New and better way to assess the climate impact of new pipelines

The urgent need to decarbonize the energy system makes it imperative for state and federal regulators to understand the climate impacts of proposed energy infrastructure. Officials deciding whether to approve new natural gas pipelines must be able to answer a crucial question: Will a particular pipeline reduce pollution by speeding the demise of more carbon intensive alternatives, or increase greenhouse emissions by locking in dependence on another fossil fuel?

Yet to date, natural gas utilities and pipeline developers have been largely unwilling to provide detailed life cycle greenhouse gas (GHG) assessments to regulators reviewing their supply projects and plans. Nor have regulatory agencies been pressing for this data.

In fact just this morning, Federal Energy Regulatory (FERC) Commissioner Richard Glick testified to Congress that “the Commission is ignoring its statutory mandates under the Natural Gas Act by refusing to analyze reasonably foreseeable greenhouse gas emissions associated with new interstate natural gas pipelines and facilities used to import or export liquefied natural gas.”

But a new analysis released this week of a proposed interstate pipeline project in New York and New Jersey significantly advances this compelling need. The fact that it was commissioned by a utility company makes it even more significant.

The analysis of the Northeast Supply Enhancement project (NESE) was done by consulting firm M.J. Bradley & Associates, on behalf of National Grid, the pipeline’s intended customer. EDF, which has extensive expertise on oil and gas methane emissions, provided technical and methodological advice to the report authors, and actively encouraged National Grid to undertake it. The project developer, Williams, also provided input.

Results of the report hinge on assumptions used by the authors about technology adoption and market demand. Based on this particular set of projections, their review finds that the NESE project would, in fact, yield net reductions in emissions versus the status quo. By making the analysis transparent, the authors enable others to test both the parameters and methodology.

Groundbreaking approach

The most important news here is fact that such an analysis was undertaken to begin with. As far as we can tell, it’s the first assessment of its kind for a pipeline project. The comprehensive scope of the assessment over lifecycle emissions, upstream and downstream of the pipeline itself, including both carbon and methane, is a major leap forward compared with current regulatory practice.

The approach can inform federal regulators’ assessment of the climate impacts of new pipelines, as well as state regulatory review of gas utility supply decisions, which are currently weighted in favor of natural gas at the expense of other options.

For certain, alternative assumptions could be used, especially regarding policies and actions needed to fully decarbonize the energy system by 2050. We encourage stakeholders and our environmental colleagues to weigh in on the analysis. That’s exactly why EDF – which believes to its core that policy should be built on robust data and rigorous analysis – encouraged National Grid to undertake and make public the study to begin with.

To be clear, EDF is not in any way endorsing or supporting the NESE project. There are a number of vital considerations that all policymakers and the public must carefully and rigorously consider in evaluating this project including the availability of alternatives and the full suite of impacts.

Crucial insight into our energy supply choices

States including New York and New Jersey have established ambitious climate goals. Moreover, as EDF has noted, there is a growing disconnect between state policies on natural gas (which weight utility decisions in favor of expanded natural gas utilization and infrastructure), and those climate goals.

But gas utilities have so far not provided sufficient means to weigh the climate impacts of their supply decisions (an issue that EDF has raised in comments before the New York Public Service Commission). Without quantitative or empirical tools to demonstrate that energy supply choices are consistent with ambitious state climate goals, we are making crucial decisions in the dark.

National Grid’s report establishes transparent elements of a valid GHG emissions analysis, and then puts that analysis into the public domain for review and scrutiny by citizens and state regulators.

Likewise, this new analysis will also help inform federal decision-making. Under the National Environmental Policy Act (NEPA), the FERC is required to assess the environmental impact of all new pipeline infrastructure.

Federal assessment of climate impacts in flux

In recent years, FERC had started to incorporate GHG emissions estimates into its pipeline review process, although such estimates were not as robust as the MJ Bradley report. The agency had also begun including estimates of the emissions resulting from additional gas consumption (called downstream emissions) in some of its final orders, and in a few cases, even the emissions resulting from the additional gas production (upstream emissions).

But in May 2018, FERC shifted course, issuing an order that it was not required to consider GHG emissions from the production or consumption of natural gas that may be the reasonably foreseeable result of the Commission’s certification decisions. In the wake of this decision, the agency is now facing a host of legal challenges.

As one FERC Commissioner put it, “the Commission is not asking enough questions or doing enough analysis.” The D.C. Circuit recently observed that it was “troubled” by FERC’s attempt to justify its NEPA analysis based on a lack of GHG emissions information.

In his testimony today, Commissioner Glick expanded:

A new interstate natural gas pipeline may, in some instances, help to reduce greenhouse gas emissions by reducing reliance on oil or coal, which produce more greenhouse gas emissions per unit of electricity generated than a new natural gas-fired plant. But natural gas is also a source of greenhouse gas emissions. Greenhouse gases are emitted not only through the downstream combustion of the natural gas, but also upstream from the new infrastructure through flaring and fugitive methane emissions, among others sources. In other words, new natural gas infrastructure can have a number of effects on greenhouse gas emissions, either mitigating or contributing to the ultimate harm from climate change, all of which must factor into the Commission’s evaluation of whether a certificate is in the public interest.

Absent a rigorous NEPA assessment—let alone a comprehensive federal climate policy—we have no way of determining whether proposed pipeline infrastructure could actually offset emissions (as in the case of displacing coal or oil generation) or increase them (by displacing even cleaner options, or increasing consumption).

A deeper emissions analysis

National Grid says that the NESE project will provide natural gas to its residential and commercial customers for oil-to-gas conversions and to meet new demand. The new analysis calculates the life cycle emissions associated with natural gas use from 2020 to 2030. It also estimates life cycle emissions associated with energy sources that would be used in lieu of natural gas if the NESE project is not built (wherein the authors assume there is insufficient gas available to meet projected demand).

The analysis commissioned by National Grid offers a valuable empirical framework by which to assess emissions impacts of projects like this one, and how they square with state climate policy. Specifically, the analysis:

1. Integrates the social cost of carbon to assess the climate footprint in financial terms (something that EDF has repeatedly requested of regulators).
2. Incorporates a second upstream scenario that scales methane emissions associated with the first scenario to reflect the latest scientific assessments by EDF and others which suggest that actual methane emissions are about 24% higher than the life cycle natural GHG estimate by the U.S. Department of Energy’s National Energy Technology Laboratory.
3. Assumes ambitious electrification of home heating and rigorous heat pump adoption rates, which are 25% higher in 2025 than the assumptions included in New York State Energy Research and Development Authority’s January 2019 analysis. (Heat pumps provide an alternative to natural gas furnaces, drawing electricity from the electric grid. As the grid incorporates more renewables, the heat pump’s carbon emissions will decline throughout its life span).

The main findings of the analysis are that GHG and air pollutant emissions are lower with the project built than without. The report finds that meeting demand for heating, hot water and other purposes using gas supplied by NESE would result in lower net GHG emissions (as well as other pollution such as nitrogen oxide, sulfur dioxide and particulate matter) as compared to meeting that same demand with heating oil and electricity.

Applying the social cost of carbon, the report finds that the GHG emission benefits would be $68 to $83 million through 2025 and $212 to $262 million through 2030. (These results, of course, turned on the particular circumstances of the pipeline and future analyses for different projects serving different markets could well arrive at different results).

Overlooked driver of gas demand

The second major takeaway of the M.J. Bradley analysis is the extent to which projected growth in natural gas demand is driven by statutory obligations and state policies imposed on gas utilities. The growth figures put forth by National Grid, for example, are largely the result of the company’s legal obligation to serve all customers, coupled with longstanding policies in New York (as in most states) declaring that access to natural gas is in the public interest.

Natural gas is bringing about the demise of polluting coal plants. But to achieve the GHG reductions we need, emissions from all fossil fuels must be drastically reduced as quickly as possible. This suggests that, if we are going to meet our ambitious climate goals, the regulatory underpinnings that serve to expand gas combustion need to be recognized and changed and zero-emitting alternatives need to be more rigorously pursued.

Laying the groundwork for improved GHG analyses and reductions

Though it may seem counterintuitive to some, there are places where new pipeline capacity can provide a net gain for climate. For example, EDF recently found that in New York, episodic constraints in gas supply are causing adverse environmental impacts in other Northeastern states, because higher gas prices were affecting relative economics of fuels used by electric generators, increasing oil burn and emissions.

As EDF has previously asserted, the burden of quantifying climate impacts through valid and transparent analyses lies with the pipeline developers and customers seeking new pipeline capacity. The voluntary commitment by National Grid, working with EDF and the pipeline project developer, Williams, stands to demonstrate the art of the possible.

By providing additional, reliable information, regulators and stakeholders will be able to better assess the climate impacts of the NESE project. Going forward, we hope this assessment can provide an approach for FERC to obtain improved climate information under NEPA, and for gas utilities to demonstrate conformity with state climate goals.