The Shale Boom: A Climate Bust?
By Brian Greenert, Staff Contributor
While the Federal Energy Regulatory Commission (FERC) has implemented specific regulations and requirements for energy producing infrastructures and projects, are they enough to address climate change issues? Some environmentalists think not.
The United States’ energy landscape has been altered dramatically in recent years. The development of shale gas resources, particularly in the Marcellus Shale region, has spurred significant growth in natural gas production. In fact, the U.S. Energy Information Administration (“EIA”) recently predicted that by 2035, natural gas will surpass coal as the nation’s largest source of energy for electricity generation. The increase in production has been so drastic, that producers are now feverishly looking outside the country for potential natural gas markets. The U.S. EIA also projects that the United States will become a net exporter of natural gas before 2020. The landscape has indeed changed.
An increase in production from advancements in hydraulic fracturing technology is not the only factor behind this energy revolution. Geopolitical factors are involved. Recently, the European Union Trade Commissioner said that the United States should seek to export natural gas in light of the conflict between Russia and Ukraine, given that Europe relies heavily on Russian natural gas exports. Domestic economic factors are also playing a role. Industry players are proclaiming the positive impact that natural gas exports will have on the U.S. economy, citing thousands of additional jobs in the engineering, manufacturing, and construction sectors.
“The conversion and compression process requires significant amounts of energy, which in turn impacts the environment.”
Despite the rapid growth in production and incentives to export, several regulatory hurdles stand in the way. The Natural Gas Act of 1938 requires anyone who wants to import or export natural gas from or to a foreign country to first obtain authorization from the Department of Energy. Additionally, the Federal Energy Regulatory Commission (“FERC”) regulates the infrastructure required to liquefy, store, and eventually export natural gas. Natural gas exports take the form of liquefied natural gas, or LNG, which is gas converted to liquid and compressed in volume by a factor of about six hundred. The conversion and compression process requires significant amounts of energy, which in turn impacts the environment. As part of FERC’s regulatory responsibilities, and consistent with the National Environmental Policy Act (“NEPA”), the Commission must prepare environmental assessments or impact statements for proposed LNG facilities. Once the facility is approved, constructed, and operational, it remains subject to FERC’s oversight as long as it is in operation.
The potential expansion of LNG exports has led some environmentalists to ask whether FERC should address climate impacts in its environmental review process. Many consider hydraulic fracturing to be too dirty and dangerous. Methane leaks from the extraction, storage, and transfer processes are a growing contributor to global greenhouse gas emissions. Significantly, at least one federal court has required a federal agency to address a federal action’s contribution to greenhouse gas emissions, the driver behind global climate change. The United States District Court for the District of Colorado, in High Country Conservation Advocates v. United States Forest Service, recently held that the U.S. Forest Service and Bureau of Land Management violated NEPA’s review requirements when it inadequately disclosed the effects of greenhouse gas emissions in assessing the environmental impacts from authorizing mining activities. According to the court, the government erred in failing to utilize the social cost of carbon tool, which was created with the input of several departments and endorsed by the EPA.
“…FERC has consistently resisted environmentalists’ calls for it to consider climate impacts.”
Nevertheless, FERC has consistently resisted environmentalists’ calls for it to consider climate impacts. The Commission has offered several reasons for its intransigence. For one, FERC argues that NEPA only requires federal agencies to look at impacts that are reasonably foreseeable, which does not encompass climate impacts from increased natural gas production. Additionally, it is difficult to measure the impact a single export project will have on the climate. Another issue is causation – to what extent, if at all, does additional LNG export capacity cause increased natural gas production, which in turn would lead to greenhouse gas emissions and climate impacts. In a 2012 case called Coalition for Responsible Growth and Resource Conservation v. FERC, the Second Circuit held that FERC’s environmental assessment of a proposed natural gas pipeline project was adequate, concluding that the impacts on development in the Marcellus Shale were “not sufficiently causally related to warrant a more in-depth analysis.”
Despite the opposition, FERC is busy approving more projects. The Commission recently green lit the Cameron LNG Terminal in Louisiana, to be completed by 2018. It also approved a Crib Energy site in Florida and a project at the Cheniere/Sabine Pass LNG on the Louisiana-Texas Border. Additionally, FERC issued an order authoring Dominion Cove Point LNG to construct and operate facilities to liquefy and export domestically produced natural gas from its existing LNG terminal located on the Chesapeake Bay in Maryland. FERC conducted an environmental assessment, which considered impacts to wetlands, vegetation, endangered species, among others, and eventually determined that the project will result in minimal environmental impacts. Both environmentalists and community activists called for a more comprehensive environmental impact statement.
“…it may be left to federal courts to ultimately decide whether FERC addresses climate impacts in its environmental reviews.”
Opposition groups have vowed to ask FERC to reconsider its decision, and if necessary, appeal the decision to a federal court. Notwithstanding the Second Circuit’s decision in Coalition for Responsible Growth, it’s worth wondering whether another Circuit would require FERC to address climate impacts in its environmental review process. Working against the Commission is President Obama’s Executive Order 13,653, which directed federal agencies to consider and plan for the risks of climate change. However, given the economic and political factors pointing in favor of increased LNG exports, it may be left to federal courts to ultimately decide whether FERC addresses climate impacts in its environmental reviews.