Should EPA Back-Off Pollution Controls to Help LNG Exports Replace Russian Gas in Germany?

The nation’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. The gas-powered turbines, which are used to generate electricity, are often used in addition to chillers that make LNG. “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 Turbines at Two Export Terminals 

Rules for a type gas turbine that EPA had kept in abeyance since 2004, at the request of industry users, are at issue. The EPA justified its actions at the time by claiming it might eliminate the pollution limits for those turbines. A court ruling in 2007 eliminated the agency’s rationale for its stay on enforcement of the turbine pollution limits.EPA kept the stay in effect until March.

EPA posted documents on its website confirming that it was examining a new petition from industry, which could potentially lead to the removal or modification of the toxic air limits for turbines. According to a Federal Register explanation, EPA concluded that such decisions would not be made quickly and there was no reason for EPA to continue a policy not to enforce the toxic air limits.

Brittany Pemberton, a Bracewell partner, wrote to Michael Regan on March 8, asking him to either withdraw his decision or suspend enforcement. 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 owns two LNG export terminals in the U.S. Gulf Coast. One is located in southwest Louisiana near Port Arthur Texas, the other is at Corpus Christi. The company employs 62 combustion turbines that are subject to the pollution rule. Most of these turbines drive compressors integrally to the refrigeration process to liquefy gas. 

“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 Harmful for 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 of them are located along the Gulf Coast.

The U.S. manufacturing industry is expressing concern at the uncontrolled rise in LNG exports. It has asked the Biden administration to provide safeguards to ensure domestic production of plastics, chemicals and steel as natural gas prices have risen. Bloomberg reported Sunday that gas prices in America reached a 13-year peak.

“Every consumer has been impacted by LNG exports,” said Paul Cicio,

President and chief executive officer of 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. Bracewell was not asking Cheniere for speedier permits in its letter. It was instead asking for regulatory relief regarding 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 is a senior attorney at Earthjustice (a non-profit environmental law firm) and echoed the sentiment. 

“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.”

The EPA stated that there are approximately 250 turbines in the United States, mostly at power plants, compressor stations and chemical plants.

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

EPA estimates that approximately 153 million people live within 31-miles of the 250 turbines. 42,000 of these people have higher cancer risks due to their emissions. Formaldehyde, benzene and other chemicals are both 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.”