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FERC Authority Could Speed Hydrogen Build-Out, Manchin Says (1)

July 19, 2022, 2:36 PMUpdated: July 19, 2022, 4:14 PM

The Federal Energy Regulatory Commission should oversee any future build-out of hydrogen pipelines, Sen. Joe Manchin, chairman of the Senate Energy and Natural Resources Committee, said Tuesday.

“It certainly makes sense” for the commission to add hydrogen to its jurisdiction because the commission currently reviews interstate natural gas pipeline projects, the West Virginia Democrat said at a committee hearing.

A federal siting authority is important as other energy infrastructure, like electric transmission lines, face long permitting delays as different states and agencies, Manchin said. Congress last year granted the commission authority to approve certain transmission lines if state commissions reject them.

Manchin recently upended the Biden administration’s plans for climate change as part of a broad economic package. The package included a production tax credit for hydrogen and an investment tax credit to spur electric transmission lines, among other energy incentives.

Manchin has also criticized FERC for pursuing a natural gas policy that would scrutinize pipelines and liquefied natural gas terminals, calling a hearing in March to demand the commission reverse course and speed up permits. FERC walked back the policy a few weeks later.

“I’ve certainly had my fair share with FERC over natural gas issues recently,” Manchin said Tuesday. “Still, it’s clear to me that the commission’s natural gas siting authority helps avoid challenges that we see again and again in developing other types of energy infrastructure.”

“My position is this: we can’t be short-sighted here,” Manchin added. “Let’s get the right regulatory framework in place now.”

An Infant Industry

Republicans disagreed with greater federal regulation at this time—and criticized FERC for slowing the pace of infrastructure today.

“It’s a terrible idea to say, ‘let’s do it like that,’ because that’s not working very well right now,” Sen. James Lankford (R-Okla.) said. “We need to fix the whole permitting process when we address hydrogen to be able to make sure we’re actually able to get energy done.”

The US has just over 1,600 miles of dedicated hydrogen pipelines, with the majority in the Gulf Coast, Texas, and California. This compares to over 2.3 million miles of natural gas pipelines in the country.

Hydrogen, the smallest molecule, can cause stresses in the current steel pipeline network designed to carry natural gas. Some gas pipeline companies are beginning to experiment with blending hydrogen into its gas supply, efforts that currently fall in FERC’s jurisdiction. Southern California Gas Co. announced in February it began developing a hydrogen pipeline system.

“At this point, I’m not convinced there is a so-called ‘regulatory gap’ that Congress needs to be filled,” said Sen. John Barrasso (R-Wyo.), the top Republican on the committee.

“The hydrogen industry is still in its infancy,” Barrasso said. “Let’s not kill the hydrogen industry when it’s still in its cradle.”

‘Incredibly Difficult’ Process

Hydrogen has summoned some of the debates over natural gas in the U.S. energy mix. Some environmental groups view hydrogen as a form of “greenwashing” by the fossil fuel industry and vow to oppose any move to lock in pipeline infrastructure.

On Tuesday, Friends of the Earth released a report timed with the hearing that highlighted hydrogen’s wide climate footprint.

“Subsidizing repackaged fossil fuels at the direct expense of renewable investment is worse than inaction,” said Sarah Lutz, a climate campaigner at Friends of the Earth. “Despite Big Oil’s greenwashing claims, simply refusing to count a portion of emissions does not negate their impact on the climate.”

But the Energy Department is advancing an $8 billion program to develop regional hydrogen hubs, and bipartisan lawmakers expressed support for growing the industry.

FERC “does seem like that’s a likely venue to approach with respect to hydrogen,” said Chad Zamarin, senior vice president, corporate strategic development for The Williams Cos, an Oklahoma-based gas company.

He proposed Congress require five provisions to federal permitting for hydrogen, including a mandatory timeline for a decision and establishing a single lead agency with sole authority to issue permits.

Zamarin also suggested revising the appellate standard of judicial review to “ensure infrastructure certifications and permits are approved unless the record lacks credible evidence in support of a permit,” he testified.

“The current FERC process has become an incredibly difficult process to facilitate the building of energy infrastructure,” Zamarin said. “We are not trying to lower the environmental threshold for us building infrastructure. We are simply trying to address the gaps that exist in (regulations) that have been leveraged to stymie development.”

(Updated with additional comment.)

To contact the reporter on this story: Daniel Moore in Washington at dmoore1@bloombergindustry.com

To contact the editor responsible for this story: Chuck McCutcheon at cmccutcheon@bloombergindustry.com