Joe Biden’s pollution crackdown deals new blow to LNG developers

Environmental groups plan to exploit new air pollution rules by the Biden administration to step up their campaign against the development of multibillion dollar natural gas export terminals in the US.

New air quality standards will require the Federal Energy Regulatory Commission to more closely examine the impact of liquefied natural gas projects on the surrounding air quality, raising the bar for which projects will be allowed to proceed to construction.

“FERC is going to have to take this issue seriously and is going to have to analyse whether these projects are in the public interest given this new reality,” said Tom Gosselin, staff attorney at the Sierra Club. 

“We plan to hold FERC’s feet to the fire to ensure that it follows through and satisfies its legal obligations.”

The pollution crackdown is the latest obstacle faced by LNG developers after the Department of Energy in January indefinitely paused the granting of new export licences for terminals while it carries out a review of the project approval process. The EU is also introducing new requirements for emissions data from LNG suppliers.

The tighter rules on permitting stem from a move by the US Environmental Protection Agency to lower the threshold for how much fine particulate matter — tiny droplets found in the air — is allowable in a community from 12 to 9 micrograms per cubic meter in an effort to improve air quality in areas affected by heavy industry.

A spotlight was shone on the new rules last week when Venture Global, whose proposed $10bn CP2 project in Louisiana would be one of the largest in the US, was asked by FERC to provide additional details to prove its pollution impact remained below the new threshold, following a submission by the Sierra Club. 

In a letter to the regulator seen by the Financial Times, the company hit out at what it described as an “eleventh hour data request” that would “encourage further baseless claims”. It submitted new information that it said would prove the project was compliant.

Industry proponents warned that the new restrictions risked adding to the regulatory burden facing the industry and frustrating construction efforts at a time of booming demand.

“Anytime that you introduce uncertainty into the regulatory process it creates challenges,” said Charlie Riedl at the Center for LNG. “It’s difficult to make multibillion dollar investments, which is what these companies are trying to do in building and constructing these facilities . . . when there is this ambiguity in the regulations.” 

There are five projects awaiting a FERC decision, including CP2 and Cheniere’s expansion of its Corpus Christi facility in Texas. Cheniere said it had already submitted information requested by FERC and did not expect any issues. FERC did not respond to a request for comment.

Environmental groups warn that the facilities will lock in reliance on gas for decades to come at a time when the world should be transitioning to cleaner fuels. They have been emboldened to take further action after their campaign led to the January pause on export licences.

“I do think it’s fair to say that the LNG export fight has opened more broadly the whole question of gas — suddenly people are more capable of hearing the science about its effect on the climate and about the damage these facilities do to local communities,” said Bill McKibben, founder of 350.org and a prominent climate campaigner.

“I think that, once uncorked, it’s hard to coax these particular vapours back into the storage tank.”

LNG proponents say the Biden administration is undermining its own commitment to supply Europe with increasing volumes of LNG by deliberately creating uncertainty for developers.

“It fits a theme that I have noticed and I’m worried about which is that uncertainty itself sometimes seems like the goal,” said Travis Fisher, director of energy and environmental policy studies at the Cato Institute, a conservative think-tank. “If you can inject enough regulatory uncertainty into the process you basically bog down a whole industry you don’t like.”

As campaigning ramps up ahead of November’s election, analysts say there is unlikely to be any significant change in the regulatory environment before next year. Donald Trump has vowed to immediately reverse the export freeze if he is re-elected.

“If there’s a change in the White House we can all assume there will be a pretty dramatic change in the authorisation policy,” said Ben Cahill, senior fellow in the Energy Security and Climate Change Program at the Center for Strategic and International Studies. “The question is, in a second Biden administration, how much will shift.”