API: FERC policy changes would cause uncertainty and hamper LNG export, reliability goals

5/26/2022

The American Petroleum Institute (API) filed reply comments to the Federal Energy Regulatory Commission (FERC) addressing the assertions of other commenters and continuing to express concerns that the commission’s two revised policy statements would chill investment in critical natural gas infrastructure.

Increasing regulatory uncertainty and permitting delays, these policy changes directly conflict with FERC’s mandate to ensure a reliable supply of natural gas under the Natural Gas Act (NGA) and run counter to the goals of the United States and European Union joint task force to increase LNG exports to Europe. 

In filed reply comments on FERC’s Draft GHG Emissions Policy Statement, API Senior Vice President of Policy, Economics and Regulatory Affairs Frank Macchiarola highlighted API’s shared goal of reducing GHG emissions through economy-wide and industry-led initiatives to address emissions associated with energy production. However, Macchiarola cautioned that the commission should not regulate outside its statutory authority. 

“Other regulators have greater levels of expertise, not to mention congressionally granted authority to regulate in these areas. FERC should not complicate or contradict the broader regulatory framework affecting industry by inserting itself in these areas,” Macchiarola said. Resources like EPA’s Mandatory Greenhouse Gas Reporting Program (GHGRP) are better suited to monitoring GHG reduction and mitigation efforts, and FERC’s involvement could unnecessarily complicate the regulatory process. 

“Natural gas pipeline infrastructure provides access to natural gas electric generation facilities, which can, and often do displace coal-fired electric generation and facilitate the integration of renewable energy resources into the nation’s power mix,” Macchiarola said. “API encourages FERC to view our industry as a vital partner in the efforts to reduce our nation’s GHG emissions, not as an obstacle.” 

According to U.S. Energy Information Administration (EIA) analysis released prior to the U.S.- EU joint task force, U.S. natural gas consumption is predicted to increase by 18 percent by 2050. “API believes that any action by FERC that would slow the approval of critical natural gas projects, or chill investment in natural gas infrastructure, would run counter to the Biden Administration’s efforts to both aid Europe and reduce GHG emissions, and should be reconsidered. Given this expected growth in the industrial and power sectors as well as the goal to surge LNG exports to Europe, FERC should look for ways to streamline the permitting process for natural gas infrastructure so that the needs of consumers and our allies abroad can be met,” Macchiarola noted in filed reply comments on FERC’s 2022 Draft Certificate Policy Statement.

Here at home, organizations like the North American Electric Reliability Corporation have highlighted the vital role natural gas plays in ensuring grid reliability. As two U.S. electric grid operators – the California Independent System Operator and the Midcontinent Independent System Operator – have announced the possibility of rotating outages to address insufficient peak electricity supply, an energy mix with reliable fuel supply like natural gas is critical as electric utilities advance a lower carbon future. 

“API is concerned that the draft policy statements will slow or halt the development of natural gas pipeline infrastructure needed to serve gas-fired power plants that are critical to maintaining the stability of the power grid, particularly as demand grows due to electrification efforts,” Macchiarola said. 

“API encourages FERC to continue to work with our industry to develop truly durable, meaningful policies which would reduce GHG emissions and ensure fulsome reviews by FERC Staff, while allowing our industry to continue to build critical natural gas infrastructure that meets the needs of consumers,” Macchiarola concluded.

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