REPORT: FERC’s 18-Year-Old Natural Gas Pipeline Permitting Policy Needs Updating
WASHINGTON – The government’s 18-year-old policy for approving natural gas pipelines that cross state borders should be updated to reflect the sector’s significant changes and exponential growth, as well as increasing concerns about public health and environmental risks, according to a groundbreaking Analysis Group study commissioned by the Natural Resources Defense Council.
The report, Natural Gas Pipeline Certification: Policy Considerations for a Changing Industry, examines the changes in the patterns and pricing of the production, transportation, and use of natural gas, as well as sizable amount of pipeline infrastructure added since the Federal Energy Regulatory Commission (FERC) issued its 1999 Policy Statement governing how it makes decisions on certifying new interstate pipelines.
“The report underscores very real concerns that we are overbuilding the natural gas pipeline system,” said Montina Cole, a senior attorney working with the Sustainable FERC Project housed within NRDC. “Pipelines put people’s health, safe drinking water, and our climate at risk. It’s a waste to keep building more pipelines when America is rapidly transitioning to a cleaner, energy future with non-polluting alternatives that don’t require pipelines, such as energy efficiency, wind and solar.”
FERC has approved approximately 400 pipeline applications since then, creating enough capacity to carry 180 billion cubic feet of natural gas every day, the report said. However, average daily U.S. consumption was less than half that last year at only 75.11 billion cubic feet. (The average daily use in January 2017 was 93.1 billion cubic feet, still considerably below pipeline capacity.)
The report noted the recent increase in pipeline siting and certification challenges, as well as concerns raised by landowners, local groups, and others about “the potential adverse impacts and risks associated with siting new pipeline projects.” These include taking land by eminent domain; harmful carbon and methane emissions from natural gas production, delivery and use; and the health and safety risks associated with hydraulic fracturing (fracking) to extract the gas.
“In light of the many substantial changes in the nature of natural gas supply and demand that have occurred since 1999, are occurring today, and will likely occur over the next decade, the time is ripe for FERC to undertake a structured and collaborative review of its pipeline certification guidance and policy,” the report’s author, Susan Tierney, said in recommending that FERC begin “a structured and collaborative review of its pipeline certification guidance and policy.”
Based on the report’s findings, NRDC recommends that FERC update its policy to:
· Analyze the need for new pipeline construction based on the energy needs in the region where the pipeline would be built, rather than individual project review. A comprehensive assessment would include examination of existing and proposed pipeline capacity, and long-term energy needs. A region-wide analysis would avoid duplicative pipelines serving similar markets, as well as other unneeded pipeline construction.
· Give a high level of scrutiny to contracts for pipeline capacity where the pipeline developer is on both sides of the deal – both the seller and buyer of pipeline capacity. Affiliate contracts are increasingly being offered as justification for new pipelines although such agreements might not reflect actual competitive market needs. Moreover, when the pipeline-affiliated customer is a monopoly utility with utility customers who cannot choose their energy provider, they pay the costs of the pipeline even if the pipeline is unneeded.
· Consider non-pipeline alternatives to pipeline construction. Cleaner and safer energy options include renewable energy, energy efficiency, and use of existing underutilized pipeline capacity.
The report can be found at: http://www.analysisgroup.com/uploadedfiles/content/insights/publishing/AG_FERC_Natural_Gas_Pipeline_Certification.pdf
Cole has posted a blog about the report at:
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The Natural Resources Defense Council (NRDC) is an international nonprofit environmental organization with more than 3 million members and online activists. Since 1970, our lawyers, scientists, and other environmental specialists have worked to protect the world's natural resources, public health, and the environment. NRDC has offices in New York City; Washington, D.C.; Los Angeles; San Francisco; Chicago; Bozeman, Montana; and Beijing. Visit us at www.nrdc.org and follow us on Twitter @NRDC.