When States Get Serious About Phasing Out Natural Gas

Posted on May 27, 2020 by Michael Gerrard

A decision issued on May 15 by the New York Department of Environmental Conservation (DEC) denying approvals for a new natural gas pipeline is sending shivers through the energy industry.  Though the decision was based primarily on water quality and wetlands impacts, it also demonstrated the force of New York’s new Climate Leadership and Community Protection Act (CLCPA), and New York’s resolve to phase out the use of natural gas.

Transco, a subsidiary of the Williams Companies, proposed to build a pipeline carrying natural gas (mostly from hydraulic fracturing in Pennsylvania) under wetlands and Raritan Bay in New Jersey, then under lower New York Bay, and connecting with an existing pipeline to serve National Grid customers in Brooklyn, Queens and Long Island.

In the bays the pipeline would have been built in a trench four feet under the water bottom in sediments that are contaminated with mercury, copper and other pollutants.   The construction would have stirred up the sediments and released the pollutants.

The Federal Energy Regulatory Commission approved this pipeline on May 3, 2019.  However, under Section 401 of the Clean Water Act the project needed a state certification that it would not  impair the state’s waters.

In its May 15 decision, DEC denied this certification, relying primarily on the impacts that the dispersed chemicals would have on a 1,000-foot wide corridor that included a critical resource area for hard clams..

DEC did not stop there, however.  It also looked at the pipeline’s impact on greenhouse gas emissions, which “cause climate change and thus indirectly impact water and coastal resources.”  DEC found, “GHG emissions associated with the Project include those from the full lifecycle of natural gas that will be transported through the Project. This includes upstream emissions, GHG emissions associated with the construction and operation of the Project, and downstream emissions.”  DEC explicitly stated that its analysis considered leakage of methane at the fracking sites in Pennsylvania, emissions where the gas is burned in power plants and buildings, and any emissions in between.  The look at out-of-state upstream emissions is especially interesting, as these are not usually considered in a state’s GHG emissions inventories.

DEC then stated, “In order to achieve the State’s critical and ambitious climate change and clean energy policies, the State needs to continue its ongoing transition away from natural gas and other fossil fuels. While the Department recognizes that many building assets in the State currently rely on natural gas for heating and other energy uses, the continued long-term use of fossil fuels is inconsistent with the State’s laws and objectives and with the actions necessary to prevent the most severe impacts from climate change. Therefore, the State must continue to support the ongoing transition to renewable and other clean sources of energy, as it works to ultimately eliminate all fossil fuel combustion sources that cannot be counterbalanced by guaranteed permanent carbon sequestration. Without appropriate alternatives or GHG mitigation measures, the Project could extend the amount of time that natural gas may be relied upon to produce energy, which could in turn delay, frustrate, or increase the cost of the necessary transition away from natural gas and other fossil fuels.”

In short, DEC said, “”[t]he use of natural gas … to produce electricity would be inconsistent with” the requirements of CLCPA, which “will ultimately require a transition away from natural gas and other fossil fuels to produce energy.”

The pipeline at issue here is a key part of a larger controversy.  In May 2019 National Grid imposed a moratorium on new natural gas connections.  Many observers felt this was a tactic to pressure New York to approve the pipeline. That led to an uproar, Governor Andrew Cuomo threatened to revoke the company’s franchise, and the Public Service Commission launched an enforcement action related to the moratorium. Pursuant to the resulting settlement agreement, National Grid issued a report on May 8, 2020 that identified energy efficiency, demand response and other measures as a way to meet the need for gas even without the pipeline.  DEC declared, “Critically, as compared to the project, National Grid concludes that this alternative is less environmentally impactful, in terms of water quality, GHG emissions and otherwise, and more consistent with the requirements” of CLCPA.

We will soon see if Transco challenges the New York decisions (and one issued the same day by New Jersey) in court.  Whatever happens, DEC has signaled that it is serious about phasing out most or all use of natural gas in the state, blocking the construction of new natural gas infrastructure, and reducing GHG emissions in accord with the mandates of the CLCPA.