Sidestepping a New Climate Commitment, the Federal Energy Regulatory Commission Greenlights a Mammoth LNG Project in Louisiana

After declaring nine months ago that it would start factoring climate change into regulatory decisions about major gas projects, the Federal Energy Regulatory Commission has thrown up its collective hands and concluded that it doesn’t know how. At least not yet.

The uncertainty was conveyed last month when the commission’s five members, all presidential appointees, approved a large liquefied gas plant and export terminal that Commonwealth LNG will construct and operate along the southwest Louisiana coast. 

According to FERC’s projections, the complex will emit the equivalent of more than 3.5 million tons of carbon dioxide a year, roughly equal to the tailpipe emissions from 700,000 cars. But the commissioners unanimously agreed they could not determine whether the emissions were “significant or insignificant.”

The agency appears to be hamstrung by a lack of clarity about its mission: Under federal law, it is required to align its decisions with “the public interest.” At the same time, FERC is politically divided on this year’s pledge to integrate climate change into its decision-making: That policy move was approved in a 3-2 vote in February, with Democratic commissioners in  favor and Republicans opposed. 

A month later, after criticism from some lawmakers and the gas industry, the commission voted unanimously to slow down, seek more public comment and state that the new policy would not apply to pending projects.

The agency’s hesitancy could have far-reaching implications for the approval of other major LNG projects. In March, Inside Climate News reported that Commonwealth LNG is one of 19 proposals for new or expanded LNG export facilities along the Gulf Coast, the nation’s hotbed of current and potential export activity. 

Based on tracking by the Environmental Integrity Project’s Oil and Gas Watch project, 30 new or expanding LNG terminal facilities nationally have been constructed or proposed nationally since 2016. Collectively, the group reports, the installations have the potential to emit the equivalent of as much as 118 million tons of carbon dioxide a year.

Commonwealth LNG’s project still needs other state and federal permits and awaits a final investment decision from its developer. But the Houston-based company’s top executive said that FERC’s Nov. 17 decision keeps plans on track to begin production in the third quarter of 2026 at the plant site in Cameron Parish, Louisiana.

“We’re extremely pleased to have our FERC order in place,” Commonwealth LNG’s founder and executive chairman, Paul Varello, said in a statement. “FERC review and approval is a rigorous process and a huge step in the development of our LNG project.”

Environmental groups that have been fighting the Commonwealth LNG proposal and other planned gas export terminals along the Gulf Coast have voiced disappointment with the FERC ruling but plan to keep working to stop the projects on climate, environmental justice and other grounds.

The plant and export terminal are “directly at the mouth of the Calcasieu River in a community already ravaged by a succession of major hurricanes, coastal erosion, and its susceptibility to sea-level rise,” said James Hiatt, the southwest Louisiana coordinator of the Louisiana Bucket Brigade, an environmental group. “The long-term environmental and climate damages far outweigh any perceived economic impact this facility would provide a local community.”

John Allaire, a retired oil and gas industry environmental manager who lives near the proposed site on more than 300 acres of coastal fish and wildlife habitat in Cameron Parish, said he was dismayed by the agency’s ruling. “I look at the FERC mission statement, and what they are doing has nothing to do with their mission statement, to just keep permitting these export terminals,” said Allaire, who has been working with environmental groups to block the project.

A FERC spokeswoman declined to comment on the Nov. 17 vote or its implications.

In a parallel decision, another federal agency, the Department of Transportation’s Maritime Administration, just approved plans to build the nation’s largest oil export terminal off the Gulf Coast of Texas. The project would add 2 million barrels per day to the nation’s oil export capacity, but the agency concluded that it would have a minimal effect on the greenhouse gas emissions associated with the overall U.S. crude oil supply chain.

After the Ukraine Invasion, a Drumbeat for LNG Exports

LNG liquefaction and export terminals take natural gas and super-cool it to minus-260 degrees Fahrenheit, converting it to a liquid.  The process is energy-intensive, as it shrinks the product into a form that is 600 times smaller than its gaseous state. The liquid gas is stored in giant chilled and insulated tanks until it is loaded onto 1,000-foot-long vessels for transport to markets in South America, Europe or Asia. Each ship can hold enough gas to heat and otherwise power tens of thousands of homes for a year.

Currently, FERC counts five operating LNG terminals in Louisiana and Texas and five more under construction. 

Commonwealth LNG’s proposed export facility was named a “project of the year” in early November at a major liquefied natural gas business summit in Lake Charles, Louisiana. The event was met by protesters in a convoy of boats that motored past a casino convention center, demanding that gas executives abandon their plans to expand liquefied natural gas exports in the region.

Despite the impact on emissions, the pressures for expanding liquefied natural gas production and exports are undeniable. After Russia’s invasion of Ukraine in February, President Joe Biden and the European Commission announced a joint task force that would seek to reduce Europe’s reliance on Russian fossil fuels — in part by directing more American LNG exports to Europe through 2030. 

The move dismayed many clean energy advocates, who pointed out that LNG infrastructure can take three years to build and would thus do little to address Europe’s short-term energy needs in the face of Russian gas cutoffs. They suggested that the task force should be focusing instead on expanding renewable energy sources.

Still, even as it champions LNG exports, the Biden administration has declared a “whole of government” approach to the challenges of climate change and environmental justice. And the administration’s touted Inflation Reduction Act includes an unprecedented $370 billion in federal spending to tackle climate change.

FERC has said it plans to do better on both the climate and environmental justice policy fronts but has waffled amid pushback from the fossil fuel industry and its supporters in Congress, including Sen. Joe Manchin of West Virginia. Manchin has threatened to block the reappointment of the commission’s Democratic chairman, Richard Glick, who has been trying to move the commission toward more climate-sensitive policies. 

A spokesman for Manchin, Sam Runyon, declined to comment on the Commonwealth LNG ruling or on Glick’s future. 

FERC is intended to be a bipartisan body, with no more than three commissioners from one political party. At its website, the agency says its mission is to “assist consumers in obtaining reliable, safe, secure and economically efficient energy services at a reasonable cost through appropriate regulatory and market means, and collaborative efforts.”

Even though he voted to greenlight the Commonwealth LNG project, Glick lamented the Nov. 17 decision. In a separate opinion, he argued that the commission’s hands were tied in part because its jurisdiction is limited by the Natural Gas Act, the federal law that provides for FERC’s review and approval of LNG export terminals.

“Climate change poses an existential threat to our security, economy, environment, and, ultimately, the health of individual citizens,” he wrote, adding that it was “readily apparent” that the LNG complex’s emissions “will significantly impact the environment.” 

The problem, he stated, is that the commission’s review “is limited to considering whether the construction and operation of the import/export facilities would be consistent with the public interest.” And the Natural Gas Act, passed in 1938 and periodically amended, affirms that such facilities are in fact consistent with the public interest, Glick wrote.

That makes it hard to weigh a project’s adverse impacts, he wrote.

James Danly, a Republican commissioner, put it another way in a separate opinion on the Commonwealth LNG case: FERC’s job under the Natural Gas Act is “to promote the development of natural gas infrastructure.” The commission, he wrote,  “has a rocky road ahead should it continue in its pursuit of environmental policy goals.”

Claiming a Lack of ‘Methodology‘

In reaching its unanimous decision last month, FERC relied on an  environmental impact study by its staff that provides an analysis of the project’s anticipated 3.5 million tons in annual greenhouse gas emissions.  Yet the 1,000-page document stops short of reaching key conclusions or evaluating the impacts of emissions from drilling gas, transporting it to the export facility or the burning of the fuel by “downstream” customers abroad.

The commission staff has “not identified a methodology to attribute discrete, quantifiable, physical effects on the environment resulting from (Commonwealth’s) incremental contribution” to greenhouse gases, the study states. “Without the ability to determine discrete resource impacts,” it adds, the staff is unable to determine the project’s contribution to climate change “through any objective analysis.”

Nonetheless, the staff predicted that the project would increase Louisiana’s greenhouse gas emissions by 1.7 percent when fully operating and account for 3.2 percent of the state’s projected greenhouse gas emissions for 2030, assuming that the state meets its overall reduction targets for that year.

The study included an estimate of the social costs of climate impacts from the project, concluding that the emissions could cause as much as $2.6 million in climate damage during construction and as much as $16 million a year when it goes into operation, a figure that would reach $22.5 million a year in 2050. 

In its ruling, the agency indicated that it would await the outcome of further deliberations after seeking public comment on how it should weigh climate change in its decision-making. 

Nathan Matthews, a senior attorney with the Sierra Club, notes that methods indeed exist for determining the significance of climate impacts from greenhouse gas emissions and that other federal agencies use them.

“FERC has leeway in how it approaches the problem,” he said. “FERC could apply its own draft guidance, it could follow what other agencies are doing, or something else. But it can’t do nothing at all.”

Matthews argued a recent case for the Sierra Club that resulted in a victory  for local environmental groups fighting LNG export facilities planned for Brownsville, Texas. And in a 2021 ruling by the U.S. Court of Appeals for the District of Columbia in a case where FERC also claimed that there was no accepted method of calculating climate impacts from the export terminals, the court found the agency’s analysis deficient.

The Sierra Club plans to request a rehearing of the Commonwealth LNG decision as a first step in a potential lawsuit against the agency on climate and other issues, Matthews said.

Morgan Johnson, a staff attorney with the Natural Resources Defense Council, which is tracking the nation’s liquefied natural gas expansion and opposes the Commonwealth project, contends that the commission’s mandate is clear. “It absolutely has to make that [greenhouse gas] assessment,” she said. 

Johnson cited a 2017 ruling involving the Sabal Trail interstate natural gas pipeline terminating in Florida, in which the same appeals court reversed FERC’s approval after finding that the agency had failed to analyze all the project’s greenhouse gas emissions.

She argues that FERC cannot get away with saying that it has aspirations of eventually complying with its responsibility to fully assess the climate impacts of gas projects. Its reasoning on the mammoth Commonwealth LNG project, Johnson said, “does not equal compliance with the law.”

She cited both the Natural Gas Act, with its requirements that the public interest come into play, and the National Environmental Policy Act and its provisions for impact assessments. 

“FERC cannot fulfill its related legal duty if it has not assessed the reasonably foreseeable climate impacts of the project,” Johnson said.