U.S. energy regulators decided to stay out of endorsing a definition of climate-friendly natural gas, rejecting a
The Federal Energy Regulatory Commission on Friday rejected the proposal by Tennessee Gas Pipeline Co., a unit of the Houston energy firm, to carry out its own certification process. The ruling means the gas industry will likely have more work to do before pitching the commission on the idea again.
The commission order noted the lack of industry or government-established standards that could guide regulators as they wade into the “nascent” market of responsibly sourced gas, or RSG.
“It is unclear how the commission would evaluate Tennessee’s decision to adopt any specific proposed criteria,” the commissioners wrote. “Given this early stage in the evolution of RSG standards, we find that it is appropriate to allow market-driven initiatives so that the development of RSG can happen organically.”
The order listed all five commissioners, with no dissents.
Kinder Morgan is “currently evaluating the FERC’s order and assessing the best approach for obtaining approval” of its proposal, the company said in a statement Monday.
The term “responsibly sourced gas” has emerged in the last couple of years to describe cleaner sources in terms of the methane emissions associated with production. But opponents view it as a form of greenwashing. Methane, a potent greenhouse gas, can leak where natural gas is produced and transported.
Market analysts have suggested RSG could come from gas operations that reduce greenhouse gas emissions, recycle water, restore land, or make community pledges.
The company sought to establish a specific methane emission intensity level, but currently no federal regulation exists for methane emissions in the oil and natural gas sector, the commission noted.
The company had asked the commission in December to allow it to use Project Canary or MiQ—two independent organizations that verify RSG claims—to determine which gas can be treated as “responsibly sourced” along its pipeline, which feeds regions from New York to Texas Gulf Coast.
The commission acknowledged Project Canary and MiQ were among “only a handful” of independent verification vendors. Each vendor appears to set its own performance rating and varies in its methodology and business model, the commission wrote.
Further Examination Needed
The proposal from Tennessee Gas, filed in December, arrived at the commission as gas companies are looking to voluntarily brand their product as low-emissions as investors seek climate-friendly options.
The Environmental Defense Fund, along with pipeline shippers, had requested the commission convene a technical conference to examine Tennessee Gas’ proposal. EDF and others had warned FERC the pipeline company would have total discretion to define what gas could be certified as responsibly sourced.
“You need robust and standardized measurements that actually are performing a physical measurement of gas emissions at various locations,” said Ted Kelly, a senior attorney at EDF who is focused on energy markets and regulation.
“It was good that FERC saw, the way the proposal as framed, it was somewhat premature and somewhat lacked some of the standards that would be necessary to have a good program,” Kelly said, adding he hopes to work with Tennessee Gas and others on developing standards in the future.
A trade group of industrial gas consumers questioned the proposal’s impact on prices, especially if each pipeline could pick and choose its own standards.
The Industrial Energy Consumers of America “agrees with FERC’s decision that the pipeline has failed to demonstrate its tariff is just and reasonable,” Paul Cicio, the group’s president and CEO, said in a statement Monday. “There needs to be cost-containment accountability. All of their costs are passed onto us, the buyers of the natural gas.”