FERC Withdraws Rules that Would Stop Pipelines and LNG Projects

As Connecting the Dots reported last month, new rules proposed by the Federal Energy Regulatory Commission (FERC) would require the FERC to consider a natural gas pipeline or LNG export project’s greenhouse gas impacts during construction, when in operation, and when the natural gas it delivers is used or burned. That cost-benefit calculus would have become a key factor in FERC’s decision whether to grant the certificate needed for construction.

As MSCI’s partners at the Energy Equipment and Infrastructure Alliance (EEIA) noted, the policy would effectively give FERC’s majority the chance to deny a project’s certificate on subjective, ideological, or political grounds even if there is a clear market need for the natural gas it would deliver.

EEIA pointed out the regulations would restrict natural gas production, pipelines, and exports at exactly the time when the United States and its allies need to replace Russian natural gas with U.S. LNG. Congressional leaders asked FERC’s commissioners to reconsider and, last week, the commissioners announced that, pending further consideration, the rules would not be implemented.

FERC Chairman Richard Glick said, “[T]he Commission decided it would be helpful to gather additional comments from all interested stakeholders, including suggestions for creating greater certainty, before implementing the new policy statements.” That statement clearly means the rules could come back at a later time. EEIA will file comments with FERC opposing the rules. Stay tuned to Connecting the Dots for updates on this issue.