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.

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