under 150 acres, then the company doesn’t need to file the environmental assessment under NEPA rules. Almost all geothermal work fits that description. Congress should broaden this loophole, or what industry insiders call a “categorical exclusion,” to geothermal exploration. Another NREL analysis from 2019 estimated that doing so would increase the amount of discovered geothermal resources by 1% to 3% a year.⁷ NREL has also found that permitting under a categorical exclusion takes 88 days on average, while doing the full environmental assessment takes an average of 337 days.⁸

This rule change has accelerated development before. As Senior Researcher at the Utah State Center for Opportunity and Progress Eli Dourado has written, the categorical exclusion of oil and gas exploration for exploratory wells was a factor in creating the shale revolution.⁹ With greater freedom to explore and experiment, oil and gas companies discovered new ways to extract resources from rock formations previously thought to be impenetrable. Those advances led the U.S. to top the world in oil production and drove energy prices down everywhere. The same could happen with geothermal energy. And there is good reason to think this proposal could gather political support.

First, it's a small tweak in a law that would not gather huge amounts of attention. Such a change could be negotiated in “Secret Congress,” the term Matt Yglesias and Simon Bazelon have coined to describe where real work gets done on Capitol Hill.¹⁰ On issues that most people don’t think about and the media does not cover, Congress often passes substantial, practical legislation. For instance, in May 2021 Congress passed a $175 billion bill to upgrade America’s water and sewer infrastructure. At the end of 2020, it passed a $35 billion bill to invest in clean energy research and development. A lawmaker, likely from a Western state that would stand to benefit from geothermal expansion, could slip this into a larger energy or infrastructure bill.

Second, and unlike other types of renewable energy, exploring and developing geothermal energy requires many of the same skills as exploring and developing oil and gas. If geothermal energy was easier to permit and developed faster, large energy companies would have more incentive to pivot some resources away from fossil fuel drilling toward geothermal. Workers, too, could make the transition. This would soothe fossil fuel companies’ angst about their place in the future and possibly lessen their opposition to such a change. Indeed, there is a two year old conference called Pivot dedicated to exactly this: educate oil and gas companies on how they can shift to geothermal.¹¹

Third, geothermal exploration doesn’t affect the environment. A 2014 NREL review of environmental assessments for 20 geothermal exploration wells found that every case resulted in a finding of no significant impact.¹² This means exploration could expand faster while still preserving federal lands.

There are two ways geothermal exploration could get a categorical exclusion for exploration. As discussed above, Congress can create one through legislation, as it did for oil and gas exploration in 2005. The other is for federal agencies to examine certain actions and grant categorical exclusions to those that don’t have significant environmental impacts. This would involve taking a look at previous NEPA filings to see what impacts, if any, occurred, hearing from experts, and conducting demonstration projects to see what kind of impacts result.

The former approach is more likely, partly because there have been similar attempts in the past and legislation is brewing to try again. In 2011, Senators Mike Crapo (R-ID) and James Risch (R-ID) introduced a bill that would have granted geothermal exploration a similar categorical exclusion as the one for oil and gas. But it died in committee. In 2020, Senators Lisa Murkowski (R-AK) and Joe Manchin (D-WV) co-authored an energy bill that, among other things, would have excluded geothermal exploration wells from NEPA as long as they were under 2.5 acres. But that portion of the law was dropped when the larger energy bill was wrapped into a larger year-end spending bill.

However, with momentum building around support for carbon-free electricity and the geothermal industry growing larger, legislators might be open to changing these rules. The move would also unite classically Republican values of decreasing government regulation on business with classically Democratic values of promoting clean energy to fight climate change.

It could happen by introducing a new categorical exclusion for geothermal, as Crapo and Risch attempted in 2011. In fact, Risch has teamed up with Idaho Congressman Russ Fulcher (R-ID) to introduce a bill that would provide a categorical exemption to geothermal exploration that mirrors the one for oil and gas.¹³ But its status is unclear, and it could die in committee just as it did in 2011. As Congress considers doling out billions in clean energy tax credits through the Build Back Better Act, or whatever legislation takes its place, surely it would also want to find ways to make those dollars go further. Including the Risch-Fulcher Act in that bill would mean more clean energy would flow into the American power system.

To see the value geothermal energy can create, consider where it all began. After successfully powering his five lightbulbs in 1904 with geothermal energy, Conti thought bigger. In 1913, he helped open the world’s first geothermal power plant, Larderello 1. It’s still in operation today and has been expanded to 34 plants that provide 800 megawatts of clean, carbon-free electricity to the towns nearby. One day, power plants like it could dot America, providing clean energy at all hours of the day. To get there, we need regulatory reform.

Andrew Kenneson works for a public housing authority in Kodiak, Alaska. Before that, he was a reporter at local newspapers in Kodiak and in Monroe, Georgia. His email is akenneson21@gmail.com.

Read the other prize-winning essays from the CSPI Essay Contest:

• “Mo’ Money Mo’ Problems” by Maxwell Tabarrok

• “Drone Airspace: A New Global Asset Class” by Brent Skorup

• “The University-Government Complex” by William L. Krayer

• “It’s Time to Review the Institutional Review Boards” by Willy Chertman

1. Lund, John W. 2005. “100 Years of Geothermal Power Product.” Thirtieth Workshop on Geothermal Reservoir Engineering Stanford University, Stanford, California, January 31-February 2. Available at https://pangea.stanford.edu/ERE/pdf/IGAstandard/SGW/2005/lund.pdf.

2. Hermann, Wess, and A.J. Simon. 2007. “Global Exergy Flux, Reservoirs, and Destruction.” Global Climate and Energy Project at Stanford University. Available at https://gcep.stanford.edu/pdfs/GCEP_Exergy_Poster_web.pdf.

3. “Geothermal.” n.d. National Energy Authority of Iceland. Available at https://nea.is/geothermal/#:~:text=Iceland%20is%20a%20pioneer%20in,the%20country's%20total%20electricity%20production.

4. Dourado, Eli. 2021. “The State of Next-Generation Geothermal Energy.” Eli Dourado. Available at https://elidourado.com/blog/geothermal/.

5. Roberts, Billy J. 2018. “Geothermal Resources of the United States.” NREL. Available at https://www.nrel.gov/gis/assets/images/geothermal-identified-hydrothermal-and-egs.jpg.

6. “American Energy and Policy Act of 2005.” 2005. Congress.gov. Available at https://www.congress.gov/109/plaws/publ58/PLAW-109publ58.pdf#page=155.

7. Young, Katherine, Aaron Levine, Jeff Cook, Donna Heimiller and Jonathan HoGeo. 2019. “GeoVision Analysis Supporting Task Force Report: Barriers.” NREL. Available at https://www.nrel.gov/docs/fy19osti/71641.pdf.

8. Levine, Aaron, and Katherine Young. 2014. “Geothermal Development and the Use of Categorical Exclusions Under the National Environmental Policy Act of 1969.” NREL. Available at https://publications.mygeoenergynow.org/grc/1033632.pdf.

9. Dourado, Eli. 2020. “The Biggest No-Brainer in All of Energy Policy.” The Center for Growth and Opportunity. Available at https://www.thecgo.org/benchmark/the-biggest-no-brainer-in-all-of-energy-policy/.

10. Bazelon, Simon and Matthew Yglesias. 2021. “The Rise and Importance of Secret Congress.” Slow Boring. Available at https://www.slowboring.com/p/the-rise-and-importance-of-secret.

11. “Pivot2020 - Kicking off the Geothermal Decade.” 2020. International Geothermal Association. Available at https://www.geothermal-energy.org/pivot2020-kicking-off-the-geothermal-decade/.

12. Levine and Young. 2014.

13. “Risch, Fulcher Introduce Bicameral Geothermal Legislation.” 2021. James E. Risch: U.S. Senator for Idaho. Available at https://www.risch.senate.gov/public/index.cfm/2021/9/risch-fulcher-introduce-bicameral-geothermal-legislation.