Jul 22, 2019

Energy regulators divided over natural gas and climate change

Illustration: Rebecca Zisser/Axios

Regulatory decisions about America’s bounty of natural gas are in the hands of an obscure and understaffed federal agency with a limited mandate to think about climate change.

Why it matters: With America’s production of oil and natural gas soaring and Congress not acting on climate change, the once-sleepy Federal Energy Regulatory Commission is finding itself at the center of protests and lawsuits. Interviews with all 4 FERC members illustrate their division over how to handle greenhouse gas emissions.

Driving the news: Democratic FERC Commissioner Richard Glick wants to require companies seeking approval for pipelines and liquefied natural gas (LNG) export terminals to offset significant greenhouse gas emissions, similar to the way companies compensate for more traditional environmental impacts like creating wetlands.

  • Natural gas is cleaner than coal and oil, but as a fossil fuel it still emits heat-trapping emissions.

The other side: “I just fundamentally disagree with Commissioner Glick on this matter,” said Neil Chatterjee, the panel's Republican chairman. “The approach the commission has been taking is what we are statutorily obligated to do.”

Where it stands: Chatterjee pointed to the commission’s February approval of a gas export terminal, calling it a “breakthrough” because it was the first in two years and because it listed the greenhouse gas emissions associated with the project. (Glick dismissed the move as "window dressing.")

“I’ve been out there as a Republican from Kentucky and as a Trump appointee talking about climate change and the need to mitigate emissions. And if we can’t have a rational conversation about the role that U.S. LNG exports have in reducing global carbon emissions, I don’t think we’re ever going to get pragmatic solutions in this area.”
— Neil Chatterjee, FERC chairman

Between the lines: The FERC's relatively limited legal authority is in the economic realm and rests largely on 2 nearly century-old laws — the Federal Power Act and the Natural Gas Act — that aren't environmentally focused.

  • It's also short-staffed. Normally, it should have 5 commissioners; today it's at 4 and it's about to drop to 3. Democratic Commissioner Cheryl LaFleur is resigning next month (against her will).
  • LaFleur has struck the most centrist position and often cast the commission’s tie-breaking votes. She supports Glick's idea. "Certainly it’s potentially within our legal bounds," LaFleur said. "I think ultimately the courts are very likely to decide that."

Indeed, recent court rulings have indicated FERC should do more to contend with the emissions associated with fossil-fuel projects; currently, the agency requires most companies to list them but nothing more.

  • “If you listen to what’s going on in the courts, we’re going to have to have carbon offsets or something like that at some point soon,” said one natural-gas executive who works closely with the agency.
  • Chatterjee is confident in the FERC’s review process for pipelines, which lists the emissions that are “reasonably foreseeable” — a phrase that's subject to multiple legal interpretations.
  • The other GOP commissioner, Bernard McNamee, agrees: "We need to be careful as an agency ... to develop new policies that even Congress hasn’t been able to make decisions about," he said.

Reality check: Experts say Glick's idea is unlikely to go anywhere, at least under GOP leadership in Washington.

  • “It’s smart to look at it long term for risk management, but do I see it as a showstopper now? No," said Christi Tezak, managing director at the nonpartisan research firm ClearView Energy Partners. "Against a majority that doesn’t share the opinion and without any legal hook to tether it to, it’s elegant rhetoric."

What's next: Once LaFleur resigns at the end of next month, the two GOP commissioners will have a clear majority and be able to approve controversial projects over Glick's opposition.

Go deeper

Growing opposition to natural gas pipelines hasn't hurt federal approvals

Environmental opposition to natural gas pipelines has grown significantly over the last decade, but the impact on actual federal approvals of such projects is limited.

Driving the news: The chart above, via the Federal Energy Regulatory Commission, shows annual approvals of natural gas pipeline capacity over the past couple of decades. These approvals ebb and flow with fuel prices and other cyclical parts of the energy business.

Go deeperArrowJul 23, 2019

Why climate change is so hard to tackle: The global problem

Illustration: Sarah Grillo/Axios

Democratic presidential hopefuls are calling for aggressive action to reduce heat-trapping emissions, while nations are facing pressure to ramp up commitments ahead of a major United Nations summit next month.

The big picture: Despite that fervor, progress on climate change remains elusive. We have cultivated a deep dependence on fossil fuels that have been driving Earth’s temperature up for more than a century, creating a problem whose mostly negative impacts are unfolding over more centuries.

Go deeperArrowAug 19, 2019

Big Oil faces a slowing economy and renewed trade war

Illustration: Sarah Grillo/Axios

Oil and natural gas companies are staring down the barrel of a slowing economy, President Trump's on-again-off-again Chinese trade war, persistently low oil prices that plunged yesterday, and even lower natural gas prices.

Where it stands: Big Oil's second-quarter earnings are mixed this week. European majors Total, Eni and Shell reported large drops in profits while BP "bucked the trend." On this side of the Atlantic, ExxonMobil faced a 21% drop in quarterly profit while Chevron saw a 26.3% rise in its quarterly profits, per Reuters.

Go deeperArrowAug 2, 2019