The Biden Administration appreciates the deleterious consequences associated with unregulated natural gas usage, while it seemingly shies away from pursuing progressive measures against the industry. But a 2050 future characterized by zero greenhouse gas (GHG) emissions demands that here in the United States and globally, we arrest methane emissions as swiftly as possible. Methane emissions, after all, over the next several decades are far more potent than emissions from coal. And yet, our news is populated with stories warning of increased methane emissions and corresponding initiatives to reduce or eliminate them. To be sure, in April 2023, the White House announced a methane finance sprint to curb emissions, joining a host of other programs targeting methane. It even acknowledged how reducing such emissions would “have an outsized impact on near-term warming.” Unfortunately, little about these existing initiatives afford sufficient comfort that natural gas will not simply replace coal as the fuel cabining our race to reach a 43% reduction in GHG emissions by 2030, the target of the 2015 Paris Agreement, or a net zero energy economy by 2035 or a zero-emission economy by 2050—targets of the Biden Administration.
This Essay probes the array of assumptions animating the Administration’s continued support for natural gas. It chronicles how we may be creeping toward another of what I term energy folly, championing a fuel ostensibly necessary today to support a reliable electric grid and spur the nascent yet emerging hydrogen economy. And it explores how natural gas proponents assume that several initiatives will diminish the climate change impacts from methane emissions, counseling against aggressive programs for reducing continued investment in natural gas infrastructure. But as this natural gas infrastructure continues to grow, possibly becoming a future-stranded asset or chilling our willingness to wean ourselves off natural gas, our existing regulatory system avoids any meaningful inquiry into the role of natural gas from now until 2030, 2035, or 2050.
To remedy this, I suggest we ought to engage in this inquiry by constructing appropriate institutional mechanisms capable of asking the right questions. State regulatory commissions, the Department of Energy, and the Federal Energy Regulatory Commission (FERC) ought to appreciate how their decisions today can solidify possibly problematic natural gas infrastructure long after immediate need for the natural gas has faded. To avert this scenario, they should be capable of scrutinizing whether any proposal involving natural gas is necessary not merely immediately or the following year, but five or more years later as well. Regional entities could be formed to aid the endeavor; those entities could be tasked with combining annual analyses by the Energy Information Administration with similar regional assessments and projections on the need for natural gas not just immediately but for the entire physical and economic life of the infrastructure. This ought to include requiring any proposal for new natural gas infrastructure to accept a decommissioning or transition plan. FERC, for instance, should demand from applicants an enforceable timeline for achieving zero emissions, whether through a commitment toward carbon capture, utilization, and sequestration (CCUS) or an agreement to transition away from natural gas and toward hydrogen, or otherwise agreeing to shutter the infrastructure.
Climate change is propelling us into a perilous future, and yet we continue to promote natural gas with unverified assumptions about how we can arrest methane emissions. Those assumptions may well prove our prescience. Natural gas may well provide a catalyst capable of transitioning our energy systems toward a much more dominant hydrogen-based economy. But a gambit with natural gas is risky. Our future, consequently, warrants being cautious and charging our institutions with the obligation to prevent natural gas from becoming the proverbial sword of Damocles, preventing our transition to a zero-carbon economy sooner rather than later.
The Obama Administration’s principal forays into arresting greenhouse gas (GHG) emissions appreciated the deleterious consequences associated with unregulated continued natural gas usage yet shied away from promoting overly aggressive measures against the industry. From both a political and cost-benefit calculation, the Administration’s initiatives to instead focus on reducing oil and coal consumption seems reasonable. In 2008, after all, total GHG emissions were 7,052.6 MMTCO2e, while methane emissions were 737.4 MMTCO2e. Transportation accounted for roughly 33% of U.S. energy-related carbon dioxide (CO2) emissions by the end-use sector, and natural gas contributed about 21% of energy-related emissions from fossil fuels; for fuels, coal contributed 36.5%, and petroleum accounted for almost 42%. The White House lawn ceremony announcing a compromise with the automobile industry, increasing the Corporate Average Fuel Economy standards, arguably signaled the first phase in the eventual decline of the combustion engine. Under the Obama Administration, thermal coal for power production began its precipitous decline—animated by a host of factors, including debilitating competition from natural gas. The market favored natural gas for both power production and home heating. The natural gas industry was not shielded from scrutiny, however. Fracking and earthquakes captivated aspects of the public consciousness—whether in films such as Gasland or in local and state legislatures animated by economics or environmental protection. As a far more potent GHG than coal in the short run, methane emissions admittedly surfaced as a concern, with the Administration developing a Methane Plan and promoting targeted policies to reduce emissions. But these seemingly marginal efforts merged with the subsequent Trump Administration’s pro-natural gas bent to leave us where we are today—with a natural gas conundrum.
Stories about methane releases populate the news amid dialogues about natural gas usage that remain obscured by a myriad of voices. Methane enjoys the dubious distinction of being considerably more potent, albeit for a shorter period, than CO2 emissions. The International Energy Association (IEA) calculates that methane is responsible for about 30% of global warming. Over a twenty-year period, methane reportedly is at least eighty times more potent than CO2, with one journalist reporting how methane had been “ignored for decades,” yet “scientists now know that methane is much more potent than carbon dioxide as a greenhouse gas in the short term, even though it lingers for only a decade in the atmosphere before breaking down.” One study even posits that methane could be “four times more sensitive to global warming than previously thought” and may, “if left unchecked,” further global warming. In April 2023, reports surfaced that methane emissions might be 70% higher than the Environmental Protection Agency’s (EPA’s) estimates—at roughly 14.8 million tons rather than 8.7 million tons. Natural gas even surfaced during the 2023 G-7 discussions with nations exploring language about the fuel’s future.
Not surprisingly, therefore, reducing or eliminating methane releases warrants urgent attention. The United Nations reports that arresting methane emissions is an efficacious tool for attacking climate change. Both the Obama and Biden Administrations crafted methane plans, while Congress, through the Inflation Reduction Act (IRA), ushered in its own methane response program. For instance, the IRA added a provision to § 136 of the Clean Air Act (CAA) for monitoring and reporting; it appropriated $850 million dollars through 2028 toward methane mitigation; it allocated considerable sums toward waste from marginally producing wells; and it adopted a methane release charge program. The Biden Administration is so serious about tackling the problem that it is now employing a cabinet-level federal task force dedicated to searching out methane release offenders. But since the IRA, the cacophony of issues surrounding natural gas usage and methane releases continue to flourish. For public lands, the Bureau of Land Management (BLM) has once again announced plans for addressing methane waste (leakage, venting & flaring). The EPA similarly has re-entered the fray with updated CAA New Source Performance Standards (NSPSs) for the oil and gas pipeline industry.
Acting pursuant to the 2020 Pipes Act, the Pipeline and Hazardous Materials Safety Administration (PHMSA) joined the club by proposing new regulations targeting methane releases as well. And even in Europe, when the Nord Stream 1 and 2 pipelines exploded, it produced one of the largest recorded methane leaks, as the EU Energy Chief encouraged countries to limit methane releases.
Can the nation endure policies favoring natural gas if the country is committed to a net zero energy economy by 2050? Natural gas and its associated infrastructure, after all, support home heating, home cooking, transportation, industrial uses, and, finally, electric energy production. Indeed, in 2022, the electric power sector used 38% of the consumed natural gas, while industrial use accounted for 32% percent, residential use was 15%, and the commercial and transportation sectors rounded out at 11% and 4%, respectively. In 2022, the Energy Information Administration’s (EIA’s) annual outlook warned that population growth and increased energy demand, absent significant policy changes, would likely require continued reliance on fossil fuels for at least another twenty-five years. Even before discussions about replacing lost Russian gas occasioned by the war in Ukraine, energy experts anticipated how natural gas would be necessary possibly beyond 2050 and that the United States ought to continue exporting the fuel to our allies. The United States, after all, could not easily object to Russia’s Nord Stream 2 pipeline while chilling our interest in exporting liquified natural gas (LNG) and strengthening Europe’s energy security. President Biden offered some hope for international energy security when he announced support for expanded LNG exports. The Administration’s announced goal at that time was to expand annual LNG exports to Europe to fifty billion cubic meters by 2030. EIA expects a 14% increase in exports in 2023 from 2022 levels, and the Department of Energy (DOE) appears poised to facilitate further LNG development that arguably has a smaller emissions impact. And while the Biden Administration has shepherded gigantic gains in responding to climate change, and the President warned in a September 2023 U.N. speech of the “existential threat” confronting us, the Administration also has weathered criticisms for its continued willingness to support some domestic fossil fuel development.
The Mountain Valley Pipeline (MVP) project demonstrates the inertia propelling our continued investment in natural gas. The MVP project is a 300-plus mile natural gas pipeline that crosses West Virginia and Virginia and passes through at least 300 waterbodies; it required some form of approval from five federal agencies and was mired in litigation at almost every jurisdictional juncture. When Congress, as part of a complicated compromise orchestrated by Senator Joe Manchin, blessed MVP, the pipeline already was about 94% constructed. Even after President Biden signed the bill into law and almost assured the pipeline’s future, protesters continued their opposition, with one member of Congress voicing concerns that the project “should’ve never been part of the debt crisis deal.” Litigation efforts nevertheless persisted, with the Biden Administration supporting the argument that the congressional compromise had precluded any further challenges to the sufficiency of the environmental review accompanying the original proposal. Perhaps the ultimate irony is that MVP may not be able to operate at even 50% of its capacity once built due to downstream constraints.
MVP’s success reflects an initial salvo by the industry, with signs that Senator Manchin’s victory may foster additional legislative discussions surrounding streamlining natural gas pipeline infrastructure.
This Essay probes such a favorable bias toward natural gas. Part I briefly explores the regulatory landscape confronting natural gas infrastructure. Here, I focus on interstate natural gas pipelines and their regulation by the Federal Energy Regulatory Commission (FERC), along with the role of the DOE in approving exports of LNG. This transitions into a discussion in Part II of why natural gas continues to capture supporters, including the Biden Administration. The Essay chronicles how natural gas is portrayed as essential for stabilizing the electric grid, furnishing winter heating, as well as, even more importantly, supporting hydrogen—a potentially transformative fuel. It further explains why natural gas proponents suggest that climate change impacts from methane emissions will be diminished by an array of initiatives, counseling against aggressive programs for reducing continued investment in natural gas infrastructure. But whether this makes sense is discussed in Part III, where I consider the assumptions surrounding those initiatives and the sufficiency of existing programs for adequately testing the existing and future role of natural gas and its accompanying infrastructure. Then, the conclusion offers some observations about what ought to be done. To avoid the likelihood of an expanded and entrenched natural gas infrastructure that becomes a stranded asset or unnecessarily favors natural gas beyond its time, I suggest that our regulatory system for approving new natural gas infrastructure should examine rather than shy away from asking the difficult questions.
Today’s natural gas industry confronts a multi-faceted regulatory process. Regulating the production of natural gas naturally varies by jurisdiction and land ownership and naturally must comply with relevant state and federal environmental controls as well as appropriate land use measures or plans. But once natural gas is extracted from underground plays and en route to some end-user, state public utility commissions, the FERC, the EPA, and the PHMSA all might have some role in whether, where, or how that gas might be transported or used. Natural gas transportation might foster land use disputes surrounding access to land for easements or right-of-way. And state or local municipalities might add their voice as well, possibly mirroring Berkely’s attempted banning of its use in certain new buildings.
A proposal for an interstate natural gas pipeline must demonstrate to FERC that the line serves the public interest, warranting a Certificate of Public Convenience and Necessity (a § 7 Certificate). The Commission accepts preconstruction contract commitments (precedent agreements) when shippers commit to use a set percentage of the pipeline’s capacity, demonstrating a market need for the natural gas. If a pipeline serves the public convenience and necessity, the Natural Gas Act (NGA) directs the Commission to issue a certificate—possibly with conditions. These commitments generally occur during what is called an open season, when the pipeline advertises its project and solicits from prospective shippers a commitment to use a percentage of the pipeline’s capacity. Once shippers commit to enough capacity, companies typically apply for a blanket certificate. This happens after the company has engaged in pre-filing outreach with the appropriate permitting authorities and, hopefully, all interested stakeholders. A general certificate condition requires documented receipt of all applicable federal environmental authorizations before proceeding with construction. Once the Commission issues a § 7 Certificate, § 7(h) entitles the certificate holder to acquire the necessary property interests for construction of approved facilities, including eminent domain authority.
The regulatory authority over exports and imports of natural gas is shared between FERC and the Secretary of Energy. Section 3 of the original NGA delegated authority over both imports and exports of natural gas, or correspondingly LNG, to the FPC. Congress instructed the Commission to allow an import or export “unless, after opportunity for hearing, it finds that the proposed exportation or importation will not be consistent with the public interest.” When Congress passed the Department of Energy Organization Act of 1977 and established FERC (replacing the FPC), it transferred § 3 authority to the newly established Secretary of Energy, “unless the Secretary assigns such a function to the Commission.” More recently, Congress ensured that FERC would exercise exclusive jurisdiction over the siting, construction, and expansion, as well as the operation, of LNG export and import facilities, and Congress incorporated specific provisions designed to streamline the permitting and environmental review process for LNG facilities. Congress further instructed the Commission to adopt regulations for complying with the National Environmental Policy Act (NEPA) and to ensure that interested stakeholders would be involved in a pre-filing process for any proposed LNG facility. The Commission complied by adopting rules encouraging natural gas infrastructure, including LNG terminals.
Natural gas poses challenges for reaching a net zero energy economy by 2035 and a corresponding zero emission economy by 2050. New interstate natural gas pipelines and facilities and new and expanded LNG terminals are exceedingly expensive. The MVP developers are spending almost $7 billion—up from a projected roughly $5 billion. The ill-fated Jordon Cove LNG proposal was that high or higher; a much smaller project, the Spire Missouri STL Pipeline, even increased its cost from $220 million to $287 million. These costs further illustrate how the infrastructure associated with these projects likely demands well beyond a twenty-year investment to recoup the capital costs—carrying the project and its accompanying fuel past 2035.
Natural Gas’ Necessity Part 1. Despite its potential for undermining pleas for immediately reducing all fossil fuel use, natural gas enjoys numerous allies. The industry and various regulators naturally champion its continued use as a necessity. They question the fuel’s moniker as a transition fuel, pointing to surging demand in Europe and not tethered to any technological mitigation such as carbon capture, utilization, and storage. Another refrain centers on the role of natural gas as stabilizing the grid, capable of being available for peak demand when electricity needs soar during periods of harsh winters or scorching summers. In 2022, as winter approached, New England’s largest energy supplier cautioned the White House that additional natural gas flowing into the region might be necessary to avert a possible shortage. The Midwestern grid operator triggered criticism when it appeared non-neutral in favoring a new natural gas plant for grid reliability. In New York, where the state electric grid is slated to become net zero by 2040 —and with the Empire state becoming the first in the union to ban natural gas in some new buildings — the New York System Operator (NYISO) prior to the summer of 2023 lamented that additional demand from EVs and more heat pumps cannot be supplied by extant renewable resources; and it expressed concern how natural gas retirements could pose a problem. In California, the state’s energy commission also approved short extensions for a few natural gas plants targeted for retirement, leaving them in reserve for extreme weather events. With over 2,000 gas-fired power plants in the country in 2021, and projections of an increase in gas-fired generation as the nation entered the 2023 summer, the difficulty with confronting natural gas’s future seems apparent.
The Biden Administration has addressed the conundrum surrounding natural gas by employing a Queen’s Gambit. In the gambit, chess players willingly sacrifice a piece to control the board. By willingly sacrificing pursuing an aggressive immediate stance against natural gas, the Administration seemingly hopes to stabilize Europe, ensure a robust deployment of renewable resources until battery technology or nuclear power can supply grid reliability, load-following services, and furnish peak energy needs. And to be sure, few question the function of natural gas, at the very least, as a transition fuel. A 2019 IEA report observed how “[e]ven with falling battery costs, natural gas is currently the most viable near-term option in most parts of the United States for balancing renewable energy at scale and providing essential load-following services.” It also remains critical for energy security overseas, at least until 2030—and that means also the necessary domestic infrastructure capable of meeting those needs. Here, conversely, our dependence on natural gas justified acting FERC Chair William Phillips, unlikely cognizant of the extreme weather that would confront the nation in the summer of 2023, to warn at summer’s outset how the nation could face a natural gas “reliability gap.”
This seems unlikely to change anytime soon. The 2023 EIA report suggests that energy growth will likely remain stable through 2050, and even though renewable energy will capture an ever-increasing lion share of our energy capacity, “relative to 2022, natural gas generating capacity ranges from an increase of between 20% to 87% through 2050.” It adds that natural gas heating seems likely to remain the largest source for heating through 2050 as well. And as the nation witnesses one extreme weather disaster after another, the need for urgent climate action becomes increasingly imperative while immediate safety and geopolitical concerns suggest caution over natural gas.
Natural Gas’ Necessity Part 2: Hydrogen. Years ago, Toyota touted hydrogen-powered vehicles as the next-generation automobile while simultaneously developing the first prominent hybrid vehicle (the Prius). Toyota engaged in at least meaningful hydrogen R&D efforts back in the early 1990s, but hydrogen soon became eclipsed by the widespread promotion of hybrids and then, more recently, electric vehicles. Now it is back. And its possibilities expanded considerably. In 2004, the National Academy of Sciences observed how “[a] transition to hydrogen as a major fuel in the next fifty years could fundamentally transform the U.S. energy system . . . .” President Bush’s State of the Union address the year before had encouraged hydrogen fuel cells for the transportation sector, even positing how a child born then might be driving a hydrogen-fueled vehicle. Now, just shy of 20 years later, hydrogen has fast become a fuel de jure. And hydrogen offers the unique potential for bolstering both our electric grid and the transportation sector. States have been collaborating and vying for Department of Energy money to develop hydrogen hubs, while associations and lobbyists are actively pursuing all manner of funding opportunities. The Department of Energy, in July 2023, unveiled a one billion-dollar investment in clean-hydrogen initiatives.
Hydrogen is a quintessential clean fuel. Many children learn how hydrogen, when burned with air, produces only water. As such, the Rhodium Group describes it as having “the potential to be a ‘Swiss Army knife’ of long-term decarbonization in the [U.S.].” It also could serve, according to others, as an opportune “energy vector” capable of decarbonizing “difficult-to-electrify” segments of society such as heaving industry.
Today, as intimated by the IEA, the difficulty with hydrogen is that, first, it is predominantly being produced using fossil fuels and, consequently, contributes to GHG emissions; and second, it is being used worldwide mostly in the refining and chemical sectors. Hydrogen can be produced in several ways. Hydrogen is generally produced either through steam-methane reforming (SMR), the most common method, or electrolysis (splitting water with electricity), although new technologies are constantly surfacing. “Green” hydrogen occurs when the process for producing it is generated through renewable energy (by electrolysis) other than nuclear power. Unfortunately, this method is costly and, as such, an emerging challenge is reducing its cost. This is why SMR predominates today’s hydrogen production, with fossil fuels deployed as the catalyst in industrial processes. Traditional fossil fuels can supply the electricity for producing hydrogen as well, but in doing so it is far from clean unless the emissions are captured. This is generally referred to as “gray” hydrogen when the resulting emissions are vented. If emissions are captured, this hydrogen turns to “blue” hydrogen.
With most existing hydrogen production tethered to natural gas and natural gas infrastructure touted as supporting hydrogen transportation, the gambit with natural gas is pronounced.
Burying it, a Hopeful Assumption? Over a decade has now passed since the allure of carbon, capture, utilization, and sequestration (CCUS) captivated industry leaders and politicians alike. Touted originally as a lifeline to the coal industry, it offered a promise of continued use of fossil fuels provided the regulatory and property-law issues could be resolved that would allow captured CO2 from coal-fired power plants to be either used in a production process or stored deep underground in pore space. Today, conversations about CCUS have morphed away from coal but escalated in championing its possibilities, including developing direct air capture projects. Former Obama Administration Secretary of Energy Ernest Moniz endorsed a CCUS plan for further infrastructure necessary to achieve significant GHG reductions. During the Biden Administration’s first year, the Council on Environmental Quality issued a report promoting CCUS. And Biden Administration Secretary of Energy Jennifer Granholm echoed the importance of CCUS, when she observed how “[t]hese kinds of technologies will help . . . the oil and gas sector . . . be able to ramp up production, but in a way that’s clean.” With the expansion of the 45Q tax subsidy for CCUS, the modern gold rush is upon us, with companies rapidly exploring how to take advantage of the economic opportunity. The White House even formed a federal task force designed to explore and likely facilitate the use of our public lands for a massive build out of available underground storage space. Promoters of CCUS, after all, cross political and sectional divides, with politically divergent states, such as Colorado and Wyoming, joining together on developing CCUS technologies. To be sure, some admittedly lament a possible future where nations rely too much on CCUS as a savior. Yet without CCUS, any fossil fuel future seems surely bleak.
CCUS, therefore, expectedly enjoys a prominent role centrally situated in current conversations surrounding blue hydrogen. As interest in hydrogen appears to be growing exponentially, the natural gas industry proclaims how it can produce large volumes of hydrogen; and if it can do so utilizing CCUS technologies, it can assume the mantle as hydrogen’s progenitor. The need to deploy renewables in the endeavor consequently dissipates. Natural gas then becomes tethered to emerging hydrogen markets in two ways. First, it strengthens the electric grid and offers an opportunity to produce hydrogen without compromising reliability. Second, the natural gas pipeline infrastructure purportedly can morph into a future network of pipelines and infrastructure capable of transporting at least some share of the new clean fuel. Indeed, in 2021, Secretary Granholm told an audience that “We want to build more pipes,” adding that natural gas pipelines could be employed to transport hydrogen. And the next year the Administration and the EU discussed how new natural gas infrastructure eventually could be constructed to adapt to carrying hydrogen. These two assumptions about the relationship of natural gas to hydrogen, coupled with policies promoting CCUS and a refrain of how natural gas remains essential for stabilizing our domestic grid and reducing worldwide GHG emissions, implicitly animate the Biden Administration’s reticence to question natural gas and its infrastructure’s future.
Don’t Worry. Yet the Biden Administration’s apparent embrace of natural gas assumes that policy initiatives will reduce the adverse consequences flowing from a possible continued natural gas future. To begin with, the oil and gas development/production industry appears poised to confront a new frontier where methane releases seem likely to be reduced greatly. Shortly after assuming office, President Biden instructed EPA to explore regulations for methane releases from the oil and gas sector. Then, mirroring the Obama Administration, the White House released a November 2021 Methane Reduction Plan, outlining future agency initiatives, the principal ones described below. And President Biden augmented the plan on August 16, 2022, when he signed the IRA. Often described as the largest climate legislation passed by Congress, the IRA includes a host of programs targeting emissions. One report suggests it might allow the United States to achieve President Biden’s goal of an 80% carbon-free electric grid by 2030. Congress appropriated about $1.5 billion toward methane reductions: DOE is investing $47 million to reduce methane emissions from oil and gas sector, as EPA has geared up to deploy $700 million in funds for methane reductions.
Notably, several other EPA initiatives could curb GHG emissions associated with natural gas infrastructure. Most prominently, EPA is once again crafting a CAA NSPS applicable to natural gas plants. The proposal optically appears progressive and would require carbon capture and storage, effectively decreasing the competitive posture of natural gas for electricity. But most new natural gas plants are what we generally describe as peaking plants, only used during times of extremely high electricity demand. Yet these plants would escape having to comply with the NSPS, naturally causing environmentalists to ponder the utility of EPA’s proposed NSPS in the first place. EPA also has accepted a consent decree that would require, by November 2025, it to examine and—if necessary—issue final revised NSPSs for new stationary combustion engines and continue to do so every eight years.
And both EPA and BLM are embarking on regulatory programs for reducing methane emissions from the oil and gas industry. In April 2022, GAO released its report on federal actions necessary to address methane emissions from the oil and gas industry. It further observed how the Interior Department, for fiscal year 2020, calculated that roughly l3.3 trillion cubic feet of gas had been produced off federal lands and that while most of that had been captured, just not all of it. The report recommended that (1) EPA provide sufficient flexibility for operators to use alternative technologies to detect methane emissions and (2) that BLM consider whether to require gas capture plans possibly mirroring states plans for federal lands. Each agency previously attempted regulations targeting methane reductions, which for different reasons faltered during the Trump Administration. Now, once again, EPA finalized updated standards at the end of 2023. As it was doing this, it announced how it would prioritize enforcement efforts geared toward reducing methane emissions from oil and gas facilities and from landfills.
Public Lands and Policy. BLM similarly hopes to ratchet down emissions from oil and gas activities on public (federal) lands. Although criticized for approving the Willow Project in Alaska, overall the Biden Administration has deployed the nation’s public lands to facilitate a green economy—emphasizing both onshore and offshore renewable energy projects. After failed efforts to pause onshore and offshore oil and gas leasing, it has embarked on other efforts to reduce threats from federal oil and gas activities—but principally in areas involving threats to species or cultural resources. This is coupled with modifications to the federal onshore oil and gas leasing program that include increased royalty rates, rental fees, and ensuring competitive bidding. And now, for the second time, BLM is poised to regulate methane emissions from public lands. Finally, BLM recently proposed a “conservation” rule that could facilitate greater emphasis on protecting lands from development; if implemented, some say it could impact oil and gas leasing on public lands.
PIPES Safety. On September 13, 2018, Columbia Gas of Massachusetts’ natural gas pipeline exploded and caused at least 40 homes in Merrimack Valley, MA, to catch fire. Congress responded by passing the Pipelines and Enhancing Safety Act of 2020, or the 2020 PIPES Act. The act continued funding the pipeline safety program and amended the program administered by the PHMSA. Along with requiring updated and expanded safety standards, the PIPES Act imposed an obligation on PHMSA to address methane releases. In PHMSA’s Spring 2023 regulations implementing the 2020 PIPES Act, the agency observed how “[t]he amendments would reduce both “fugitive emissions” (meaning unintentional emissions resulting from leaks and equipment failures) and “vented emissions” (meaning those emissions resulting from blowdowns, equipment design features, and other intentional releases, also called “intentional emissions”) from over 2.7 million miles of gas transmission, distribution, and gathering pipelines and other gas pipeline facilities as well as 403 underground natural gas storage facilities (UNGSWFs) and 165 liquefied natural gas (LNG) facilities, thereby improving public safety, promoting environmental justice, and addressing the climate crisis.” Many in the natural gas industry have responded by accusing the agency of overreaching—threatening to impose unnecessary and unreasonable costs on pipelines.
Long Since Abandoned Development. Finally, in the last few years, increased attention has focused on addressing methane emissions from abandoned wells. Public and private lands are sprinkled with abandoned oil and gas wells, along with old, abandoned coal mines, which collectively contribute significantly to methane emissions. The Natural Resources Defense Council even posted how these abandoned wells “[a]re [t]hreatening [l]ives and the [c]limate,” possibly according to a Reuters’ investigation, emitting almost several hundred thousand tons of methane a year. The IRA responded to this lingering problem by including almost $5 billion to help fund the closing of what could be many thousands of abandoned oil and gas wells.
Our continued embrace of natural gas congers images of an Escher print, a never-ending strange loop that optically obscures embedded anomalies. To avert a scenario where, in 2050, we have billions invested in natural gas infrastructure that becomes a stranded asset or continues to produce GHG emissions, we must assume—
Each assumption, unfortunately, contains a myriad of factors, leaving a wide margin of error. Before exploring a few critical ones, it is worth acknowledging that we must presume the political winds will remain calm enough to continue the present policies ushered in during the Biden Administration. Then, we must accept that regulatory programs will be fashioned to account for market changes.
Arguably, more significantly, we must agree that new natural gas infrastructure is indispensable for a reliable electric grid and national supply of heating capacity. Projections seemingly suggest it is. Our electricity needs will grow between now and 2050; and the transition to electric vehicles only intensifies the urgency of shoring up a reliable electric grid. Of course, even the EIA predicts that, by the early 2030s, the majority of natural gas produced in the United States will be exported either by pipeline or as LNG: it “will become larger than any domestic end-user sector, including residential, commercial, industrial, and electric generation.” Although we are the world’s largest consumer of natural gas and became a natural gas exporter in 2017 (and now the third largest exporter), as exports rose so, did production and a corresponding decrease in price, fueling additional consumption but not enough to offset the production increase. And at least as of spring 2022, a Pew research report suggests the majority of Americans do not oppose funneling natural gas to overseas markets.
This Essay cannot wade into the dialogue over whether renewable energy will be sufficient and, if so, when that might occur, but any assumption that natural gas will be essential for the electric grid for beyond another twenty years is problematic. Technological change occurs too rapidly to offer a sound prognosis for a future beyond, say, a decade. Projections about peak oil never materialized. High noon for natural gas faded into the sunset as horizontal drilling and hydraulic fracturing became economical. Even without the Clean Power Plan, utilities shuttered their coal-fired power plants faster than would have been necessary under the plan. Battery technologies could improve dramatically, for storing electricity on the grid (married to renewables) and for automobiles. Notably, the automobile industry champions a transition to electric vehicles likely quicker than when anyone expected a decade ago. Widespread adoption of small modular reactors could transform the electric grid, and electric heat pumps could eclipse natural gas heating, while new homes could enjoy induction ranges rather than gas burners. After all, today, many enjoy talking on their Apple Watch, while ten years ago, it would be three years before Apple’s Tim Cook would announce its arrival. A survey of senior business leaders in 2017 suggested that less than 20% were aware of artificial intelligence; and today, one would be quite ill-informed to have not heard of ChatGPT. Consequently, while perhaps we lack confidence to profess that natural gas will be unnecessary for another twenty years (or less), we should be equally cautious to pronounce it will remain indispensable.
One significant assumption involves examining how much our natural gas pipeline infrastructure will support future robust hydrogen systems. Currently, the meager miles of hydrogen-dominant pipelines are concentrated in the Gulf Coast, and worldwide “most hydrogen pipelines are owned by merchant hydrogen producers who sell their hydrogen to industry in bulk.” It seems somewhat trite to tout that new natural gas infrastructure should accommodate fuel switching, when nothing currently demands it. No consensus even exists on the applicable regulatory program for hydrogen pipelines and accompanying infrastructure—some suggest hydrogen pipelines should be regulated under the Interstate Commerce Act; others promote the NGA. And while FERC may employ the NGA when exploring tariffs that include other constituents flowing through a pipeline that could affect a line’s integrity, such as renewable natural gas (or biogas), using hydrogen as a justification for investing billions of dollars in new natural gas pipelines appears questionable. Some percentage of hydrogen and natural gas can safely be blended in existing natural gas pipelines and blending is not new, but just how much blending is possible remains uncertain—and the same is true for the accompanying compressors and equipment. A late 2022 report by the National Renewable Energy Laboratory encouraged that “additional research across the entire hydrogen and natural gas supply chain will be needed to fill current knowledge gaps and better inform [decisionmakers] on future blending projects.” And the Energy Department cautions that a blending percentage will “depend on the design and condition of current pipeline materials, of infrastructure equipment, and of applications that utilize natural gas.” In Europe, therefore, conversations focused on proposed new natural gas infrastructure include exploring its blending capabilities.
Sadly, this question and others escape meaningful inquiry here in the United States. This is despite that companies like Southern California Gas Co., one of the nation’s largest local gas distribution companies, is following an ASPIRE 2045 program for net zero emissions by 2045, highlighting hydrogen as a component—but principally green hydrogen from renewable energy. While, therefore, any examination seemingly should be encouraged when considering any new natural gas infrastructure, FERC’s program for considering new proposals abjures it. This is despite warnings in 2022 regarding how “FERC is under heightened pressure this year to reform the way it greenlights new pipelines, following recent court rulings and criticism that it has not done enough to analyze the environmental effects of natural gas infrastructure.”
FERC’s Abdication. FERC exudes a penchant for approving new natural gas infrastructure absent compelling reasons counseling otherwise. Indeed, the Commission’s approach toward reviewing natural gas projects has been plagued by various elemental concerns, most of which I chronicled earlier. The Commission clings to an outdated 1999 policy for addressing NGA certificate applications. When it attempted to update these policies that have since proven problematic, including the byzantine way the Commission and the pipeline companies employ NGA’s eminent domain authority, often to the detriment of landowners, the fierce backlash stalled the effort. Notably, however, three issues inform our present discussion. First, the Commission employs a rate of return for newly constructed interstate natural gas pipelines that affords a rate of return that is arguably too enticing from a short-term business perspective. This could favor capital investments in pipelines when the investment might appear profitable in the short-term, regardless of future regulatory initiatives that might shorten the economic life of a project—and possibly produce a stranded investment.
Second, FERC’s examination of whether a project is in the public interest and, as such, a need for the natural gas is anything but searching. FERC exhibits an affinity for approving a proposed natural gas infrastructure project, absent strong evidence questioning the merits of a particular project. In her analysis of FERC’s approval of 125 pipeline projects between 2014 and 2018, Romany Webb concluded that FERC generally avoids examining environmental issues in any depth—focusing more on economic analysis. Its 1999 Certificate Policy skews the deck: it emphasizes an economic test that balances the beneficial and adverse economic effects, and only when the former outweighs the latter will it proceed with an environmental analysis. And the economic analysis, as noted above, is often skewed because FERC merely relies on precedent agreements with little scrutiny unless forced. If existing customers are not being asked to subsidize a new project, no adverse effects would exist; if the project is a greenfield project, FERC similarly expresses little economic concern because it considers the risk of subsidization or degradation of existing customers unlikely. For instance, the D.C. Circuit chastised FERC for not examining the adequacy of the precedent agreements for the NEXUS Gas Transmission project that were designed, according to the City of Oberlin, Ohio, for exporting gas to Canada. FERC responded to the court’s remand by concluding that, regardless of the precedent agreements, shipping gas to Canada was in the public interest in accordance with its 1999 policy statement. Perhaps so, but the outcome seemed preordained. Not surprisingly, the Commission’s environmental analysis also occasionally appears slim upon review—ostensibly diminishing a project’s impact on the environment, aside from on the climate.
Finally, the Commission openly struggles with whether or how to examine GHG emissions associated with a proposed project. The Commission’s somewhat mercurial approach toward addressing GHG emissions associated with a project is possibly the most pronounced instance of where meaningful climate change policy is avoided. It became part of the floundering play by the Commission to update its 1999 Certificate Policy, only to cost its then-acting Chairman his job. FERC generally avoids examining upstream (indirect) effects of possibly inducing more natural gas development. And when it can, it relegates the importance of downstream GHG emission effects as well. During the 2023 summer, FERC Commissioner Allison Clements lamented how the Commission not only ought to revisit updating its Certificate Policy but should also comply with the requirement to consider and assess GHG emissions associated with a project approval. The D.C. Circuit soon thereafter suggested in an oral argument that perhaps the Commission ought to delay approving new projects until it updates its policy.
When the Commission considered the Henderson County Expansion Project, a roughly twenty-four-mile pipeline from Kentucky to Indiana, it refused to announce any judgment on whether the environmental analysis should have employed the social cost of carbon as a metric for assessing GHG emissions. When announcing the availability of the environmental impact statement (EIS), it noted how the document “is not characterizing the Project’s greenhouse gas emissions as significant or insignificant because the Commission is conducting a generic proceeding to determine whether and how the Commission will conduct significance determinations going forward.” During scoping for the project, the EPA expressed its concerns with the purpose of and need for the project, as well as its possible climate change impacts (including from methane leakage) and potential impact to wetlands. It later repeated aspects of these concerns when commenting on the final EIS. The Citizens Action Coalition of Indiana, however, requested rehearing of the Commission’s October 20, 2022 Order granting the necessary authorizations, specifically objecting to an allegedly deficient EIS. In a controversial move, the Commission denied rehearing in June 2023 without addressing the principal argument about analyzing GHG emissions. And the Commission’s spokesperson deflected criticism by observing how “[t]he Commission has made tremendous progress clearing the backlog of natural gas infrastructure projects needed for reliability” and Chairman Phillips “remains consistent and cooperative” in “mov[ing] orders forward.”
LNG: FERC and DOE. LNG export projects must wade through a labyrinth regulatory process that includes DOE as well as FERC, but the cards generally remain in their favor. For the most part, LNG export decisions by DOE are presumptively considered as in the public interest. After 1992, countries with a free trade agreement (FTA) with the United States “shall be deemed to be consistent with the public interest” and, as such, granted the authority to export “without modification or delay.” Similarly, the presumption also applies to “small-scale” natural gas exports to non-FTA countries. Then, for larger export projects in countries without an FTA, DOE conducts any relevant environmental inquiry and seemingly examines whether approving the export would serve the public interest. As of April 2023, DOE had existing authorizations under forty-one long-term orders for exporting 49.83 Bcf/d, excluding FTA and small-scale exports.
Recent DOE authorization orders suggest the department follows President Biden’s earlier commitment to promote LNG exports, primarily for Europe. And, analogously, Europe correspondingly has, for the first time, received more natural gas from LNG imports than from pipelines. The 2022 Environmental Integrity Project suggests that, as of that year, the DOE’s “role in the LNG permitting process is largely one of a rubber stamp.” In 2022, for instance, DOE expanded the volume authorized for export from two Gulf Coast terminals. And in DOE’s listing of its 178 orders in 2022, it appears the department generally accepts the industry’s requests. The Administration’s support for an LNG project in Alaska further illustrates its cautious approach toward chilling any LNG investment. When, moreover, the D.C. Circuit upheld the $39 billion Alaska LNG project, the FERC Chairman observed how it reflected “the fact [that] we’re moving in the right direction” for energy policy.
To be sure, DOE seemingly strengthened its approval policy by announcing how a company will have only up to seven years from an order granting the authorization to commence construction (or, before ninety days prior to the seven-year expiration period, apply for an extension). The industry perceived this as tightening standards surrounding LNG approvals. Yet, as DOE explained, this policy reflects LNG orders since 2011, and most of what DOE is concerned with is allowing companies to stretch out too long by continuing to seek extensions (sometimes at the last minute) when they commence construction. This appears unlikely to chill LNG proposals.
How the United States confronts the natural gas gambit is quintessentially a role for energy experts capable of canvassing the panoply of factors informing how at least the United States can reach net zero by 2050. Whether that means continuing FERC’s approach toward considering new or modified interstate natural gas projects or DOE’s presumption toward approving LNG export projects remains a complicated matter. Perhaps too, at least for now, natural gas is fundamental to stabilizing the electric grid, and there is little we should do. After all, EIA projects that even if a natural gas moratorium were imposed in 2024, it would merely reduce CO2 emissions from all sectors by a paltry 1% by 2050. And whether natural gas infrastructure ought to remain tethered to the burgeoning hydrogen-centric energy push is a query still in its infancy. Answering it, in part, naturally requires addressing whether existing and future efforts will target green or blue hydrogen. The former might diminish the role of existing natural gas infrastructure, consequently. But that, of course, could, in turn, be tempered by how the Internal Revenue Service deploys the 45V tax credit and whether that credit will be available for marrying other renewable resources, such as small modular reactors, with hydrogen or whether the credit (for purposes of “additionality”) will favor marrying hydrogen to natural gas.
No crystal ball can project regulatory changes, technological advances, and market changes that could steer us along the foremost path forward. Instead, we must develop institutional procedural mechanisms sufficiently comprehensive and flexible enough to monitor trends and, correspondingly, render efficacious decisions from gathered information. Our existing regulatory structure arguably does the opposite. Each participant, whether state or local entities, FERC or some other federal agency, contributes in some measure to energy choices, but their regulatory or other charge narrows their focus to what is before them. Each year EIA may project twenty-five years into the future, but transformations occur rapidly, and little about EIA’s efforts impact the choices made by the energy-related actors, such as FERC. To confront all facets of climate change, particularly the prospects for natural gas and how to eliminate methane emissions, that must change.
We should construct appropriate institutional mechanisms capable of asking the right questions. This suggests state regulatory commissions and FERC ought to appreciate how their decisions today can solidify possibly problematic natural gas infrastructure long after the immediate need for natural gas has faded. To avert this scenario, they should be capable of probing whether any proposal involving natural gas is absolutely necessary, not only today or the following year but five or more years hence as well. Regional entities could be formed to aid the endeavor; and those entities should be tasked with combining EIA’s analyses with similar regional assessments and projections on the need for natural gas not just immediately but for the entire physical and economic life of the infrastructure. This ought to include requiring any proposal for new natural gas infrastructure to accept a decommissioning or transition plan. FERC, for instance, should demand from applicants an enforceable timeline for achieving zero emissions: when will the project proponent commit to CCUS, agree to transition away from natural gas and toward hydrogen, or otherwise agree to shutter the infrastructure? A commitment, in short.
Climate change is propelling us into a perilous future, and yet we continue to promote natural gas with unverified assumptions about how we can arrest methane emissions. Those assumptions may well prove our prescience. Natural gas may well provide a catalyst capable of transitioning our energy systems toward a much more dominant hydrogen-based economy. But a gambit with natural gas is risky. Our future, consequently, warrants being cautious and charging our institutions with the obligation to prevent natural gas from becoming a proverbial sword of Damocles preventing our transition to a zero-carbon economy sooner rather than later.
The author would like to thank the participants at the 8th Annual SRP Sustainable Conference of Legal Educators, ASU, for their helpful comments, as well as the editors of the Administrative Law Review.
