FERC Gas LNG Pipelines

Federal Agencies Play Hot Potato on LNG Emissions

December 8, 2020

The United States—the world’s top producer of natural gas—extracts far more gas than we need to satisfy domestic demand. This has led the American gas industry to invest billions of dollars in the export of liquefied natural gas through the construction of export terminals and pipelines along the American coast. As part of these efforts, the industry repeatedly has characterized LNG as a climate solution—a climate hero even. But a new NRDC study, Sailing to Nowhere, calls that entire narrative into question.

Rather than being a “bridge fuel,” NRDC’s analysis concludes that if American LNG exports expand as projected, it will be nearly impossible to keep global warming below 1.5 degrees Celsius—even when an LNG project is intended to replace other dirtier fossil fuels, like coal. Beyond LNG’s own emissions, investment in LNG diverts funds away from renewable projects, exacerbating each LNG project’s net climate impacts.

This reality is particularly concerning given the current state of affairs at the Federal Energy Regulatory Commission and the Department of Energy—the two agencies that oversee LNG exports. While federal law requires FERC (the agency that reviews applications to construct new LNG export terminals) and DOE (the agency that reviews applications to actually export LNG) to (1) thoroughly evaluate whether a proposed LNG project is consistent with the public interest and (2) quantify and assess the significance of the environmental effects of an LNG project, the LNG review process is currently a “check-the-box” exercise.

The time is now for FERC and DOE to take LNG export and the emissions it causes seriously.

Quite simply, LNG project applicants do not worry if their projects will be approved; all of their lawyers’ and lobbyists’ effort is directed at when their projects will be approved, to gain a commercial edge on competitors. But this is not what the law demands.

The division of labor between FERC and DOE has allowed the two agencies to play a game of emissions hot potato, each disclaiming an obligation to incorporate an LNG project’s upstream and downstream emissions (aka their “indirect emissions” ) into their reviews. And while FERC agrees that it must incorporate any emissions connected to the construction and operation of an LNG terminal (the “direct emissions”) into its reviews, it doesn’t actually do so, due to its failure to develop a test to determine the severity of those emissions. In other words, FERC currently identifies an estimate of how many tons of greenhouse gas an LNG export terminal will directly emit, but then immediately disclaims its ability to extrapolate anything from that figure. 

While DOE previously has argued that it holds the exclusive authority to consider upstream impacts and has, at minimum, disclosed the downstream impacts, DOE issued a rule on December 4 stating that it now will only consider the emissions emitted during the actual marine vessel transport of LNG. The rule also established a presumption that DOE can approve LNG exports without any environmental review whatsoever.

Enough is enough. The production, export, and use of LNG has sizeable greenhouse gas consequences, and those consequences are relevant to whether a project is consistent with the public interest. Moving forward, FERC and DOE should acknowledge the relevance of these emissions, clearly outline which emissions fall within the purview of each agency, and capitalize on the remarkable brainpower of FERC and DOE staff to develop a test to evaluate those emissions’ significance on the environment and consistency with the public interest.

The time to do this was yesterday. But that shouldn’t prevent us from doing it tomorrow.