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Should FERC Consider Potential Climate Impacts of Proposed Interstate Gas Pipelines?

The question posed in the title above is the main topic of a Notice of Inquiry published in April by the Federal Energy Regulatory Commission (FERC). I submitted comments on the notice this week on behalf of the Competitive Enterprise Institute. The comment period, initially scheduled to close on June 25, has been extended to July 25.

Here’s the gist of the matter. Under the Natural Gas Act, before a company may build a new interstate gas pipeline, it must obtain from FERC a certificate of “public convenience and necessity.” FERC may deny an application only if a balancing of all of the factors weighs against authorization of the proposed project. Such factors include the project’s potential economic and environmental impacts. FERC considers the environmental factors pursuant to the National Energy Policy Conservation Act (NEPA).

The notice invites public comment on a series of questions, including four dealing specifically with climate change.

  1. Should FERC calculate the potential greenhouse gas (GHG) emissions from upstream activities such as the drilling of natural gas wells?
  2. Should FERC calculate the potential GHG emissions from downstream consumption of gas such as its use in electric power generation?
  3. Should FERC weigh potential climate change damages against favorable economic benefits in determining whether a proposed project is required by public convenience and necessity?
  4. Should FERC use social cost of carbon (SCC) analysis to inform determinations of public convenience and necessity?

In effect, the notice asks whether FERC should comply with the rescinded Obama administration Council on Environmental Quality (CEQ) guidance requiring agencies to a) estimate both the direct and indirect (upstream and downstream) emissions of individual projects and b) quantify the associated climate change damages using U.S. Government estimates of the social cost of carbon.

The notice also asks whether FERC should base public convenience and necessity determinations, at least in part, on SCC-estimated climate change impacts.

The answer to all those questions, my comment letter argues, is no.

To begin with, SCC analysis is too subjective and speculative—hence too vulnerable to partisan and ideological manipulation—to inform public policy decisions.

More importantly, mitigating climate change one project at a time is a fool’s errand bound to impose real costs out of all proportion to the speculative benefits.

Affordable energy and economic growth are critical to human mastery of climate-related risks, and the climatological significance of any infrastructure project is for all practical purposes nil. Consequently, blocking an interstate pipeline in the name of climate protection can only do more harm than good to public health and welfare.

The rejoinder, conveniently furnished by the Obama CEQ guidance, is that although “individual sources of emissions each make relatively small additions to global atmospheric GHG concentrations,” the myriad diverse sources “collectively have huge impact.” The policy implication is not hard to fathom. If thousands of individual projects collectively have a “huge impact,” then permission must be denied to as many as possible—ideally to all.

The chief problem with that policy—aside from the enormous economic losses and suffering it would entail—is that Congress has not authorized it.

Under the Paris Climate Treaty, the Obama administration sought to commit the United States to an emission-reduction target “consistent with a path to deep de-carbonization.” As the U.S. nationally determined contribution explained, the administration’s pledge to cut emissions 26-28 percent below 2005 levels by 2025 “is consistent with a straight line emission reduction pathway from 2020 to deep, economy-wide emission reductions of 80 percent or more by 2050.”

Pursuing “deep de-carbonization” in earnest might well require agencies across the federal government to reject increasing numbers of applications to extract, transport, and combust fossil fuels. However, neither NEPA nor the Natural Gas Act authorizes FERC to mandate a national energy transformation away from fossil fuels.

FERC should therefore decline to do piecemeal what it clearly lacks authority to do on the scale and schedule desired by climate campaigners and fracking foes.

To read my full comment letter, click here.