A federal appellate court decision has set back the approval of a newly completed set of natural gas pipelines in the U.S. Southeast, and raised the possibility that all gas pipeline projects will need to clear a new — and potentially challenging — hurdle before they can secure a final OK from the Federal Energy Regulatory Commission (FERC). In its late-August ruling in Sierra Club, et al vs. FERC, the U.S. Court of Appeals for the District of Columbia Circuit said FERC’s environmental impact statement for the Southeast Market Pipelines Project, which includes the 1.1-Bcf/d Sabal Trail pipeline from west-central Alabama to central Florida, should have considered greenhouse gas emissions from gas-fired power plants the new pipelines will serve. Today, we explore the potentially far-reaching effect of the decision on midstream companies and the utilities that depend on them.
The abundant supplies of U.S. natural gas made possible by the Shale Revolution — and the relatively low and stable gas pricing that came with that abundance — have played a significant role in reducing the volume of carbon dioxide (CO2) and other greenhouse gases (GHGs) emitted by the electric power industry. As shale-gas production increased over the past 10 years, electric utilities and independent power companies have scrapped their plans for new coal plants, retired scores of existing coal units and built dozens of new gas-fired plants (most of them highly efficient and operationally flexible combined-cycle facilities). Additionally, as abundant, low-cost gas supplies flooded the market (causing prices to drop), gas began beating coal economically for day-to-day generation. The net effect of this shift from coal to natural gas as the U.S.’s leading power plant fuel — plus the addition of new wind farms and solar facilities — has been a more than 20% decline in GHG emissions by the power sector since 2007. (The coal-to-gas shift has also helped to slash emissions of sulfur dioxide, mercury and other pollutants.)
But there’s a sort of “What have you done for me lately” attitude out there. Once gas had displaced coal as the leading generation fuel, some activist environmental organizations turned their attention from coal to gas. The thinking appeared to be, “Thanks for pushing coal into the background. Now we’re after you as the next carbon-based fuel.” This evolving attitude has taken the form of staunch opposition to new pipelines needed to deliver natural gas from the wellhead to gas-fired power plants. That meant that many environmental groups joined entities that were already trying to stop pipelines for their own sake, including those trying to stop pipelines as enablers of gas supply development. And sometimes (especially in the Northeast) all these opponents were joined by state regulators too (see Part 2 of our “In a Northeast Minute” blog series).
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