CEI Comments to Federal Energy Regulatory Commission: Docket No. PL21-3-000

Federal Energy Regulatory Commission, Order on Draft Policy Statements, March 24, 2022.

Docket No. PL21-3-000

Comments submitted by Marlo Lewis, Patrick Michaels, and Kevin Dayaratna.

Thank you for the opportunity to submit additional comments on how (or whether) the Federal Energy Regulatory Commission (“FERC,” “Commission”) should consider climate change impacts in reviews of infrastructure projects under the Natural Gas Act (NGA).[1]

Our comments of January 7, 2022, on the Commission’s November 19, 2021 technical conference on greenhouse gas (GHG) mitigation under the NGA, advised FERC to steer clear of climate policy, for three main reasons.[2]

First, the Biden administration’s NetZero agenda to decarbonize and degasify the U.S. electric power sector cannot lawfully be aligned with the NGA. Biden’s goals conflict with the NGA’s “principal purpose,” which is to “encourage the orderly development of plentiful supplies of electricity and natural gas at reasonable prices.” In addition, climate change is not a factor Congress authorized FERC to consider. The words “climate,” “carbon,” “greenhouse,” “global,” “warming,” “mitigate,” or any of their cognates do not occur in the Act.

Second, although the direct and indirect emissions of natural gas infrastructure may be “reasonably foreseeable,” the climate effects are not. FERC’s project reviews are governed by the National Environmental Policy Act. NEPA requires scrutiny of major federal actions “significantly affecting the human environment.” Even the emissions of the largest natural gas projects are too small to discernibly affect global climate, and no project’s “carbon footprint” is big enough to influence the fate or fortunes of any community, business, or human being anywhere in the world.

Third, the social cost of carbon (SCC)—an estimate of the present value of the cumulative climate damages of an incremental ton of CO2e emissions—is too speculative and subjective, and too easily manipulated for political purposes, to be weighed in the same scales with an infrastructure project’s estimated economic benefits. The Biden administration’s SCC estimates are egregiously biased in favor of climate alarm and regulatory ambition, rendering any agency action that relies on them arbitrary and capricious.

Unlike several presenters at the November 2021 technical conference, FERC’s “interim” (now “draft”) GHG policy statement does not advocate requiring SCC analysis in NGA determinations of public convenience and necessity. Neither, however, does FERC disavow an intent to require it in later policy statements. The Commission may simply be waiting for the Biden administration’s Interagency Working Group (IWG) to finalize its interim SCC estimates,[3] or for courts to resolve Louisiana’s challenge to federal agency use of those metrics.[4]

The Commission’s draft GHG policy statement establishes a “rebuttable presumption that proposed projects with 100,000 metric tons per year of carbon dioxide equivalents (CO2e) emissions will be deemed to have a significant impact on climate change.” FERC also implies that it may condition project approval on the sponsor’s plans to “mitigate all or a portion of the project’s climate change impacts.”[5]

The camel’s nose is already under the tent. It is not hard to guess where this is going if FERC does not quickly reverse course. The usual suspects will pressure the Commission to: (1) progressively lower climate significance thresholds, (2) monetize undetectably small project-related climate “impacts” using agenda-driven SCC estimates, and (3) either reject needed natural gas infrastructure projects outright or impose mitigation requirements that render them uneconomic.  

We stand by the chief policy conclusion of our January 7 comments. If an infrastructure project is commercially viable and helps ensure plentiful supplies of electricity and natural gas at reasonable prices (the NGA’s principal purpose), the Commission knows in advance that the project’s economic benefits far exceed its climate-related externalities. Therefore, no further investigation of the project’s GHG emissions is required, nor does it make sense to condition the certificate of public convenience and necessity on the project’s adoption of mitigation measures.

New research by Dr. Dayaratna (hereafter “Heritage analysis”) further confirms that conclusion. Using the U.S. government’s leading energy and climate policy models, the Heritage analysis demonstrates that banning construction of new U.S. pipelines would have a negligible effect on U.S. annual CO2 emissions through 2050 and, thus, a similarly negligible effect on global temperatures through 2100. The policy implication for FERC is clear. No level of over-regulation or prohibition that regulators might apply to the development of U.S. natural gas pipelines could meaningfully affect the Earth’s climate or possibly be worth the economic losses imposed on construction companies, natural gas producers, and energy consumers.