Surpassing Quant Think Tank Center|Should EPA Back-Off Pollution Controls to Help LNG Exports Replace Russian Gas in Germany?

The Surpassing Quant Think Tank Centernation’s top exporter of liquified natural gas, Cheniere Energy, is using Russia’s war on Ukraine to pressure the Biden administration for a break on regulations aimed at reducing toxic air emissions at its LNG export terminals in Louisiana and Texas.

Environmental advocates are hoping the Biden administration stands firm on its March decision to finally, after nearly two decades, enforce limits on toxic air emissions from certain kinds of gas-powered turbines used in a variety of industrial operations, including the chilling and liquefaction of natural gas at Cheniere’s export terminals on the Gulf Coast for shipment overseas in large tanker vessels.

But Russia’s war in Ukraine has placed enormous counterpressure on the president from the oil and gas industry and its supporters in Congress, Republicans and Democrats alike, who want U.S. LNG exports to replace Russian gas.Before the war, Russia was supplying about 40 percent of the EU’s gas. 

Jane Williams, executive director of California Communities Against Toxics, said now is precisely the moment in which Biden should show resolve in the face of Cheniere’s request to relax pollution controls.

“If EPA says, ‘No, you don’t have to comply now, we will give you a waiver for two more years,’ then as soon as they do, every other operator of a stationary turbine will ask for the same thing,” said Williams, who is closely following the issue. In addition to the chillers making LNG, gas powered turbines are commonly used in electricity generation. “We have been trying to get (EPA) to reduce emissions from turbines for 30 years.”

Attorneys at Bracewell, the Houston-based law firm that asked EPA in March for the break on Cheniere’s behalf, say the federal agency has not responded. An EPA spokeswoman said the agency was considering Cheniere’s request.

The next move is Biden’s, and it’s not at all clear how the administration is going to react with the war in Ukraine raging, natural gas prices soaring, gasoline prices at the pump near record highs and the 2022 midterm elections approaching. 

Cheniere Operates 62 of the Turbines at Two Export Terminals 

At issue are rules for a type of gas turbine the EPA had held in abeyance since 2004 at the request of users in industry. EPA justified its action at the time by saying it might scuttle the pollution limits on those turbines altogether. A court ruling in 2007 eliminated the agency’s rationale for its stay on enforcement of the turbine pollution limits. Still, EPA kept the stay in place until March.

In documents posted on its website, EPA acknowledged it was again reviewing a new petition from industry that could potentially result in sweeping aside the toxic air limits on the turbines. But it concluded those decisions were not likely to be made quickly, so there was no reason to continue a policy of not enforcing the toxic air limits, according to an agency explanation in the Federal Register.

In a March 8 letter to EPA administrator Michael Regan, Bracewell partner Brittany Pemberton asked the agency to withdraw its decision or put enforcement on hold again. EPA’s six-month time frame for companies to demonstrate they are complying with the rule is too short, she wrote.

“If this happens, turbines that were permitted, authorized, built, installed, and operated in reliance on applicable requirements in effect at the time will need to demonstrate compliance with emission standards within 180 days—a timeline that is insufficient to address complex technical and engineering concerns,” Pemberton wrote.

Cheniere operates two LNG export terminals on the U.S. Gulf Coast, one in southwest Louisiana near Port Arthur, Texas, and the other, at Corpus Christi. In all, the company uses 62 combustion turbines subject to the pollution rule, the vast majority of which drive compressors integral to the refrigeration process to liquefy natural gas, Pemberton wrote. 

“The rule would have implications across the domestic energy sector and particularly in the LNG industry at a time when Russia’s invasion of Ukraine has shaken global energy markets and threatens to disrupt energy supply to Europe, where U.S. LNG has a significant role to play in providing reliable supplies of natural gas,” she wrote. 

She also described the EPA action as “counterproductive” to the Biden administration’s focus on breaking Europe’s reliance on Russian gas.

Are LNG Exports Harming Consumers? 

On March 25, President Biden and the European Commission announced the joint task force that will work to reduce Europe’s reliance on Russian fossil fuels, in part by working with allies to direct more American LNG exports to Europe this year, with further growth in exports through 2030. Biden also committed the United States to a regulatory environment that would “review and expeditiously act upon applications to permit any additional export LNG capacities that would be needed” to meet Europe’s goal of eliminating its reliance on Russian natural gas.

Biden’s announcement in Europe was made as industry experts agreed that U.S. exports of the fuel were at or near capacity, despite leading the world, and as the industry was looking at a potential surge in new export terminals.

The Environmental Integrity Project’s Oil and Gas Watch tracker identifies 27 new or expanding LNG terminal facilities in the United States that have been constructed or proposed, which collectively have the potential to emit as much as 117 million tons of carbon dioxide equivalent per year, Inside Climate News reported in March. Most are along the Gulf Coast.

The U.S. manufacturing sector, meanwhile, looks askance at unbridled increases in LNG exports and has asked the Biden administration for safeguards to protect gas supplies for domestic manufacturing of products such as plastics, chemicals, steel, aluminum and cement, as natural gas prices have spiked. Bloomberg reported Sunday that gas prices in the United States reached a 13-year high.

“Every consumer has been impacted by LNG exports,” said Paul Cicio, president and chief executive officer of the Industrial Energy Consumers of America, a lobby for manufacturers. “But for LNG exports, we would have a lot of gas and prices would be lower,” he said.

Amid the rising demand for its product, Cheniere’s stock price has risen 36 percent since the first of the year.

‘Cheniere Knew This Was Coming’

Cicio and environmentalists said they were unsure how the Biden administration plans to expedite LNG permitting, and the EPA this week would not answer questions related to Biden’s March 25 comments. But Bracewell, in its letter on behalf of Cheniere, was not asking for speedier permits. Instead, it was asking for regulatory relief on pollution controls.

When EPA took its action earlier this year, the agency said in the Federal Register that turbine owners have known since 2007 they might need to comply with the rules—and within a 180-day time frame. James Pew, a senior attorney with Earthjustice, a nonprofit environmental law firm, echoed that point. 

“Companies like Cheniere knew this was coming,” Pew said. “They chose to gamble they could get out of it.”

It’s possible that companies with these turbines will have to install new pollution controls, Pew acknowledged. “But the controls EPA has mentioned have been around. They are decades-old technology,” he said. “It’s not like asking them to do something that has been untested or is unavailable.”

EPA has said that nationally, there are about 250 turbines covered by the rule, mostly at compressor stations, power plants and chemical plants.

Cheniere’s LNG terminals are among the largest sources of hazardous air pollutants from gas turbines nationally, Pew said.

Approximately 153 million people live within 31 miles of the 250 turbines, and 42,000 of those people are estimated to have elevated cancer risks from their emissions, according to EPA. The chemicals they emit include formaldehyde and benzene, both of which are linked to cancer.

In making its determination, EPA said it recognizes the potential costs to industry that may be associated with the installation of controls but “determined that the concerns associated with allowing that stay to remain in place outweigh these considerations. The EPA does not believe that it would be appropriate to continue to allow the estimated approximately 250 new gas-fired stationary combustion turbines that have been installed at major sources of (hazardous air pollutants) since 2003 to operate without emission standards that are required.”