Wednesday, February 01, 2012

FERC Ignores Environmental Impact of LNG Exports

By Press Action

The export of liquefied natural gas will lead to additional shale gas extraction, induce additional coal consumption for electricity generation, and increase greenhouse gas emissions and global warming, the Sierra Club warns in a Jan. 27 filing with the Federal Energy Regulatory Commission.

The Sierra Club is urging FERC to consider these effects when it decides whether to grant the owners of the Sabine Pass LNG terminal permission to build facilities that would allow natural gas to be liquefied and then exported from the Louisiana terminal. The project is being developed by Cheniere Energy subsidiaries Sabine Pass Liquefaction and Sabine Pass LNG.

But so far, FERC is refusing to analyze the impact of increased LNG exports as part of its review of Sabine Pass’ application to build the liquefaction and export facilities. Instead, FERC is focusing only on the environmental impact of the facilities themselves, not on how the facilities will create greater demand for natural gas production in the United States, with large amounts of that increased production heading overseas in the form of LNG.

According to the Sierra Club, an environmental assessment prepared by FERC’s staff and released in late December “wholly ignores” the indirect effects resulting from the export of LNG. The decision by FERC violates the National Environmental Policy Act and is incompatible with the Department of Energy’s decision to rely on FERC to assess the environmental impacts of export authorization, the Sierra Club said in its filing.

Under the framework proposed by FERC and DOE, the environmental assessment prepared by FERC staff provides the sole opportunity to examine environmental effects of exports themselves. But FERC has declined to look at the environmental effects of LNG exports and is focusing only on the proposed Sabine Pass facilities.

In its application, Sabine Pass stated that the proposed liquefaction facilities and “subsequent exportation” of domestic natural gas to the global market “would provide a market solution to allow the further development of unconventional (particularly shale gas-bearing formation) sources in the United States.” FERC staff highlighted this acknowledgement by Sabine Pass in its environmental assessment of the project.

And yet, as noted by the Sierra Club, “despite this explicit recognition that the project will encourage additional shale gas extraction, the [environmental assessment] contains no analysis of the impacts of such extraction.” Refusing to address the impact of the shale gas extraction “violates NEPA’s command to consider both direct and indirect impacts of the proposed action,” the Sierra Club said.

The Sierra Club pointed out that the U.S. Energy Information Administration recently concluded that exports will increase domestic natural gas prices. “Due to higher prices, the electric power sector primarily shifts to coal-fired generation, and secondarily to renewable sources,” EIA said.

“The increase in domestic coal consumption for purposes to electricity generation is therefore an indirect effect caused by LNG export,” the Sierra Club told FERC. “Because coal burning power plants emit more hazardous pollutants than natural gas fired plants, this shift will negatively affect human health and the environment. The EA should have analyzed this impact.”

But as with every natural gas infrastructure project that it analyzes, FERC’s staff gave the Sabine Pass liquefaction and export project application its notorious rubber stamp. “The FERC staff concludes that approval of the proposed project, with appropriate mitigating measures, would not constitute a major federal action significantly affecting the quality of the human environment,” the staff wrote in the environmental assessment, using the boilerplate language—always favorable to the applicant—that appears in every environmental assessment and environmental impact statement that it prepares for a natural gas project.

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