A RUBBER STAMP FOR LNG EXPORT PROJECTS? The former head of the Federal Energy Regulatory Commission pushed back on criticisms from Democrats that the Biden administration is “rubber stamping” the approval of new LNG export terminals.
First, the criticism: Sen. Jeff Merkley of Oregon and other liberal Democrats have pressed the administration to reconsider the criteria it uses to approve new LNG export terminals. At least 11 proposed LNG projects have been fully approved by FERC and the Energy Department.
Merkley has accused FERC of “rubber-stamping” every application that has come before it, at the expense of “climate chaos.” And in a letter to the DOE he led in November, more than 60 Democrats faulted DOE for never denying LNG project approval based on climate considerations.
The pushback: Former FERC chairman Neil Chatterjee took umbrage at the criticism, arguing that the approval rate is somewhat misleading. He said that projects must go through a demanding process and that ones that don’t meet the criteria are turned away before an official approval decision is sought.
Before DOE can issue final determinations on LNG projects, FERC is tasked with overseeing all environmental impact assessments and ensuring NEPA compliance.
It’s during the lengthy and expensive safety and environmental certification process overseen by FERC that many would-be projects flame out, Chatterjee told the Washington Examiner in an interview.
The “rubber stamp” criticism “doesn’t account for all of the permit applications that are withdrawn or don’t complete the process, because project sponsors recognize that their applications are not viable” before they even reach DOE, Chatterjee said.
“The FERC process is incredibly rigorous, it’s expensive, it’s time consuming, and it’s thorough,” he added.
Members of FERC—a separate, independent agency with a bipartisan configuration— are also “subject to legal scrutiny of their decisions and sticking to past precedents,” Chatterjee said.
Another key point: It is only after FERC grants the certification to proposed LNG facilities that they are passed on to the Energy Department for final authorization. DOE is required to automatically approve FERC-certified LNG exports to any free trade agreement (FTA) countries, thanks to a requirement Congress included in the Natural Gas Act.
In fact, DOE can only make the “public determination” decisions for non-FTA countries, or if trade to a certain country is expressly prohibited by current law or policy.
(Currently, neither EU countries nor Japan are FTA-designated countries, giving DOE a bit more wiggle room on this.)
We asked the offices of Merkley and other Democrats for any response, and will provide an update if one is provided.
Why it matters: The U.S. is in the process of building out more than 70 million tons per year in baseload LNG export capacity, according to a report from the Center for Strategic and International Studies.
The explosion of U.S. exports — especially following Russia’s invasion of Ukraine, which increased EU LNG demand by 60%—led to an escalation in the debate. Industry groups argue LNG exports are fundamental to energy security and Democrats say they put climate and emissions targets at risk.
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Breanne Deppisch (@breanne_dep) and Nancy Vu (@NancyVu99). Email bdeppisch@washingtonexaminer dot com or nancy.vu@washingtonexaminer dot com for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.
RED SEA CRISIS HITS SUPPLY CHAINS: The U.S. returned the Yemen-based Houthi rebels to its list of terrorist groups this morning, raising the odds of long-term disruptions along critical East-West shipping routes.
Europe is expected to be hit hardest. “The cost of goods into Europe from Asia will be significantly higher,” Yuvraj Narayan, a senior official with the DP World consultancy, told Reuters. “European consumers will feel the pain … It will hit developed economies more than it will hit developing economies,” he added.
Insurance premiums for ships traveling on the Red Sea have also increased due to the violence, adding hundreds of thousands in additional costs for a traditional seven-day voyage.
Insurance could become more expensive or limited if the U.S.-led “Prosperity Guardian” freedom of navigation operation fails to deliver on its objectives, Morningstar analysts said in a note. That could force “most of the traffic to use the much longer route around the Cape of Good Hope,” the group wrote.
Trade through the Red Sea “represents an estimated 40% of Asia-European trade including fuel, energy, food products, and manufactured goods and remains a critical shipping link,” the group’s head of diversified industries, Scott Rattee, said in a separate note.
Chevron CEO Mike Wirth said yesterday that he was surprised oil prices are not higher given the “very real” risk in the Red Sea, which he warned could worsen very quickly.
“So much of the world’s oil flows through that region that, were it to be cut off, I think you could see things change very rapidly,” Wirth told CNBC in an interview.
CONSERVATIVE CLIMATE CAUCUS ADDS TO ITS RANKS: The Conservative Climate Caucus announced it will add new leadership roles to its ranks as its chairman, Rep. John Curtis, launches a bid for Utah’s open Senate seat.
The positions: Five new vice chairs will be added to the leadership slate – Republican Reps. Buddy Carter, Jen Kiggans, Greg Murphy, Tim Walberg, and Lori Chavez-DeRemer. Curtis will continue his role as chairman, and Rep. Mariannette Miller-Meeks will continue in her position as vice chairwoman.
“If you would have asked me when I first started this caucus, that less than three years later we would have 85 members and brought a conservative voice to the climate table, I probably would not have believed you,” said Curtis. “I am incredibly excited of the success we have experienced, the engagement of our members, including our six vice chairs, and look forward to continued success.”
The significance: Curtis won’t be serving in the House next year, and adding new members to CCC’s leadership is part of the Utah Republican’s plan to help ensure the group continues to grow after he leaves the lower chamber.
Conservative Climate Foundation chairwoman Heather Reams congratulated the members on their new positions, in a statement acquired by the Washington Examiner.
“Their elevation to caucus leadership shows further commitment of House Republicans to contribute commonsense policies that will lead to lowering emissions that contribute to climate change,” Reams said.
SHELL’S APPEAL AGAINST DUTCH CLIMATE RULING SET FOR APRIL: Shell’s appeal against a landmark ruling directing it to cut its carbon emissions by 45% over the next decade will start in April, Bloomberg reports.
If you’ll recall: The oil and gas major is looking to reverse a May 2021 ruling in a Dutch court that ordered Shell to cut its emissions faster by 2030 – a victory for environmental groups that filed the suit, including Greenpeace and Friends of the Earth Netherlands. The ruling orders Shell to reduce emissions by 740 million tons of CO2 a year. At the time, Shell said it would repeal the ruling – and later filed the appeal in March 2022.
Shell will go head to head with the Dutch arm of Friends of the Earth in court between April 2 and April 12, according to Bloomberg. The oil company argued that it has unjustly been singled out. More on that here.
OPEC STICKS WITH ITS GUTS: OPEC is sticking with its prediction that there will be more strong growth in global oil demand in 2024, while asserting that 2025 will see a significant increase in oil use with China and the Middle East leading, as reported by Reuters.
The latest forecast for 2025 reaffirms the group’s view that oil use will continue rising for the next 20 years – a projection at odds with, for instance, that of the International Energy Agency, which is that oil demand will peak by 2030 as the world attempts to move away from fossil fuels.
“Ultimately, peak oil supply has never come to pass, and predictions of peak oil demand are following a similar trend,” said OPEC Sec. General Hathiam al-Ghais in a written statement. “Time and again, oil has defied expectations regarding peaks. Logic and history suggest that it will continue to do so.”
In its monthly report, the organization projected world oil demand will increase by 1.85 million barrels per day in 2025 to 106.21 million bpd. For 2024, OPEC saw demand growth of 2.25 million bpd – which is the same prediction it offered last month.
The 2025 prediction would have been expected in July 2024, based on previous practice, according to Reuters. The group stated that it included the estimates to get a head start on long-term guidance for the market. More on that here.
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