The Simmering Climate Battle Over Natural-Gas Exports

A fight is brewing over whether Energy Department regulators should weigh the impact of liquefied natural gas on global warming.

A liquefied natural gas (LNG) tanker arrives at a gas storage station at Sodegaura city in Chiba prefecture, east of Tokyo on April 6, 2009 for the first shipment of LNG from Sakhalin-2 natural gas development project in Sakhalin, Russia. AFP PHOTO / JIJI PRESS (Photo credit should read STR/AFP/Getty Images)
National Journal
Ben Geman
July 30, 2014, 2:42 p.m.

A fight is brew­ing over wheth­er En­ergy De­part­ment reg­u­lat­ors should weigh the im­pact of li­que­fied nat­ur­al gas on cli­mate change be­fore grant­ing com­pan­ies per­mis­sion to ship the product abroad.

The du­el­ing pres­sures on the de­part­ment from in­dustry of­fi­cials and green groups are part of a wider dis­pute over wheth­er nat­ur­al gas is a friend or en­emy in battles against glob­al warm­ing.

Nat­ur­al gas emits far less car­bon di­ox­ide than coal when burned to cre­ate elec­tri­city. But leaks of the po­tent green­house gas meth­ane along the pro­duc­tion, pro­cessing, and trans­it chain eat in­to that ad­vant­age — and how much is a mat­ter of fierce dis­pute.

Right now, part of the battle over gas and cli­mate is play­ing out in pub­lic com­ments on an En­ergy De­part­ment re­port about ex­ports of li­que­fied nat­ur­al gas.

“LNG ex­ports will in­duce in­creases in U.S. gas pro­duc­tion and as­so­ci­ated emis­sions, and LNG ex­ports will dis­place in­vest­ments in re­new­able en­ergy and ef­fi­ciency in im­port­ing mar­kets,” state the Si­erra Club and sev­er­al oth­er groups in a let­ter this month to the de­part­ment.

In late May, the En­ergy De­part­ment re­leased a draft re­port on the range of “li­fe­cycle” green­house-gas emis­sions of hy­po­thet­ic­al gas ex­ports to Europe and Asia. It ex­plores the com­bined emis­sions from pro­du­cing, mov­ing, cool­ing, and ship­ping U.S. gas, then burn­ing it abroad to cre­ate elec­tri­city.

The draft study, while packed with un­cer­tain­ties and caveats, showed that these “li­fe­cycle” emis­sions were gen­er­ally a good deal lower than us­ing coal mined in those re­gions, and bet­ter than or at least on par with Rus­si­an gas sent via pipeline.

But al­though the re­port con­tained good news for ex­port ad­voc­ates, in­dustry of­fi­cials are non­ethe­less press­ing the de­part­ment not to factor the re­view of these emis­sions in­to its de­cisions on gas-ex­port ap­plic­a­tions that are piled up be­fore reg­u­lat­ors.

An in­dustry group called the Cen­ter for Li­que­fied Nat­ur­al Gas, in re­cent com­ments on the re­port, ar­gues that weigh­ing the study would run afoul of reg­u­la­tions that gov­ern the Na­tion­al En­vir­on­ment­al Policy Act re­view pro­cess.

The in­dustry group also ar­gues that the li­fe­cycle emis­sions re­view has no place in DOE de­cisions about wheth­er ap­plic­a­tions are in the “pub­lic in­terest” and there­fore should be ap­proved.

If the ana­lys­is is weighed in those re­views, “DOE could ac­com­plish en­vir­on­ment­al goals through its own ana­lys­is what it can­not do through the NEPA pro­cess,” such as con­sider en­vir­on­ment­al con­di­tions in oth­er na­tions, the cen­ter says in com­ments sub­mit­ted last week.

“[S]uch a use out­side the NEPA pro­cess could lead to in­con­sist­ent con­clu­sions on the en­vir­on­ment­al re­view … and sub­ject the pub­lic in­terest de­term­in­a­tion by DOE to un­ne­ces­sary leg­al chal­lenges by those op­pos­ing the ap­plic­a­tions for any per­ceived de­fi­cien­cies in DOE’s con­sid­er­a­tion of en­vir­on­ment­al factors,” the group said.

Sim­il­arly, the big en­ergy com­pany Domin­ion doesn’t want li­fe­cycle emis­sions to pay a big role in DOE re­views. The com­pany, which is seek­ing fi­nal clear­ances to move ahead with a mult­i­bil­lion-dol­lar li­que­fied nat­ur­al-gas pro­ject in Mary­land, ap­plauded the study as “fa­vor­able” to ex­ports, but also notes: “This type of life cycle GHG ana­lys­is is in no way re­quired as part of the en­vir­on­ment­al re­view of LNG ex­ports.”

The com­pany said DOE’s ap­prov­al of ex­port ap­plic­a­tions doesn’t have a clear link to the sum of green­house-gas emis­sions from nat­ur­al-gas de­vel­op­ment and use.

“In no sense can DOE’s au­thor­iz­a­tion of LNG ex­ports be con­sidered the cause of [green­house-gas] emis­sions ran­ging all the way from the well-head (wherever that may be for par­tic­u­lar feed gas) to the burn­er-tip (wherever the ex­por­ted LNG may be burned after re­gas­i­fic­a­tion un­der whatever reg­u­lat­ory rules may ap­ply in that coun­try),” the com­pany said.

The draft En­ergy De­part­ment study looks at the so-called glob­al-warm­ing po­ten­tial of us­ing ex­por­ted U.S. gas in Asia and Europe over 20-year and 100-year ho­ri­zons. The lat­ter time­frame is friend­li­er to gas, be­cause while meth­ane emis­sions pack a wal­lop, they are re­l­at­ively short-lived in the at­mo­sphere.

The study showed that us­ing a 100-year ho­ri­zon, ex­por­ted gas is eas­ily more friendly to the cli­mate than us­ing re­gion­ally sourced coal in China and Europe. But the ad­vant­age shrinks some­what us­ing the 20-year ho­ri­zon. And the high end of the es­tim­ated cli­mate dam­age from us­ing im­por­ted U.S. gas in China is even slightly worse than the low end of the range of es­tim­ates from us­ing coal there.

Over­all, the re­port states: “This ana­lys­is has de­term­ined that the use of U.S. [li­que­fied nat­ur­al gas] ex­ports for power pro­duc­tion in European and Asi­an mar­kets will not in­crease [green­house-gas] emis­sions, on a li­fe­cycle per­spect­ive, when com­pared to re­gion­al coal ex­trac­tion and con­sump­tion for power pro­duc­tion.”

But sev­er­al en­vir­on­ment­al groups, in com­ments on the study, say the ana­lys­is greatly un­der­es­tim­ates the cli­mate im­pact of U.S. gas. They ar­gue that the 1.6 per­cent es­tim­ated meth­ane leak­age rate for U.S. nat­ur­al-gas de­vel­op­ment that DOE used is too con­ser­vat­ive, and cite stud­ies that have con­cluded it may be twice that high or worse.

Ju­ly 21 com­ments to DOE from the Si­erra Club, the Ches­apeake Cli­mate Ac­tion Net­work, Earthjustice, and oth­er groups also ar­gue that DOE should not just com­pare ex­por­ted U.S. gas to oth­er fossil fuels when com­par­ing li­fe­cycle emis­sions.

“End-use mar­kets in Europe and Asia are rap­idly in­vest­ing in clean-en­ergy in­fra­struc­ture like wind, sol­ar, and ef­fi­ciency. U.S. LNG ex­ports would likely dis­place these en­ergy in­vest­ments in ad­di­tion to, or in­stead of, dis­pla­cing use of oth­er fossil fuels,” it states.

While act­iv­ists be­lieve the re­port un­der­plays dam­age to the cli­mate from nat­ur­al-gas ex­ports, they do say that cli­mate change should be front and cen­ter in DOE’s de­cisions about ex­port ap­plic­a­tions.

“We will con­tin­ue to do everything we can to raise our voice on this is­sue, edu­cate the coun­try on the cli­mate real­ity of [li­que­fied nat­ur­al gas] ex­ports and seek leg­al re­course and path­ways as avail­able,” said Mike Tid­well, dir­ect­or of the Ches­apeake Cli­mate Ac­tion Net­work.

The En­ergy De­part­ment has pre­vi­ously giv­en one fi­nal and six pre­lim­in­ary ap­provals to ap­plic­a­tions to ex­port gas to na­tions that don’t have a form­al free-trade deal with the U.S. But roughly two-dozen more of these ap­plic­a­tions, which are sub­ject to care­ful scru­tiny, are be­fore reg­u­lat­ors.

DOE said in re­leas­ing the draft re­port that the study would be in­cluded in com­pan­ies’ ap­plic­a­tion dock­ets to help “in­form” its de­cisions, but did not provide spe­cif­ics.

“The de­part­ment eval­u­ates each ap­plic­a­tion and is­sues a pub­lic-in­terest de­term­in­a­tion based on a num­ber of dif­fer­ent factors, in­clud­ing do­mest­ic en­ergy se­cur­ity, eco­nom­ic im­pacts, in­ter­na­tion­al con­sid­er­a­tions, and en­vir­on­ment­al factors such as green­house-gas emis­sions,” a spokes­per­son said.

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