[Federal Register Volume 85, Number 1 (Thursday, January 2, 2020)]
[Notices]
[Pages 72-86]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-28306]
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DEPARTMENT OF ENERGY
[FE Docket Nos.]
Life Cycle Greenhouse Gas Perspective on Exporting Liquefied
Natural Gas From the United States: 2019 Update--Response to Comments
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FE Docket No.
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Sabine Pass Liquefaction, LLC......... 10-111-LNG
Freeport LNG Expansion, L.P. et al.... 10-161-LNG
Lake Charles Exports, LLC............. 11-59-LNG
Dominion Cove Point LNG, LP........... 11-128-LNG
Freeport LNG Expansion, L.P. et al.... 11-161-LNG
Cameron LNG, LLC...................... 11-162-LNG
Southern LNG Company, LLC............. 12-100-LNG
Gulf LNG Liquefaction Company, LLC.... 12-101-LNG
Jordan Cove Energy Project, L.P....... 12-32-LNG
CE FLNG, LLC.......................... 12-123-LNG
Golden Pass Products, LLC............. 12-156-LNG
Lake Charles LNG Export Co............ 13-04-LNG
MPEH LLC.............................. 13-26-LNG
Cheniere Marketing LLC and Corpus 13-30-LNG,
Christi Liquefaction, LLC. 13-42 LNG, &
13-121-LNG
Venture Global Calcasieu Pass, LLC.... 13-69-LNG, 14-88-LNG, & 15-25
LNG
Eos LNG LLC........................... 13-116-LNG
Barca LNG LLC......................... 13-118-LNG
Magnolia LNG, LLC..................... 13-132-LNG
Delfin LNG, LLC....................... 13-147-LNG
Commonwealth LNG, LLC................. 13-153-LNG
SCT&E LNG, LLC........................ 14-98-LNG
Pieridae Energy (USA) Ltd............. 14-179-LNG
Bear Head LNG Corporation and Bear 15-33-LNG
Head LNG (USA).
G2 LNG LLC............................ 15-45-LNG
Texas LNG Brownsville LLC............. 15-62-LNG
Sabine Pass Liquefaction, LLC......... 15-63-LNG
Cameron LNG, LLC...................... 15-90-LNG
Port Arthur LNG, LLC.................. 15-96-LNG
Cameron LNG, LLC...................... 15-167-LNG
Rio Grande LNG, LLC................... 15-190-LNG
Venture Global Plaquemines LNG, LLC... 16-28-LNG
Freeport LNG Expansion, L.P., et al... 16-108-LNG
Lake Charles LNG Export Co............ 16-109-LNG
Lake Charles Exports, LLC............. 16-110-LNG
Driftwood LNG LLC..................... 16-144-LNG
Fourchon LNG, LLC..................... 17-105-LNG
Galveston Bay LNG, LLC................ 17-167-LNG
Freeport LNG Expansion, L.P., et al... 18-26-LNG
Corpus Christi Liquefaction Stage III, 18-78-LNG
LLC.
Mexico Pacific Limited LLC............ 18-70-LNG
Energ[iacute]a Liquefaction, S. de 18-144-LNG
R.L. de C.V.
Energ[iacute]a Costa Azul, S. de R.L. 18-145-LNG
de C.V.
Annova LNG Common Infrastructure, LLC. 19-34-LNG
Cheniere Marketing LLC and Corpus 19-124-LNG
Christi Liquefaction, LLC.
Sabine Pass Liquefaction, LLC......... 19-125-LNG
Commonwealth LNG, LLC................. 19-134-LNG
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AGENCY: Office of Fossil Energy, Department of Energy.
ACTION: Notice of response to comments.
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SUMMARY: On September 19, 2019, the Office of Fossil Energy (FE) of the
Department of Energy (DOE) gave notice of the availability of a study
entitled, Life Cycle Greenhouse Gas Perspective on Exporting Liquefied
Natural Gas from the United States: 2019 Update (LCA GHG Update or
Update), in the above-referenced proceedings and invited the submission
of public comments on the Update. DOE commissioned the LCA GHG Update
to inform its decision on pending and future applications seeking
authorization to export domestically
[[Page 73]]
produced liquefied natural gas (LNG) from the lower-48 states to
countries with which the United States does not have a free trade
agreement (FTA) requiring national treatment for trade in natural gas,
and with which trade is not prohibited by U.S. law or policy (non-FTA
countries). The LCA GHG Update includes three principal updates to
DOE's 2014 LCA GHG Report. In this document, DOE responds to the seven
public comments received on the LCA GHG Update and summarizes its
conclusions on the Update. The LCA GHG Update and the public comments
are posted on the DOE website at: https://fossil.energy.gov/app/docketindex/docket/index/21.
DATES: Applicable on December 19, 2019.
FOR FURTHER INFORMATION CONTACT: Amy Sweeney, U.S. Department of Energy
(FE-34), Office of Regulation, Analysis, and Engagement, Office of
Fossil Energy, Forrestal Building, Room 3E-042, 1000 Independence
Avenue SW, Washington, DC 20585; (202) 586-2627;
[email protected]; Cassandra Bernstein or Kari Twaite, U.S.
Department of Energy (GC-76), Office of the Assistant General Counsel
for Electricity and Fossil Energy, Forrestal Building, Room 6D-033,
1000 Independence Ave. SW, Washington, DC 20585; (202) 586-9793 or
(202) 586-6978; [email protected] or
[email protected].
SUPPLEMENTARY INFORMATION:
Acronyms and Abbreviations. Acronyms and abbreviations used in this
document are set forth below for reference.
API American Petroleum Institute
AR5 Fifth Assessment Report
Bcf/d Billion Cubic Feet per Day
Bcf/yr Billion Cubic Feet per Year
CLNG Center for Liquefied Natural Gas
CO2 Carbon Dioxide
CO2e Carbon Dioxide Equivalents
DOE U.S. Department of Energy
EIA U.S. Energy Information Administration
EPA U.S. Environmental Protection Agency
FE Office of Fossil Energy, U.S. Department of Energy
FTA Free Trade Agreement
GHG Greenhouse Gas
GWP Global Warming Potential
IEA International Energy Agency
IECA Industrial Energy Consumers of America
IPCC Intergovernmental Panel on Climate Change
LCA Life Cycle Analysis
LNG Liquefied Natural Gas
MWh Megawatt-Hour
NETL National Energy Technology Laboratory
NEPA National Environmental Policy Act of 1969
NGA Natural Gas Act of 1938
Table of Contents
I. Background
A. DOE Export Authorizations Under Section 3 of the Natural Gas
Act
B. Public Interest Review for Non-FTA Export Authorizations
C. 2014 Life Cycle Greenhouse Gas Report (LCA GHG Report)
D. Judicial Decisions Upholding DOE's Non-FTA Authorizations
II. Life Cycle Greenhouse Gas Perspective on Exporting Liquefied
Natural Gas From the United States: 2019 Update (LCA GHG Update)
A. Overview of the LCA GHG Update
B. The April 2019 LCA of Natural Gas Extraction and Power
Generation
C. Purpose of the LCA GHG Update
D. Study Scenarios
E. GHGs Reported as Carbon Dioxide Equivalents
F. Natural Gas Modeling Approach
G. Coal Modeling Approach
H. Key Modeling Parameters
I. Results of the LCA GHG Update
III. Notice of Availability of the LCA GHG Update
IV. Comments on the LCA GHG Update and DOE Responses
A. Scope of the LCA GHG Update
B. Roles of Natural Gas and Renewable Energy
C. Domestic Natural Gas-to-Coal Switching
D. Global Warming Potential of Methane
E. Methane Emission Rate of U.S. Natural Gas Production
F. Other Aspects of NETL's Natural Gas Modeling Approach
V. Discussion and Conclusions
I. Background
A. DOE Export Authorizations Under Section 3 of the Natural Gas Act
DOE is responsible for authorizing exports of domestically produced
natural gas to foreign countries pursuant to section 3 of the Natural
Gas Act (NGA), 15 U.S.C. 717b.\1\ In relevant part, section 3(c) of the
NGA applies to applications for exports of natural gas, including LNG,
to countries with which the United States has entered into a FTA
requiring national treatment for trade in natural gas, and with which
trade is not prohibited by U.S. law or policy (FTA countries).\2\
Section 3(c) was amended by section 201 of the Energy Policy Act of
1992 (Pub. L. 102-486) to require that FTA applications ``shall be
deemed to be consistent with the public interest'' and granted
``without modification or delay.'' \3\ Therefore, DOE approves
applications for FTA authorizations without modification or delay.\4\
None of the comments or discussion herein apply to FTA authorizations
issued under NGA section 3(c).
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\1\ The authority to regulate the imports and exports of natural
gas, including LNG, under section 3 of the NGA (15 U.S.C. 717b) has
been delegated to the Assistant Secretary for FE in Redelegation
Order No. 00-002.04G issued on June 4, 2019.
\2\ 15 U.S.C. 717b(c). The United States currently has FTAs
requiring national treatment for trade in natural gas with
Australia, Bahrain, Canada, Chile, Colombia, Dominican Republic, El
Salvador, Guatemala, Honduras, Jordan, Mexico, Morocco, Nicaragua,
Oman, Panama, Peru, Republic of Korea, and Singapore. FTAs with
Israel and Costa Rica do not require national treatment for trade in
natural gas.
\3\ 15 U.S.C. 717b(c).
\4\ Unless otherwise stated, all references to exports of LNG
herein refer to natural gas produced and liquefied in the lower-48
states. Additionally, DOE uses the terms ``authorization'' and
``order'' interchangeably.
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For applications to export natural gas to non-FTA countries,
section 3(a) of the NGA sets forth the following standard of review:
[N]o person shall export any natural gas from the United States
to a foreign country or import any natural gas from a foreign
country without first having secured an order of the [Secretary of
Energy \5\] authorizing it to do so. The [Secretary] shall issue
such order upon application, unless after opportunity for hearing,
[he] finds that the proposed exportation or importation will not be
consistent with the public interest. The [Secretary] may by [the
Secretary's] order grant such application, in whole or part, with
such modification and upon such terms and conditions as the
[Secretary] may find necessary or appropriate.\6\
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\5\ The Secretary's authority was established by the Department
of Energy Organization Act, 42 U.S.C. 7172, which transferred
jurisdiction over imports and export authorizations from the Federal
Power Commission to the Secretary of Energy.
\6\ 15 U.S.C. 717b(a) (emphasis added).
DOE--as affirmed by the D.C. Circuit--has consistently interpreted
NGA section 3(a) as creating a rebuttable presumption that a proposed
export of natural gas is in the public interest.\7\ Accordingly, DOE
will conduct an informal adjudication and grant a non-FTA application
unless DOE finds that the proposed exportation will not be consistent
with the public interest.\8\ Before reaching a final decision, DOE must
also comply with the National
[[Page 74]]
Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321 et seq.
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\7\ See Sierra Club v. U.S. Dep't of Energy, 867 F.3d 189, 203
(D.C. Cir. 2017) (``We have construed [NGA section 3(a)] as
containing a `general presumption favoring [export] authorization.'
'') (quoting W. Va. Pub. Serv. Comm'n v. U.S. Dep't of Energy, 681
F.2d 847, 856 (D.C. Cir. 1982)).
\8\ See id. (``there must be `an affirmative showing of
inconsistency with the public interest' to deny the application''
under NGA section 3(a)) (quoting Panhandle Producers & Royalty
Owners Ass'n v. Econ. Regulatory Admin., 822 F.2d 1105, 1111 (D.C.
Cir. 1987)). As of August 24, 2018, qualifying small-scale exports
of natural gas to non-FTA countries are treated differently--
specifically, they are deemed to be consistent with the public
interest under NGA section 3(a). See 10 CFR 590.102(p); 10 CFR
590.208(a); see also U.S. Dep't of Energy, Small-Scale Natural Gas
Exports; Final Rule, 83 FR 35106 (July 25, 2018).
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B. Public Interest Review for Non-FTA Export Authorizations
Although NGA section 3(a) establishes a broad public interest
standard and a presumption favoring export authorizations, the statute
does not define ``public interest'' or identify criteria that must be
considered. In prior decisions, DOE has identified a range of factors
that it evaluates when reviewing an application to export LNG to non-
FTA countries. These factors include economic impacts, international
impacts, security of natural gas supply, and environmental impacts,
among others. To conduct this review, DOE looks to record evidence
developed in the application proceeding.
DOE's prior decisions have also looked to certain principles
established in its 1984 Policy Guidelines.\9\ The goals of the 1984
Policy Guidelines are to minimize federal control and involvement in
energy markets and to promote a balanced and mixed energy resource
system. Specifically, the 1984 Policy Guidelines state that ``[t]he
market, not government, should determine the price and other contract
terms of imported [or exported] gas,'' and that DOE's ``primary
responsibility in authorizing imports [or exports] should be to
evaluate the need for the [natural] gas and whether the import [or
export] arrangement will provide the gas on a competitively priced
basis for the duration of the contract while minimizing regulatory
impediments to a freely operating market.'' \10\ Although the Policy
Guidelines are nominally applicable to natural gas import cases, DOE
held in DOE/FE Order No. 1473 that the 1984 Policy Guidelines should be
applied to natural gas export applications.\11\
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\9\ New Policy Guidelines and Delegations Order Relating to
Regulation of Imported Natural Gas, 49 FR 6684 (Feb. 22, 1984)
[hereinafter 1984 Policy Guidelines].
\10\ Id. at 49 FR 6685.
\11\ Phillips Alaska Natural Gas Corp., et al., DOE/FE Order No.
1473, FE Docket No. 96-99-LNG, Order Extending Authorization to
Export Liquefied Natural Gas from Alaska (Apr. 2, 1999), at 14
(citing Yukon Pacific Corp., DOE/FE Order No. 350, Order Granting
Authorization to Export Liquefied Natural Gas from Alaska, 1 FE ]
70,259, 71,128 (1989)).
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In Order No. 1473, DOE stated that it was guided by DOE Delegation
Order No. 0204-111. That delegation order directed the regulation of
exports of natural gas ``based on a consideration of the domestic need
for the gas to be exported and such other matters as the Administrator
[of the Economic Regulatory Administration] finds in the circumstances
of a particular case to be appropriate.'' \12\
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\12\ DOE Delegation Order No. 0204-111 (Feb. 22, 1984), at 1 (]
(b)); see also 1984 Policy Guidelines, 49 FR 6690 (incorporating DOE
Delegation Order No. 0204-111). In February 1989, the Assistant
Secretary for Fossil Energy assumed the delegated responsibilities
of the Administrator of the Economic Regulatory Administration. See
Applications for Authorization to Construct, Operate, or Modify
Facilities Used for the Export or Import of Natural Gas, 62 FR
30435, 30437 n.15 (June 4, 1997) (citing DOE Delegation Order No.
0204-127, 54 FR 11436 (Mar. 20, 1989)).
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Although DOE Delegation Order No. 0204-111 is no longer in effect,
DOE's review of export applications has continued to focus on: (i) The
domestic need for the natural gas proposed to be exported, (ii) whether
the proposed exports pose a threat to the security of domestic natural
gas supplies, (iii) whether the arrangement is consistent with DOE's
policy of promoting market competition, and (iv) any other factors
bearing on the public interest described herein.
Under this public interest standard, DOE has issued 38 final long-
term authorizations to export domestically produced (or U.S.) LNG or
compressed natural gas to non-FTA countries.\13\ The cumulative volume
of approved non-FTA exports under these authorizations is 38.06 billion
cubic feet per day (Bcf/d) of natural gas, or 13.9 trillion cubic feet
per year.\14\ Each of these non-FTA orders authorize an export term of
20 years.
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\13\ See Venture Global Plaquemines LNG, LLC, DOE/FE Order No.
4446, FE Docket No. 16-28-LNG, Opinion and Order Granting Long-Term
Authorization to Export Liquefied Natural Gas to Non-Free Trade
Agreement Nations, at 43 (Oct. 15, 2019).
\14\ See id.
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C. 2014 Life Cycle Greenhouse Gas Report (LCA GHG Report)
In 2014, DOE commissioned the National Energy Technology Laboratory
(NETL), a DOE applied research laboratory, to conduct an analysis
calculating the life cycle greenhouse gas (GHG) emissions for LNG
exported from the United States. DOE commissioned this life cycle
analysis (LCA) to inform its public interest review of non-FTA
applications, as part of its broader effort to evaluate different
environmental aspects of the LNG production and export chain.
DOE sought to determine: (i) How domestically-produced LNG exported
from the United States compares with regional coal (or other LNG
sources) for electric power generation in Europe and Asia from a life
cycle GHG perspective, and (ii) how those results compare with natural
gas sourced from Russia and delivered to the same markets via pipeline.
In June 2014, DOE published NETL's report entitled, Life Cycle
Greenhouse Gas Perspective on Exporting Liquefied Natural Gas from the
United States (2014 LCA GHG Report or 2014 Report).\15\ Subsequently,
DOE received public comments on the 2014 LCA GHG Report and responded
to those comments in non-FTA orders.\16\ DOE has relied on the 2014
Report in its review of all subsequent applications to export LNG to
non-FTA countries.\17\
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\15\ Dep't of Energy, Life Cycle Greenhouse Gas Perspective on
Exporting Liquefied Natural Gas From the United States, 79 FR 32260
(June 4, 2014). DOE announced the availability of the LCA GHG Report
on its website on May 29, 2014.
\16\ See, e.g., Golden Pass Products LLC, DOE/FE Order No. 3978,
FE Docket No. 12-156-LNG, Opinion and Order Granting Long-Term,
Multi-Contract Authorization to Export Liquefied Natural Gas by
Vessel From the Golden Pass LNG Terminal Located in Jefferson
County, Louisiana, to Non-Free Trade Agreement Nations, at 102-28
(Apr. 25, 2017) (description of LCA GHG Report and response to
comments).
\17\ See, e.g., Venture Global Plaquemines LNG, LLC, DOE/FE
Order No. 4446, at 14-15, 38-41.
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D. Judicial Decisions Upholding DOE's Non-FTA Authorizations
Beginning in 2015, Sierra Club petitioned the U.S. Court of Appeals
for the District of Columbia Circuit (D.C. Circuit or the Court) for
review of five long-term LNG export authorizations issued by DOE under
the standard of review described above. Sierra Club challenged DOE's
approval of LNG exports to non-FTA countries from projects proposed or
operated by the following authorization holders: Freeport LNG
Expansion, L.P., et al.; Dominion Energy Cove Point LNG, LP (formerly
Dominion Cove Point LNG, LP); Sabine Pass Liquefaction, LLC; and
Cheniere Marketing, LLC, et al. The D.C. Circuit subsequently denied
four of the five petitions for review: One in a published decision
issued on August 15, 2017 (Sierra Club I),\18\ and three in a
consolidated, unpublished opinion issued on November 1, 2017 (Sierra
Club II).\19\ Sierra Club subsequently withdrew its fifth and remaining
petition for review.\20\
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\18\ Sierra Club vs. U.S. Dep't of Energy, 867 F.3d 189 (Aug.
15, 2017) (denying petition of review of the LNG export
authorization issued to Freeport LNG Expansion, L.P., et al.).
\19\ Sierra Club v. U.S. Dep't of Energy, Nos. 16-1186, 16-1252,
16-1253, 703 Fed. Appx. 1 (D.C. Cir. Nov. 1, 2017) (denying
petitions of review of the LNG export authorization issued to
Dominion Cove Point LNG, LP; Sabine Pass Liquefaction, LLC; and
Cheniere Marketing, LLC, et al., respectively).
\20\ See Sierra Club v. U.S. Dep't of Energy, No. 16-1426, Per
Curiam Order (D.C. Cir. Jan. 30, 2018) (granting Sierra Club's
unopposed motion for voluntarily dismissal).
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In Sierra Club I, the D.C. Circuit concluded that DOE had complied
with both NGA section 3(a) and NEPA in
[[Page 75]]
issuing the challenged non-FTA authorization. Freeport LNG Expansion,
L.P. and its related entities (collectively, Freeport) had applied to
DOE for authorization to export LNG to non-FTA countries from the
Freeport Terminal located on Quintana Island, Texas. DOE granted the
application in 2014 in a volume equivalent to 0.4 Bcf/d of natural gas,
finding that Freeport's proposed exports were in the public interest
under NGA section 3(a). DOE also considered and disclosed the potential
environmental impacts of its decision under NEPA. Sierra Club
petitioned for review of the Freeport authorization, arguing that DOE
fell short of its obligations under both the NGA and NEPA. The D.C.
Circuit rejected Sierra Club's arguments in a unanimous decision,
holding that, ``Sierra Club has given us no reason to question the
Department's judgment that the [Freeport] application is not
inconsistent with the public interest.'' \21\
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\21\ Sierra Club I, 867 F.3d at 203.
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As relevant here, the D.C. Circuit rejected Sierra Club's challenge
to DOE's analysis of the potential ``downstream'' GHG emissions
resulting from the transport and usage of U.S. LNG abroad, set forth in
the 2014 LCA GHG Report.\22\ The Court pointed out that Sierra Club did
not challenge the method employed in the LCA GHG Report to evaluate
such GHG emissions, but instead argued that DOE ``should have evaluated
additional variables'' as part of the analysis.\23\ Specifically,
Sierra Club asserted that DOE should have considered the potential for
LNG to compete with renewable sources of energy (or ``renewables''),
which Sierra Club argued are prevalent in certain import markets. The
D.C. Circuit rejected this argument, finding that ``Sierra Club's
complaint `falls under the category of flyspecking.' '' \24\ The Court
further held there was ``nothing arbitrary about [DOE's] decision'' in
the 2014 LCA GHG Report to compare emissions from exported U.S. LNG to
emissions of coal or other sources of natural gas, rather than a
variety of other possible fuel sources with which U.S. LNG might
compete in importing nations.\25\
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\22\ Id. at 201-02.
\23\ Id. at 202.
\24\ Id. (citing Myersville Citizens for a Rural Cmty., Inc. v.
FERC, 783 F.3d 1301, 1324 (D.C. Cir. 2015)).
\25\ Id.
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In the consolidated opinion in Sierra Club II issued on November 1,
2017, the D.C. Circuit ruled that ``[t]he court's decision in [Sierra
Club I] largely governs the resolution of the [three] instant cases.''
\26\ Upon its review of the remaining ``narrow issues'' in those cases,
the Court again rejected Sierra Club's arguments under the NGA and
NEPA, and upheld DOE's actions in issuing the non-FTA authorizations in
those proceedings.\27\
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\26\ Sierra Club, 703 Fed. Appx. 1 at * 2.
\27\ Id.
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The D.C. Circuit's decisions in Sierra Club I and II--including the
Court's holding on the 2014 LCA GHG Report--continue to guide DOE's
review of applications to export LNG to non-FTA countries.
II. Life Cycle Greenhouse Gas Perspective on Exporting Liquefied
Natural Gas From the United States: 2019 Update (LCA GHG Update)
In 2018, DOE commissioned NETL to conduct an update to the 2014 LCA
GHG Report, referred to as the LCA GHG Update.\28\ As with the 2014
Report, the LCA GHG Update compares life cycle GHG emissions of exports
of domestically produced LNG to Europe and Asia, compared with
alternative fuel sources (such as regional coal and other imported
natural gas) for electric power generation in the destination
countries. Although core aspects of the analysis--such as the scenarios
investigated--are the same as the 2014 Report, NETL included three
principal updates in the LCA GHG Update. In this section, we summarize
the scope of the LCA GHG Update, as well as its methods, limitations,
and conclusions.
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\28\ Nat'l Energy Technology Laboratory, Life Cycle Greenhouse
Gas Perspective on Exporting Liquefied Natural Gas from the United
States: 2019 Update (DOE/NETL 2019/2041) (Sept. 12, 2019), available
at: https://www.energy.gov/sites/prod/files/2019/09/f66/2019%20NETL%20LCA-GHG%20Report.pdf. Although the LCA GHG Update is
dated September 12, 2019, DOE announced the availability of the LCA
GHG Update on its website and in the Federal Register on September
19, 2019.
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A. Overview of the LCA GHG Update
In commissioning the LCA GHG Update, DOE sought information on the
same two questions presented in the 2014 LCA GHG Report:
How does domestically produced LNG exported from the
United States compare with regional coal (or other LNG sources) used
for electric power generation in Europe and Asia, from a life cycle GHG
perspective?
How do those results compare with natural gas sourced from
Russia and delivered via pipeline to the same European and Asian
markets? \29\
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\29\ See id. at 1.
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To evaluate these questions on the basis of more current
information, NETL made the following three updates to the 2014 LCA GHG
Report:
Incorporated NETL's most recent characterization of
upstream natural gas production, set forth in NETL's April 2019 report
entitled, Life Cycle Analysis of Natural Gas Extraction and Power
Generation (April 2019 LCA of Natural Gas Extraction and Power
Generation); \30\
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\30\ Nat'l Energy Technology Laboratory, Life Cycle Analysis of
Natural Gas Extraction and Power Generation (DOE/NETL-2019/2039)
(Apr. 19, 2019), available at: https://www.netl.doe.gov/energy-analysis/details?id=3198 [hereinafter April 2019 LCA of Natural Gas
Extraction and Power Generation].
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Updated the unit processes for liquefaction, ocean
transport, and regasification characterization using engineering-based
models and publicly-available data informed and reviewed by existing
LNG export facilities, where possible; and
Updated the 100-year global warming potential (GWP) for
methane (CH4) to reflect the current Intergovernmental Panel
on Climate Change's (IPCC) Fifth Assessment Report (AR5).\31\
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\31\ See LCA GHG Update at 1 (citing IPCC. 2013. Climate Change
2013 The Physical Science Basis. Intergovernmental Panel on Climate
Change, available at: http://www.climatechange2013.org/report/).
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In all other respects, the 2019 LCA GHG Update is unchanged from
the 2014 Report.
B. The April 2019 LCA of Natural Gas Extraction and Power Generation
The primary component of natural gas is methane, a type of GHG. The
methane emission rate--sometimes referred to as the methane leakage
rate \32\--represents methane emissions released to the air through
venting, fugitives, combustion, or other sources per unit of natural
gas delivered to end users. For example, emissions of methane during
the production, processing, transmission, and delivery of natural gas
were 25% of total U.S. methane emissions in 2016 (the most recent year
for which adequate data are available), and were 2.8% of all GHGs when
comparing GHGs on a 100[hyphen]year time frame.\33\ The methane
emission rate varies with the source of natural gas, due to the
variability among geographic locations of natural gas[hyphen]bearing
formations and the different technologies used to extract natural
gas.\34\
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\32\ Because Sierra Club uses the term ``methane leakage rate''
instead of methane emission rate in its Comments, we use the terms
interchangeably for purposes of this document.
\33\ See April 2019 LCA of Natural Gas Extraction and Power
Generation, at 3 (citation omitted).
\34\ See id. at 1, 3-4, 76.
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To evaluate changes in the scientific knowledge of methane and
other GHG emissions associated with natural gas
[[Page 76]]
systems, NETL updates its LCA of Natural Gas Extraction and Power
Generation every two to three years. NETL published the most recent
version of this LCA on April 19, 2019.\35\ The April LCA informs the
LCA GHG Update in this proceeding, which in turn was published on
September 12, 2019.\36\
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\35\ See supra at note 30.
\36\ See, e.g., LCA GHG Update at 1, 4.
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Expanding upon NETL's previous LCAs of natural gas systems, the
April 2019 LCA of Natural Gas Extraction and Power Generation provides
a complete inventory of emissions to air and water, water consumption,
and land use change.\37\ It also evaluates the GHG emissions across the
entire natural gas supply chain--including production, gathering and
boosting, processing, transmission and storage, and distribution of
natural gas to consumers.
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\37\ See April 2019 LCA of Natural Gas Extraction and Power
Generation at 3 (stating that ``GHGs are not the only metric that
should be considered when comparing energy options, so this analysis
also includes a full inventory of air emissions, water use and
quality, and land use.'').
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For this LCA, NETL developed 30 scenarios as a way to better
understand variability in natural gas systems. The results were
generated using a model made up of 140 sources of emissions to account
for different types of variability. Among other findings, NETL
determined that the top contributors to carbon dioxide and methane
emissions are combustion exhaust and other venting from compressor
systems.\38\ Additionally, NETL calculated a national average methane
emission rate (or leakage rate) of 1.24%.\39\ However, if the modeling
boundaries end after pipeline transmission--which is the case for
large-scale end users like power plants and liquefaction terminals--
NETL calculated an average methane emission rate of 1.08%.\40\
---------------------------------------------------------------------------
\38\ Id. at 1.
\39\ Id. (95% confidence interval ranging from 0.84% to 1.76%);
see also id. at 76-77 & Exh. 6-2.
\40\ Id. at 77 (Exh. 6-2).
---------------------------------------------------------------------------
C. Purpose of the LCA GHG Update
At the time of the 2014 LCA GHG Report, NETL considered one medium-
distance destination (a location in Europe) and one long-distance
destination (a location in Asia), since the exact destination countries
for U.S. LNG exports could not be predicted at the time.\41\
Specifically, NETL applied its LCA model to represent: (1)
Unconventional natural gas production and transportation to a U.S. Gulf
Coast liquefaction facility (Gulf Coast facility), (2) liquefaction of
the natural gas at the Gulf Coast facility, (3) transportation of the
LNG to an import terminal in Rotterdam, Netherlands, to represent a
European market; and (4) transportation of the LNG to an import
terminal in Shanghai, China, to represent Asian markets.\42\ At the
time of the LCA GHG Update, those choices were still valid based on
U.S. LNG exports to date.\43\
---------------------------------------------------------------------------
\41\ See LCA GHG Update at 2 n.1.
\42\ See id.
\43\ See, e.g., U.S. Dep't of Energy, LNG Annual Report 2018, at
1-2 (Feb. 15, 2019), available at: https://www.energy.gov/fe/downloads/lng-annual-report-2018 (shipments of domestically produced
LNG delivered from February 2016 through December 2018).
---------------------------------------------------------------------------
NETL determined that one of the most likely uses of U.S. LNG is to
generate electric power in the destination countries. Accordingly, NETL
used a parametric model for the scenarios to account for variability in
supply chain characteristics and power plant efficiencies. In
considering sources of fuel other than U.S. LNG, NETL assumed that
producers in Europe and Asia could generate electricity in the
following ways: (1) By obtaining natural gas from a local or regional
pipeline, (2) by obtaining LNG from a LNG producer located closer
geographically than the United States, or (3) by using regional coal
supplies, foregoing natural gas altogether.\44\
---------------------------------------------------------------------------
\44\ See LCA GHG Update at 2-3.
---------------------------------------------------------------------------
Using this framework, NETL developed four study scenarios,
identified below. To compare scenarios, NETL used a common denominator
as the end result for each scenario: One megawatt-hour (MWh) of
electricity delivered to the consumer, representing the final
consumption of electricity. Additionally, NETL considered GHG emissions
from all processes in the LNG supply chains--from the ``cradle'' when
natural gas or coal is extracted from the ground, to the ``grave'' when
electricity is used by the consumer. This method of accounting for
cradle-to-grave emissions over a single common denominator is known as
a life cycle analysis, or LCA.\45\
---------------------------------------------------------------------------
\45\ The data used in the LCA GHG Update were originally
developed to represent U.S. energy systems. To apply the data to
this study, NETL adapted its natural gas and coal LCA models. The
five life cycle stages used by NETL (or ``LC Stages''), ranging from
Raw Material Acquisition to End Use, are identified in the LCA GHG
Update at 2.
---------------------------------------------------------------------------
Using this LCA approach, NETL's objective was to model realistic
LNG export scenarios--encompassing locations at both a medium and long
distance from the United States--while also considering local fuel
alternatives. The purpose of the medium and long distance scenarios was
to establish likely results for both extremes (i.e., both low and high
bounds).\46\
---------------------------------------------------------------------------
\46\ See id. at 2 n.1.
---------------------------------------------------------------------------
D. Study Scenarios
NETL identified four modeling scenarios to capture the cradle-to-
grave process for both the European and Asian cases. The scenarios vary
based on where the fuel (natural gas or coal) comes from and how it is
transported to the power plant. For this reason, the beginning
``cradle'' of each scenario varies, whereas the end, or ``grave,'' of
each scenario is the same because the uniform goal is to produce 1 MWh
of electricity. The first three scenarios explore different ways to
transport natural gas; the fourth provides an example of how regional
coal may be used to generate electricity, as summarized in Table 1:
[[Page 77]]
Table 1--LCA GHG Scenarios Analyzed by NETL \47\
------------------------------------------------------------------------
Scenario Description Key assumptions
------------------------------------------------------------------------
1..................... Natural gas is The power plant is
extracted in the located near the LNG
United States from import site.
Appalachian Shale.
It is
transported by
pipeline to an LNG
facility, where it is
cooled to liquid form,
loaded onto a LNG
tanker, and
transported to a LNG
port in the receiving
country (Rotterdam,
Netherlands, for the
European case and
Shanghai, China, for
the Asian case).
Upon reaching
its destination, the
LNG is re-gasified,
then transported to a
natural gas power
plant.
2..................... Same as Unlike Scenario 1, the
Scenario 1, except regional gas is
that the natural gas produced using
comes from a regional conventional
source closer to the extraction methods,
destination. such as vertical wells
In the that do not use
European case, the hydraulic fracturing.
regional source is The LNG tanker
Oran, Algeria, with a transport distance is
destination of adjusted accordingly.
Rotterdam.
In the Asian
case, the regional
source is Darwin,
Australia, with a
destination of
Shanghai, China.
3..................... Natural gas is The pipeline distance
produced in the Yamal was calculated based
region of Siberia, on a ``great circle
Russia, using distance'' (the
conventional shortest possible
extraction methods distance between two
\48\. points on a sphere)
It is between the Yamal
transported by district in Siberia
pipeline directly to a and a power plant
natural gas power located in either
plant in either Rotterdam or Shanghai.
Rotterdam or Shanghai.
4..................... Coal is This scenario models
extracted in either two types of coal
Europe or Asia. It is widely used to
transported by rail to generate steam-
a domestic coal-fired electric power: (1)
power plant. Surface mined sub-
bituminous coal, and
(2) underground mined
bituminous coal.
Additionally, U.S.
mining data and U.S.
plant operations were
used as a proxy for
foreign extraction in
Germany and China.
------------------------------------------------------------------------
In all four scenarios, the 1 MWh of electricity delivered to the
end consumer is assumed to be distributed using existing transmission
infrastructure.\49\
---------------------------------------------------------------------------
\47\ The four scenarios are set forth in the LCA GHG Update at
2-3 and also discussed at 4-5.
\48\ Yamal, Siberia, was chosen as the extraction site because
that region accounted for 82.6% of natural gas production in Russia
in 2012. LCA GHG Update at 5.
\49\ See id. at 3.
---------------------------------------------------------------------------
E. GHGs Reported as Carbon Dioxide Equivalents
Recognizing that there are several types of GHGs, each having a
different potential impact on the climate, NETL normalized GHGs for the
study. NETL chose carbon dioxide equivalents (CO2e), which
convert GHGs to the same basis: an equivalent mass of carbon dioxide.
CO2e is a metric commonly used to estimate the amount of
global warming that GHGs may cause, relative to the same mass of carbon
dioxide released to the atmosphere.\50\ NETL chose CO2e
using the GWP of each gas set forth in the IPCC's AR5, published in
2013.\51\
---------------------------------------------------------------------------
\50\ See id.
\51\ See id.
---------------------------------------------------------------------------
GWP is an impact category that comprises carbon dioxide, methane,
and nitrous oxide (N2O). All three of these gases have the
ability to trap heat in the atmosphere, but each one has a unique heat
trapping capacity and atmospheric decay rate, thus requiring an impact
assessment method that allows aggregation of their impacts to a common
basis. Without multiplying each of these gases by an equivalency factor
(e.g., a GWP), there is no way to directly compare them. Therefore, the
IPCC uses the relative radiative forcing of these gases, the secondary
effects of their decay, and feedback from the ecosystem--all of which
are a function of a specified time frame--to develop the GWP
equivalency factors.
In the Update, NETL notes that the IPCC AR5 gives the GWPs on a 20-
and 100-year time frame that includes climate-carbon feedback.\52\ NETL
used a 20-year methane GWP of 87 and a 100-year methane GWP of 36.
Because climate carbon effects are included in these GWP values, they
are slightly higher than the GWP values used in the 2014 LCA GHG Report
(which were 85 and 30, respectively). As a result, the LCA GHG Update
reflects the most current GWP for methane as set forth in the IPCC
AR5.\53\
---------------------------------------------------------------------------
\52\ See id. & n.2 (discussing the IPCC AR5's GWPs).
\53\ See id.
---------------------------------------------------------------------------
F. Natural Gas Modeling Approach
NETL's natural gas model is flexible, allowing for the modeling of
different methods of producing natural gas. For Scenario 1, all natural
gas was modeled as unconventional gas from the Appalachian Shale, since
that shale play reasonably represents new marginal gas production in
the United States. For Scenarios 2 and 3, the extraction process was
modeled after conventional onshore natural gas production in the United
States. This includes both the regional LNG supply options that were
chosen for this study (Algeria for Europe and Australia for Asia) and
extraction in the Siberian region of Russia for pipeline transport to
the power plants in Europe and Asia.\54\
---------------------------------------------------------------------------
\54\ LCA GHG Update at 4.
---------------------------------------------------------------------------
In the above three natural gas scenarios, the natural gas is
transported through a pipeline, either to an area that processes LNG
(Scenarios 1 and 2) or directly to a power plant (Scenario 3). NETL's
model also includes an option for all LNG steps--from extraction to
consumption--known as the LNG supply chain. After extraction and
processing, natural gas is transported through a pipeline to a
liquefaction facility. The LNG is loaded onto an ocean tanker,
transported to an LNG terminal, re-gasified, and fed to a pipeline that
transports it to a power plant. NETL assumed that the natural gas power
plant in each of the import destinations already exists and is located
close to the LNG port, such that no additional pipeline transport of
natural gas is modeled in the destination country.\55\
---------------------------------------------------------------------------
\55\ See id.
---------------------------------------------------------------------------
The amount of natural gas ultimately used to make electricity is
affected by power plant efficiency. Therefore, the efficiency of the
destination power plant is an important parameter required for
determining the life cycle emissions for
[[Page 78]]
natural gas power. The less efficient a power plant is, the more
natural gas it consumes and the more GHG emissions it produces per unit
of electricity generated. The LCA GHG Update used a natural gas power
plant efficiency of 46.4%, the same efficiency used in the 2014
Report.\56\ This efficiency is consistent with the efficiencies of
currently installed, large-scale natural gas power plants in the United
States, as detailed in the Update.\57\ NETL also assumed that the
efficiencies used at the destination power plants (in Rotterdam and
Shanghai) were the same as those used in the U.S. model, which are
representative of fleet baseload power plants.\58\
---------------------------------------------------------------------------
\56\ Originally calculated using the U.S. Environmental
Protection Agency's (EPA) Emissions and Generation Resource
Integrated Database (eGRID), this 46.4% figure represents the
average efficiency of natural gas power plants operating in the
United States in 2009. More background on this efficiency is
provided in NETL's Natural Gas and Power LCA Model Documentation
(NETL, 2014).
\57\ See LCA GHG Update at 19 (Exh. 5-13). In Exhibit 5-13, the
two citations to the NETL, 2019 reference should cite the NETL,
2014a reference, as shown in the third row of that column. Although
these two NETL references were incorrectly cited, the numbers used
in the LCA GHG Update were correct.
\58\ See id.
---------------------------------------------------------------------------
G. Coal Modeling Approach
NETL modeled Scenario 4, the regional coal scenario, based on two
types of coal: bituminous and sub-bituminous. Bituminous coal is a soft
coal known for its bright bands. Sub-bituminous coal is a form of
bituminous coal with a lower heating value. Both types are widely used
as fuel to generate steam-electric power. NETL used its existing LCA
model for the extraction and transport of sub-bituminous and bituminous
coal in the United States as a proxy for foreign extraction in Germany
and China. Likewise, NETL modeled foreign coal production as having
emissions characteristics equivalent to average U.S. coal production.
No ocean transport of coal was included to represent the most
conservative coal profile (whether regionally sourced or imported).\59\
---------------------------------------------------------------------------
\59\ See id. at 6.
---------------------------------------------------------------------------
The heating value of coal is the amount of energy released when
coal is combusted, whereas the heat rate is the rate at which coal is
converted to electricity by a power plant. Both factors were used in
the model to determine the feed rate of coal to the destination power
plant (or the speed at which the coal would be used). For consistency,
the LCA GHG Update used the same range of efficiencies that NETL used
in the 2014 LCA GHG Report for the modeling of coal power in the United
States. The Update also assumed the same range of power plant
efficiencies for Europe and Asia as the U.S. model, which are
representative of fleet baseload power plants.\60\
---------------------------------------------------------------------------
\60\ See id. at 6-7.
---------------------------------------------------------------------------
H. Key Modeling Parameters
NETL modeled variability among each scenario by adjusting numerous
parameters, giving rise to hundreds of variables. Key modeling
parameters described in the LCA GHG Update include, but are not limited
to: (1) Lifetime well production rates, (2) emission factors for non-
routine (or episodic) emissions,\61\ (3) the flaring rate for natural
gas,\62\ (4) coal type (sub-bituminous or bituminous), (5) transport
distance (ocean tanker for LNG transport, and rail for coal transport),
and (6) the efficiency of the destination power plant.\63\ To account
for uncertainty, NETL developed distributions of low, expected, and
high values when the data allowed. Otherwise, NETL gave an expected
value for each parameter.\64\
---------------------------------------------------------------------------
\61\ The key modeling parameters for the natural gas scenarios
are provided in the LCA GHG Update at Exhibits 5-1 through Exhibit
5-6 (LNG and Russian natural gas). See LCA GHG Update at 8-14.
\62\ Flaring rate is a modeling parameter because the GWP of
vented natural gas can be reduced if it is flared, or burned, to
create carbon dioxide. See id. at 8.
\63\ See generally id. at 8-19 (key modeling parameters).
\64\ Id. at 9.
---------------------------------------------------------------------------
NETL noted that the results of the LCA GHG Update are sensitive to
these key modeling parameters--particularly changes in coal type, coal
transport distance, and power plant net efficiency (i.e.,
performance).\65\ NETL also identified several study limitations
attributable to challenges with LNG market dynamics and data
availability in foreign countries, including that: (1) NETL had to
model foreign natural gas and coal production based on U.S. models; (2)
NETL had to model foreign power plant efficiencies based on data from
U.S. power plants; and (3) the specific LNG export and import locations
used in the Update represent an estimate for an entire region (e.g.,
New Orleans representing the U.S. Gulf Coast).\66\
---------------------------------------------------------------------------
\65\ See id. at 18-19.
\66\ See id. at 32 (summary and study limitations).
---------------------------------------------------------------------------
I. Results of the LCA GHG Update
As with the 2014 LCA GHG Report, two primary conclusions may be
drawn from the LCA GHG Update.\67\ First, use of U.S. LNG exports to
produce electricity in European and Asian markets will not increase GHG
emissions on a life cycle perspective, when compared to regional coal
extraction and consumption for power production.\68\ As shown below in
Figures 1 and 2, the Update indicates that, for most scenarios in both
the European and Asian regions, the generation of power from imported
natural gas has lower life cycle GHG emissions than power generation
from regional coal.\69\ The use of imported coal in these countries
would only increase coal's GHG profile. Given the uncertainty in the
underlying model data, however, it is not clear if there are
significant differences between the corresponding European and Asian
cases other than the LNG transport distance from the United States and
the pipeline distance from Russia.\70\
---------------------------------------------------------------------------
\67\ For detailed study results, see LCA GHG Update at 20-31.
\68\ See id. at 32.
\69\ Although these figures present an expected value for each
of the four scenarios, the figures should not be interpreted as the
most likely values due to the wide range of scenario variability and
data uncertainty. Rather, the values allow an evaluation of trends
only--specifically, how each of the major processes (e.g.,
extraction, transport, combustion) contribute to the total life
cycle GHG emissions. See id. at 20.
\70\ See id. at 22.
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Second, on a 100-year GWP timeframe, there is an overlap between
the ranges in the life cycle GHG emissions of U.S. LNG, regional
alternative sources of LNG, and natural gas from Russia delivered to
the European or Asian markets. Any differences are considered
indeterminate due to the underlying uncertainty in the modeling data.
Therefore, on a 100-year GWP timeframe, the life cycle GHG emissions
among these sources of natural gas are considered similar, and no
significant increase or decrease in net climate impact is anticipated
from any of these three scenarios.\73\
---------------------------------------------------------------------------
\71\ See id. at 20 (Exh. 6-1).
\72\ See id. at 21 (Exh. 6-2).
\73\ LCA GHG Update at 21, 32.
---------------------------------------------------------------------------
When using a 20-year GWP timeframe, the Russian scenario (which
transports natural gas via pipeline) has higher life cycle GHG
emissions than the LNG scenarios, with no overlapping of error bars.
Further, on a 20-year GWP time frame, the error bars for the Russian
scenario overlap those for the regional coal scenarios for both Europe
and Asia.
For additional information, please see the LCA GHG Update available
on DOE's website at: https://www.energy.gov/sites/prod/files/2019/09/f66/2019%20NETL%20LCA-GHG%20Report.pdf.
III. Notice of Availability of the LCA GHG Update
On September 19, 2019, DOE published notice of availability (NOA)
of the LCA GHG Update and a request for comments.\74\ The purpose of
the NOA was ``to provide additional information to the public and to
inform DOE's decisions regarding the life cycle greenhouse gas
emissions of U.S. [LNG] exports for use in electric power generation.''
\75\ DOE stated that ``any person may file comments addressing the LCA
GHG Update.'' \76\
---------------------------------------------------------------------------
\74\ See U.S. Dep't of Energy, Life Cycle Greenhouse Gas
Perspective on Exporting Liquefied Natural Gas From the United
States; Notice of Availability of Report Entitled Life Cycle
Greenhouse Gas Perspective on Exporting Liquefied Natural Gas From
the United States: 2019 Update and Request for Comments, 84 FR 49278
(Sept. 19, 2019).
\75\ Id. at 84 FR 49279.
\76\ Id. at 84 FR 49280 (also stating that persons with an
interest in individual docket proceedings already have been given an
opportunity to intervene in or protest those matters).
---------------------------------------------------------------------------
Publication of the NOA began a 30-day public comment period that
ended on October 21, 2018. DOE received seven comments in response to
the NOA. Three commenters supported the LCA GHG Update: (1) LNG Allies,
the U.S. LNG Association (LNG Allies), (2) the American Petroleum
Institute (API), and (3) the Center for Liquefied Natural Gas (CLNG).
Three commenters opposed the LCA GHG Update, or otherwise criticized
aspects of the Update: (1) John Young, (2) the Industrial Energy
Consumers of America (IECA), and (3) Sierra Club. The final comment,
submitted by Croitiene ganMoryn, was non-responsive. Ms. ganMoryn did
not address the LCA GHG Update but rather stated her opposition to
exports of LNG generally.
The NOA and comments received on the NOA are available on DOE's
website at: https://fossil.energy.gov/app/docketindex/docket/index/21.
IV. Comments on the LCA GHG Update and DOE Responses
DOE has evaluated the comments received during the public comment
period. In this section, DOE discusses the relevant comments received
on the LCA GHG Update and provides DOE's responses to those comments.
DOE does not address comments outside the scope of the LCA GHG Update,
such as concerns related to hydraulic fracturing (or ``fracking'') and
the geopolitical aspects of exporting U.S. LNG.\77\
---------------------------------------------------------------------------
\77\ See Comments of John Young at 1-2.
---------------------------------------------------------------------------
A. Scope of the LCA GHG Update
1. Comments
Commenters supporting the LCA GHG Update express support for NETL's
study design. For example, LNG Allies supports NETL's transparency in
presenting the LCA approach, the modeling scenarios used, and other
aspects of the Update.\78\ LNG Allies further states that the
assumptions used in the LCA GHG Update track other peer-reviewed
studies published between 2015 and 2019--which, LNG Allies asserts,
found that exports of U.S. LNG yield ``substantial net positive global
GHG benefits.'' \79\ CLNG states that NETL's updates to the 2014 LCA
GHG Report reflect the latest science and understanding of new
technology, including a comprehensive upstream LCA model and updated
shipping and regasification modules.\80\ Similarly, API expresses
support for DOE's decision to provide updates to the assumptions and
methodologies used in the 2014 Report, and notes that the overall
conclusions in the Update remain the same.\81\
---------------------------------------------------------------------------
\78\ Comments of LNG Allies at 1.
\79\ Id. at 1-2.
\80\ Comments of CLNG at 2-3.
\81\ Comments of API at 1-2.
---------------------------------------------------------------------------
Sierra Club observes that ``comparing the lifecycle emissions of US
LNG with other fossil fuels can provide a useful perspective on the
climate impacts of potential LNG exports.'' \82\ Sierra Club, however,
also criticizes the scope of the LCA GHG Update for this same
comparison.
---------------------------------------------------------------------------
\82\ Comments of Sierra Club at 5.
---------------------------------------------------------------------------
In Sierra Club's view, comparing the lifecycle emissions of
electricity generated in foreign markets using various fossil fuels
``does not answer the question of how DOE's decision to approve
additional US LNG exports, generally for 20-year licenses, will affect
global greenhouse gas emissions throughout the approved project
lifetimes.'' \83\ Sierra Club argues that the LCA GHG Update fails to
account for two factors: (1) That U.S. LNG exports allegedly will, to
some extent, displace renewables or increase overall energy
consumption, rather than only displacing other fossil fuels, and (2)
that increasing LNG exports will cause ``domestic gas-to-coal
switching,'' and thus result in an increase in coal use.\84\ We address
the domestic gas-to-coal switching argument in section IV.C.
---------------------------------------------------------------------------
\83\ Id. at 1 (emphasis in original).
\84\ Id.
---------------------------------------------------------------------------
As to the first point, Sierra Club asserts that the LCA GHG Update
ignores the effect that exports of U.S. LNG will have on renewable
sources of energy and overall energy consumption.\85\ Sierra Club
maintains that increasing international trade in LNG to increase global
availability of natural gas will cause natural gas to displace use of
wind, solar, or other renewables that would otherwise occur. Further,
according to Sierra Club, ``recent peer reviewed research concludes
that US LNG exports are likely to play only a limited role in
displacing foreign use of coal . . . such that US LNG exports are
likely to increase net global GHG emissions.'' \86\
---------------------------------------------------------------------------
\85\ Id. at 3 (and section heading).
\86\ Id. at 4 (citing Gilbert, A.Q. & Sovacool, B.K., U.S.
liquefied natural gas (LNG) exports: Boom or bust for the global
climate? Energy (Dec. 15, 2017) [hereinafter Gilbert & Sovacool]).
---------------------------------------------------------------------------
Mr. Young similarly questions whether exports of U.S. LNG will
delay or reduce the transition to renewable sources of energy, and
whether LNG will replace or be added to coal generated power.\87\
---------------------------------------------------------------------------
\87\ Comments of John Young at 1.
---------------------------------------------------------------------------
2. DOE Response
The 2019 LCA GHG Update was a timely update to the 2014 LCA GHG
Report and maintained the same analytical structure. As with the 2014
Report, the boundaries of the 2019 Update were developed with respect
to questions about two fossil fuels--natural gas and coal--and where
they
[[Page 81]]
come from. Although Sierra Club criticizes the Update for ``not looking
at the whole picture,'' \88\ the purpose of the LCA was to understand
the life cycle GHG emissions from natural gas-fired power and how it
varies with changes to natural gas sources, destinations, and transport
distances. The LCA included coal-fired power as a comparative scenario
because coal is currently the most likely alternative to natural gas-
fired power for baseload power generation.
---------------------------------------------------------------------------
\88\ Comments of Sierra Club at 3.
---------------------------------------------------------------------------
Additionally, the LCA is an attributional analysis, meaning that
the natural gas and coal scenarios are considered independent supply
chains. Therefore, the LCA does not account for supply or demand shifts
caused by the use of one fuel instead of another fuel (or types of
fuels).
For these reasons, the LCA GHG Update (like the 2014 Report) does
not provide information on whether authorizing exports of U.S. LNG to
non-FTA nations will increase or decrease GHG emissions on a global
scale. Recognizing there is a global market for LNG, exports of U.S.
LNG will affect the global price of LNG which, in turn, will affect
energy systems in numerous countries. DOE further acknowledges that
regional coal and imported natural gas are not the only fuels with
which U.S.-exported LNG will compete. U.S. LNG exports may also compete
with renewable energy, nuclear energy, petroleum-based liquid fuels,
coal imported from outside East Asia or Western Europe, indigenous
natural gas, synthetic natural gas derived from coal, and other
resources. However, to model the effect that U.S. LNG exports would
have on net global GHG emissions would require projections of how each
of these fuel sources would be affected in each LNG-importing nation.
Such an analysis would not only have to consider market dynamics in
each of these countries over the coming decades, but also the
interventions of numerous foreign governments in those markets.
Moreover, the uncertainty associated with estimating each of these
factors would likely render such an analysis too speculative to inform
the public interest determination in DOE's non-FTA proceedings.
Although Sierra Club expresses concern with the scope of the LCA
GHG Update, the D.C. Circuit held in 2017 that there was, in fact,
``nothing arbitrary about the Department's decision'' to compare
emissions from exported U.S. LNG to emissions of coal or other sources
of natural gas, rather than renewables or other possible fuel
sources.\89\ The Court's decision in Sierra Club I guided our
development of this Update.\90\
---------------------------------------------------------------------------
\89\ Sierra Club I, 867 F.3d at 202 (finding that ``Sierra
Club's complaint `falls under the category of flyspecking' '')
(citation omitted).
\90\ See supra at Sec. I.D.
---------------------------------------------------------------------------
Nonetheless, Sierra Club asserts that DOE could now conduct a more
careful and informative analysis than it did in the 2014 Report.\91\
Sierra Club does not cite any study that provides the sort of analysis
it urges DOE to undertake. Rather, Sierra Club cites projections from
the U.S. Energy Information Administration (EIA) that ``global energy
consumption will steadily increase in the coming decades, and that this
increase will be satisfied by growth in renewables and [natural] gas,''
\92\ as well as projections by the International Energy Agency (IEA)
that exports of LNG are likely to supply increased demand rather than
displace existing generation.\93\ Sierra Club also points to a study by
Gilbert and Sovacool which, according to Sierra Club, concludes that
U.S. LNG is ``likely to play only a limited role in displacing foreign
use of coal.'' \94\
---------------------------------------------------------------------------
\91\ Comments of Sierra Club at 4.
\92\ Id. (citing U.S. Energy Info. Admin., International Energy
Outlook 2019, at 31).
\93\ Id. at 3-4.
\94\ Id. at 4 (citing Gilbert & Sovacool, supra).
---------------------------------------------------------------------------
As explained previously, NETL's LCA GHG Update uses the most
current data and methodology to assess GHG emissions. The materials
cited by Sierra Club do not provide any new analysis to evaluate how
exports of U.S. LNG may affect global GHG emissions. The market
projections by EIA and IEA cited by Sierra Club simply provide a case
of continued exports of U.S. LNG to support global energy demands.
Conclusions by other analysts (such as the Gilbert and Sovacool study)
provide a different analysis, but they do not provide new data or tools
beyond what NETL already has integrated into the Update.
The reality is that, although it may be straightforward to model
simplified cause-and-effect relationships between energy options (such
as the direct displacement of coal with natural gas), the modeling of
complex market interactions in different countries introduces
significant uncertainty, while at the same time expanding study
boundaries and hindering accurate comparisons.\95\ For these reasons,
DOE finds that Sierra Club has not provided new evidence to justify
changes to the scope of the LCA GHG Update.
---------------------------------------------------------------------------
\95\ For example, in one recent study (cited with approval by
LNG Allies), Kasumu et al. mention the interaction among fuel
options for electricity generation (e.g., LNG vs. renewables), but
this study likewise did not model a complex cause-and-effect
relationship between LNG and other fuels. See Kasumu, A.S., Li, V.,
Coleman, J.W., Liendo, J., & Jordaan, S.M. (2018). Country-level
life cycle assessment of greenhouse gas emissions from liquefied
natural gas trade for electricity generation. Environmental Science
& Technology, 52(4), 1735-1746.
---------------------------------------------------------------------------
B. Roles of Natural Gas and Renewable Energy
1. Comments
In challenging the scope of the LCA, Sierra Club states that the
``primary question'' facing international markets that may import U.S.
LNG is ``whether to meet increasing energy needs through [natural] gas
or renewables.'' \96\
---------------------------------------------------------------------------
\96\ Comments of Sierra Club at 4.
---------------------------------------------------------------------------
CLNG states, however, that natural gas is an ``ideal partner'' to
renewable energy resources in global energy markets.\97\ According to
CLNG, when countries increase their use of natural gas for power
generation, they both reduce their GHG emissions by switching to
natural gas and have the opportunity to increase their use of renewable
energy. CLNG asserts that, for every 1% increase in natural gas-powered
electric generation, renewable power generation increases by 0.88%,
further reducing emissions.\98\ CLNG thus argues that natural gas is
helping the transition to a lower-carbon future.\99\
---------------------------------------------------------------------------
\97\ Comments of CLNG at 4.
\98\ Id. (citing National Bureau of Economic Research,
``Bridging the Gap: Do Fast Reacting Fossil Technologies Facilitate
Renewable Energy Diffusion?'' (July 2016)).
\99\ Id.
---------------------------------------------------------------------------
2. DOE Response
Projections by IEA from November 2019 indicate that the question of
how to meet the demand for global energy should not be framed as
natural gas or renewables, as suggested by Sierra Club.\100\ IEA's
World Energy Model predicts medium to long-term energy trends, using
simulations to replicate the inner-workings of energy markets.\101\ In
that Model, the Sustainable Development Scenario models the behavior of
energy markets in reaction to holding the increase in global average
temperature below a 2 [deg]C increase from pre-industrial levels. The
Sustainable Development Scenario projects that global CO2
emissions will peak around 2020, then steeply decline by 2040. Although
renewable energy sources will comprise much of this change--as
renewables are projected to provide over 65% of global electricity
generation by 2040--the use of natural gas remains
[[Page 82]]
part of the portfolio through 2040.\102\ As a result, DOE concludes
that natural gas is one part of an environmentally-preferable global
energy portfolio.
---------------------------------------------------------------------------
\100\ See Comments of Sierra Club at 4.
\101\ Internat'l Energy Agency, World Energy Model (Nov. 2019),
available at: https://www.iea.org/weo/weomodel/.
\102\ See id. at https://www.iea.org/weo/weomodel/sds/ and
https://www.iea.org/weo2018/scenarios/. Table A3 (at page 679) shows
the Sustainable Development Scenario World Energy Demand for the
years 2030 and 2040. In 2040, natural gas is projected to be 17% of
total world electricity demand and meet 24% of total world primary
energy demand under the Sustainable Development Scenario.
---------------------------------------------------------------------------
C. Domestic Natural Gas-to-Coal Switching
1. Comments
Sierra Club asserts that the LCA GHG Update is flawed because it
does not consider that increasing LNG exports will cause natural gas-
to-coal switching in the United States.\103\ Citing EIA's 2012 and 2014
LNG Export Studies for DOE, Sierra Club argues that some of the
additional U.S. LNG to be exported will not be supplied by new
production, but instead will be supplied by diverting natural gas from
domestic consumers--which allegedly will cause an increase in domestic
natural gas prices.\104\ According to Sierra Club, these price
increases will cause domestic consumers to switch to using coal for
power generation. Sierra Club therefore claims that the LCA GHG Update
should have evaluated how increasing U.S. LNG exports will lead to an
increase in domestic coal use and, in turn, how global GHG emissions
will change based on DOE's decision to approve LNG export
applications.\105\
---------------------------------------------------------------------------
\103\ Comments of Sierra Club at 1.
\104\ Id. at 5.
\105\ Id. at 1, 5.
---------------------------------------------------------------------------
2. DOE Response
The purpose of the Update was to conduct a life cycle analysis of
GHG emissions in Europe and Asia, not to predict future coal usage by
U.S. consumers. This argument is thus beyond the scope of this
proceeding.
Nonetheless, we note that the current price of natural gas in the
United States is historically low, at less than $3.00/MMBtu. There
would have to be substantial price increases before domestic consumers
would switch from natural gas to coal. In 2018, however, DOE issued the
2018 LNG Export Study, which found that `` `[i]ncreasing U.S. LNG
exports under any given set of assumptions about U.S. natural gas
resources and their production leads to only small increases in U.S.
natural gas prices.' '' \106\ The 2018 LNG Export Study also refuted
the concern that LNG exports would negatively impact domestic natural
gas production.\107\ Further, EIA's Reference Case in the Annual Energy
Outlook 2019 (AEO 2019) shows decreasing levels of coal consumption
through 2050, falling from 677 million short tons (MMst) in 2018 to 538
MMst in 2050.\108\ Although Sierra Club participated in the 2018 LNG
Export Study proceeding, it did not raise concerns about gas-to-coal
switching in that proceeding.\109\ Sierra Club also does not
acknowledge the findings of the 2018 LNG Export Study or EIA's
projections in AEO 2019 in its comments on the LCA GHG Update.
---------------------------------------------------------------------------
\106\ See U.S. Dep't of Energy, Study on Macroeconomic Outcomes
of LNG Exports; Response to Comments Received on Study, 83 FR 67251,
67258 (quoting 2018 LNG Export Study), 67272 (same) (Dec. 28, 2018).
\107\ Id. at 83 FR 62273.
\108\ See U.S. Energy Info. Admin., Annual Energy Outlook 2019
(with projections to 2050) (Jan. 24, 2019), available at: https://www.eia.gov/outlooks/aeo/pdf/aeo2019.pdf.
\109\ See Sierra Club, Comments on the 2018 LNG Export Study
(July 27, 2018), available at: https://fossil.energy.gov/app/DocketIndex/docket/DownloadFile/582.
---------------------------------------------------------------------------
We also note that, in prior LNG export proceedings, Sierra Club
raised this natural gas-to-coal switching argument under the National
Environmental Policy Act (NEPA). In Sierra Club I, the D.C. Circuit
rejected this argument by Sierra Club. The Court agreed with DOE that
``the economic causal chain between its [non-FTA] export authorization
and the potential use of coal as a substitute fuel for gas `is even
more attenuated' than its relationship to export-induced gas
production.'' \110\
---------------------------------------------------------------------------
\110\ Sierra Club I, 867 F.3d at 201 (quoting DOE's order on
rehearing) (denying Sierra Club's petition with respect to coal
usage).
---------------------------------------------------------------------------
D. Global Warming Potential of Methane
1. Comments
Although CLNG states that it supports the conclusion of the LCA GHG
Update, it contends that NETL used an incorrect 100-year Global Warming
Potential (GWP) for methane of 36.\111\ CLNG argues that this GWP value
is out of line with most LCA practitioners and that, if NETL instead
used a lower GWP of 28 or 30, the LCA GHG Update would show even
greater benefits of U.S. LNG exports.\112\
---------------------------------------------------------------------------
\111\ Comments of CLNG at 3 n.3.
\112\ Id.
---------------------------------------------------------------------------
2. DOE Response
Although the 2014 LCA GHG Report used a 100-year methane GWP of 30,
that value is no longer appropriate today. In the LCA GHG Update, NETL
used the 100-year methane GWP of 36, as set forth in the IPCC's Fifth
Assessment Report (or AR5). The GWP value of 36 captures climate carbon
feedbacks not reflected in lower GWP values for methane, and thus
represents the current consensus of the international scientific and
policy communities. DOE commissioned the LCA GHG Update in part to
recognize this updated GWP value.\113\
---------------------------------------------------------------------------
\113\ LCA GHG Update at 3 & n.2; see also supra at Sec. II.E.
Insofar as CLNG argues that the 100-year methane GWP of 36 skews the
results of the LCA GHG Update, we refer CLNG to our prior
proceedings, where we explained that a 100-year methane GWP of 36
versus 30 would not have materially affected the conclusions of the
2014 LCA GHG Report. See, e.g., Sabine Pass Liquefaction, LLC, DOE/
FE Order No. 3792-A, FE Docket No. 15-63-LNG, Opinion and Order
Denying Request for Rehearing, at 37-38 (Oct. 20, 2016).
---------------------------------------------------------------------------
E. Methane Emission Rate of U.S. Natural Gas Production
1. Comments
Sierra Club challenges the methane emission rate (also called the
methane leakage rate) for U.S. natural gas production used in the LCA
GHG Update. As explained previously, the methane emission rate measures
the amount of methane that is emitted during the production,
processing, and transportation of natural gas to a U.S. liquefaction
facility.\114\ Sierra Club points out that, in the Update, NETL used a
methane leakage rate of 0.7% of the natural gas delivered. Sierra Club
states that this figure underestimates the methane leakage rate of
domestic natural gas production, and thus underestimates the lifecycle
GHG emissions of U.S. LNG.\115\
---------------------------------------------------------------------------
\114\ See supra at Sec. II.B.
\115\ Comments of Sierra Club at 6 (citing LCA GHG Update at
27).
---------------------------------------------------------------------------
First, Sierra Club argues that the 0.7% leakage rate is not
consistent with NETL's supporting documentation. Sierra Club points to
NETL's April 2019 LCA of Natural Gas Extraction and Power Generation,
which found a national average methane emission rate of 1.24%.\116\
Sierra Club further states that, even if it is appropriate to use a
regional (as opposed to national) value representing natural gas coming
from the Appalachian Shale (as NETL did in the Update), NETL's
supporting documentation provides a leakage rate of 0.88% for
Appalachian Shale production.\117\
---------------------------------------------------------------------------
\116\ Id.
\117\ See id.
---------------------------------------------------------------------------
Second, Sierra Club maintains that the 0.7% leakage rate is far
lower than ``top-down'' measurements, which it contends provide a more
accurate leakage rate. Top-down studies measure methane emissions by
measuring--through aerial flyovers--atmospheric measurements where oil
and natural gas activity is occurring. Sierra Club
[[Page 83]]
criticizes NETL's 0.7% leakage rate because it is taken from ``bottom-
up'' measurement studies, which use measurements of methane emissions
taken ``on the ground'' at natural gas production facilities.\118\ We
note that this choice is consistent with the 2014 Report, in which NETL
also used a methane emission rate derived from bottom-up measurement
studies.
---------------------------------------------------------------------------
\118\ See id. at 6-8.
---------------------------------------------------------------------------
Sierra Club argues that methane leakage rates from top-down
measurement studies are more common in the published literature, and
that bottom-up estimates are ``systemically too low.'' \119\ According
to Sierra Club, ``the likely average leak rate for U.S. natural gas
production is 2.3% or more.'' \120\ Therefore, in Sierra Club's
opinion, the 0.7% leakage rate used in the Update significantly
understates the likely climate impact of U.S. LNG exports.\121\
---------------------------------------------------------------------------
\119\ Id. at 7.
\120\ See id. at 8.
\121\ Comments of Sierra Club at 8.
---------------------------------------------------------------------------
2. DOE Response
The average methane leakage rate estimated in the LCA GHG Update,
at 0.7%, is based on NETL's analyses and relevant scientific
literature.
As a starting point, NETL used Appalachian Shale in the Update to
represent the upstream emissions from U.S. LNG exports. NETL chose this
scenario because Appalachian Shale is a growing share of the U.S.
natural gas supply, currently representing approximately 30% of U.S.
natural gas production.\122\ NETL's April 2019 LCA of Natural Gas
Extraction and Power Generation showed a methane emission rate (or
leakage rate) of 0.88% from cradle through distribution. This rate,
like all GHG emissions in NETL's results, was bounded by wide
uncertainty bounds that are driven by the variability in natural gas
systems. The upper error bound for Appalachian Shale natural gas, from
cradle through transmission, is 1.21%. When the boundaries of this
emission rate are modified to represent natural gas production through
transmission only (i.e., not including distribution to the end
consumer), the average methane emission rate is reduced to 0.7%. This
boundary modification is necessary because LNG liquefaction terminals
pull natural gas directly from the natural gas transmission network to
supply exports--meaning the natural gas does not pass through local
distribution networks to U.S. consumers (which would increase the
leakage rate). Accordingly, NETL's choice of a 0.7% leakage rate is
representative of natural gas produced in the Appalachian Shale region
for purposes of this export-focused analysis.
---------------------------------------------------------------------------
\122\ See, e.g., LCA GHG Update at 4, 9-11.
---------------------------------------------------------------------------
Second, we note that the studies cited by Sierra Club were
generally published between 2012 and 2014.\123\ Sierra Club cites two
more recent studies: A study published by Tong, et al. in 2015,\124\
and a study published by Alvarez, et al. in 2018.\125\ DOE addressed
Sierra Club's argument based on several of the earlier studies in
connection with the 2014 LCA GHG Report, and we incorporate by
reference DOE's prior response.\126\
---------------------------------------------------------------------------
\123\ See Comments of Sierra Club at 6-8.
\124\ Tong, et al., Comparison of Life Cycle Greenhouse Gases
from Natural Gas Pathways for Medium and Heavy-Duty Vehicles, 49
Environ. Sci. Technol. 12 (2015), cited in Comments of Sierra Club
at 6 n.16 & Exh. 11 [hereinafter Tong study].
\125\ Alvarez, et al., Assessment of methane emissions from the
U.S. oil and gas supply chain, 361 Science 186 (July 13, 2018),
cited in Comments of Sierra Club at 6 n.16 & Exh. 10 [hereinafter
Alvarez study].
\126\ See, e.g., Sabine Pass Liquefaction, LLC, DOE/FE Order No.
3792-A, supra note 113, at 31-35 (stating, inter alia, that ``[t]he
top-down studies cited by Sierra Club represent valuable research
that advance our understanding of methane emissions, but do not form
a robust basis for estimating the leakage rate from U.S. natural gas
systems in the aggregate.'').
---------------------------------------------------------------------------
Turning to the Tong study, DOE notes that this study presents a LCA
for fuel pathways for vehicles. Although the study includes a 2015-era
estimates of methane emissions from the natural gas supply chain, its
primary focus is transportation. Specifically, for natural gas supply
chain emissions, the Tong study estimates a baseline methane leakage
rate ranging from 1.0% to 2.2%, then multiplies this baseline rate by
1.5 to account for ``superemitters.'' (``Superemitters'' is an
expression that has been adopted by natural gas analysts to describe a
small number of emission sources that contribute a disproportionately
large share of emissions to the total U.S. natural gas emission
inventory.) The methodology used in the Tong study, however, is neither
as specific nor as current as NETL's 2019 methodology, which
characterizes upstream natural gas production using data published by
NETL in the April 2019 LCA of Natural Gas Extraction and Power
Generation.\127\
---------------------------------------------------------------------------
\127\ LCA GHG Update at 1, 4-5; see also supra at Sec. II.B
(discussing the April 2019 LCA).
---------------------------------------------------------------------------
Likewise, the Alvarez study--which used a bottom-up approach--
evaluates measurements taken between 2012 and 2016. These measurements
covered the natural gas supply chain, from production through
distribution, and included methane emissions from petroleum production.
Nonetheless, most of these measurements were collected at the facility
level, and do not provide information on component-level emission
sources within the fence-lines of facilities. On this basis, the
Alvarez study calculated an average methane emission rate (or leakage
rate) of 2.3%. This rate is higher than the rate in EPA's Greenhouse
Gas Inventory, which shows an average methane emission rate of 1.4% for
all U.S. natural gas from production through distribution.\128\ The
Alvarez study further concluded that traditional inventory methods
underestimate total methane emissions because they do not account for
emissions from abnormal events, although the study did not provide data
on what constitutes an abnormal event. Therefore, although the Alvarez
study assembles emissions to a national level, its results do not
provide insight on how methane emissions vary geographically or
temporally.
---------------------------------------------------------------------------
\128\ See U.S. Envt'l Protection, 2018. Inventory of U.S.
Greenhouse Gas Emissions and Sinks: 1990-2016. EPA 430-R-18-003
(Apr. 12, 2018), cited in LCA GHG Update at 33.
---------------------------------------------------------------------------
Unlike the Tong and Alvarez studies, the LCA GHG Update accounts
for methane emissions at the component level (i.e., specific pieces of
supply chain equipment) and accounts for geographic and temporal
variability. To address the discrepancies between top-down and bottom-
up measurement studies, NETL accounted for geographic and component
variability in its April 2019 LCA on Natural Gas Extraction and Power
Generation--which, in turn, was used as part of the 2019 Update.
Specifically, NETL stratified EPA's Greenhouse Gas Reporting Program
data into 27 scenarios that represent four extraction technologies and
12 onshore production basins (``techno-basins''). This approach allowed
NETL to factor in the regional differences in natural gas production
methods and geologic sources across the country, with regional
variability in methane emission profiles.\129\ The average life cycle
methane emissions across NETL's techno-basins range from 0.8% to 3.2%
(production through distribution).\130\
---------------------------------------------------------------------------
\129\ See, e.g., LCA GHG Update at 1, 4-5, 8-9.
\130\ April 2019 LCA of Natural Gas Extraction and Power
Generation, at 79 (Exh. 6-4).
---------------------------------------------------------------------------
NETL's methodology thus acknowledges that there are combinations of
natural gas extraction technologies and geographical regions that both
exceed the methane emission rate (or leakage rate) calculated in the
Alvarez study and that have upper error bounds that include the leakage
rates from top-down studies. The existence of higher leakage rates does
not undermine
[[Page 84]]
NETL's use of 0.7% as the methane emission rate because part of NETL's
analysis in the Update sought to address the discrepancies between the
two types of measurements.
Further, as noted, NETL chose the Appalachian Shale scenario
because the Appalachian Shale represents a growing share of U.S.
natural gas production and is currently supporting the U.S. LNG export
market. The other, higher leakage rates cited by Alvarez are merely
indicative of the type of irregular behavior expected in highly
variable natural gas systems, which have many contributors with skewed
probability distribution functions (e.g., superemitters).\131\
---------------------------------------------------------------------------
\131\ See, e.g., Brandt, A.R., Heath, G.A., & Cooley, D. (2016).
Methane leaks from natural gas systems follow extreme distributions.
Environmental science & technology, 50(22), 12512-12520.
---------------------------------------------------------------------------
In sum, top-down and bottom-up methods are complementary, and more
research and analysis are necessary to reconcile them. NETL has
continued to update its LCA of Natural Gas Extraction and Power
Generation with the current state of the science, inclusive of both
top-down and bottom-up measurement data. By characterizing the
variability inherent in EPA's Greenhouse Gas Reporting Program data,
NETL's bottom-up method provides results that are comparable to top-
down studies.\132\ For these reasons, DOE concludes that a higher
methane leakage rate derived through top-down studies is not inherently
more accurate than the 0.7% rate calculated by NETL on the basis of its
bottom-up method.
---------------------------------------------------------------------------
\132\ As one example, NETL has accounted for variability between
top-down and bottom-up methods by evaluating liquids unloading. NETL
produced a multivariable model that simulates liquids unloading at a
basin level and generates methane emission rates that are comparable
to top-down measurements (Zaimes, et al., 2019). This method is
included in NETL's latest work, including in the LCA GHG Update and
the April 2019 LCA of Natural Gas Extraction and Power Generation.
---------------------------------------------------------------------------
F. Other Aspects of NETL's Natural Gas Modeling Approach
1. Comments
Sierra Club and IECA assert that the LCA GHG Update either
underestimates certain categories of GHG emissions (including methane)
present at other stages of the LNG lifecycle or does not include them
at all. Neither commenter explains how or to what extent these alleged
deficiencies in NETL's natural gas modeling approach would affect the
conclusions of the Update. However, both commenters assert that the
Update must account for these emissions.\133\
---------------------------------------------------------------------------
\133\ See Comments of Sierra Club at 8-9; Comments of IECA at 1.
---------------------------------------------------------------------------
First, Sierra Club contends that it was improper for NETL to assume
that the natural gas power plant in each of the import destinations is
located close to the LNG port, so that no additional pipeline transport
of natural gas was modeled in the destination country.\134\ Citing an
article in Bloomberg Business, Sierra Club states that, ``in China, LNG
is being transported from terminal to end users by truck, a process
that presumably entails significant emissions even greater than
transportation by pipeline.'' \135\
---------------------------------------------------------------------------
\134\ Comments of Sierra Club at 8 (discussing LCA GHG Update at
4).
\135\ Comments of Sierra Club at 8 & n.26 (citing Dan Murtaugh,
Welcome to Gas Pipelines on Wheels, Bloomberg Business (Nov. 5,
2018)).
---------------------------------------------------------------------------
Second, Sierra Club contends that the LCA GHG Update should account
for the fact that LNG may not proceed directly from the import facility
to regasification due to an emerging LNG resale market.\136\ Sierra
Club states that resale (or re-export) of U.S. LNG in the destination
country may involve additional steps in storing, moving, and shipping
LNG, beyond the direct shipping routes assumed by NETL in its national
gas modeling approach.\137\
---------------------------------------------------------------------------
\136\ Id. at 9.
\137\ Id.
---------------------------------------------------------------------------
Next, IECA identifies the following five types of emissions that,
it states, should be included in the LCA GHG Update:
(1) GHG emissions from natural gas electricity consumption to
compress the natural gas into LNG and to operate the liquefaction
facility;
(2) GHG emissions from the LNG liquefaction process inside-the-
fence line, including CO2, methane, and GHG emissions
emitted during the refrigeration process;
(3) Methane emissions inside-the-fence line, including those
emitted during the loading and unloading of LNG;
(4) Methane emissions from pipelines used to serve the LNG
facility, using the EIA/EPA national average methane leakage rates;
and
(5) National average EIA/EPA GHG emissions from drilling oil and
natural gas wells, plus any related power generation.\138\
\138\ Comments of IECA at 1.
Additionally, API states that the Update likely overestimated the
emissions associated with the natural gas extraction and processing
stage, citing the availability of new, low-leak equipment.\139\ CLNG
likewise asserts that NETL overestimated the GHG emissions associated
with compressor stations and, by extension, pipelines.\140\
---------------------------------------------------------------------------
\139\ Comments of API at 2.
\140\ Comments of CLNG at 3 n.3 (referencing Exhibit 6-3 of the
April 2019 LCA of Natural Gas Extraction and Power Generation).
---------------------------------------------------------------------------
2. DOE Response
Addressing Sierra Club's first concern, DOE notes that the LCA GHG
Update intentionally did not account for natural gas transmission
between regasification facilities and power plants. This was a modeling
simplification--the same one used in the 2014 Report--based on an
assumption that large-scale natural gas power plants are located close
to LNG import terminals.
As a way of testing the effect of this assumption, NETL has
approximated the marginal increase in life cycle GHG emissions by
adding 100 miles of natural gas pipeline transmission between the
regasification facility and power plant. The April 2019 LCA of Natural
Gas Extraction and Power Generation, at Exhibit 6-1, shows that there
are approximately 6 kilograms (kg) of CO2e emitted from
natural gas transmission per megajoule (MJ) of delivered natural gas.
These emissions comprise approximately 4.5 grams of CO2 and
1.5 grams of methane (in 100-year methane GWPs). NETL's life cycle
natural gas model uses an average transmission distance of 971
kilometers (km) and a natural gas combustion emission factor of
approximately 2.7 kg CO2/kg natural gas. This information
allows the computation of a transmission energy intensity of 0.0017 g
NG fuel/MJ-km and a transmission emission intensity factor of 0.0062 g
CO2e/MJ-km. After balancing these intensity factors with
upstream natural gas losses and downstream power plant demands, DOE
finds that an additional 100 miles of transmission between
regasification and power generation increases the life cycle GHG
emissions for NETL's New Orleans-to-Rotterdam scenario by only 1.8%
(from 636 to 648 kg CO2e/MWh). The magnitude of this
increase would be similar for all LNG scenarios, and such a small
increase would not change the conclusions of the LCA GHG Update.
With regard to truck transport, DOE agrees that trucks are another
potential option for moving natural gas between import terminals and
end users, including power plants. However, because truck transport of
LNG is still relatively new and transport by pipeline remains the
dominant way to move LNG to end users, NETL did not model LNG tanker
truck transport for purposes of this analysis. In a fully developed LNG
supply chain, we expect that LNG importers will invest in efficient,
cost-effective infrastructure, like pipelines, to transport natural gas
to end users. Sierra Club does not provide evidence, other than the
Bloomberg Business
[[Page 85]]
article, to support this point, and we decline to make any changes to
the LCA GHG Update on this basis.\141\
---------------------------------------------------------------------------
\141\ Among other observations about Sierra Club's truck
argument, we note that imports of U.S. LNG as modeled in the LCA GHG
Update would be delivered in large-scale LNG carriers capable of
delivering the equivalent of more than three billion cubic feet of
natural gas. Those deliveries would serve power plants on a scale
requiring continuous supply of natural gas that would make
deliveries by truck impracticable. Additionally, Sierra Club claims
that LNG transported from terminals to end users by truck ``accounts
for 12 percent of China's LNG use.'' Comments of Sierra Club at 8-9.
Sierra Club cites the Bloomberg Business article for this statistic.
We are unable to evaluate this statistic, however, as it is appears
to be taken from a Wood Mackenzie report that is not part of the
record. Finally, Sierra Club's argument is based on the assumption
that all truck transport of LNG in China involves imported LNG. We
note, however, that China produces its own natural gas, and also
receives natural gas by pipeline from neighboring countries. These
supplies of natural gas could be liquefied in China for delivery by
truck.
---------------------------------------------------------------------------
As to Sierra Club's concern regarding emissions potentially
associated with the resale or re-export of U.S. LNG in importing
countries, this issue is outside the scope of this proceeding.
Nonetheless, in December 2018, DOE found that re-exports of U.S. LNG
cargoes represent a ``very small percentage'' of global LNG trade.\142\
---------------------------------------------------------------------------
\142\ U.S. Dep't of Energy, Eliminating the End Use Reporting
Provision in Authorizations for the Export of Liquefied Natural Gas;
Policy Statement, 83 FR 65078, 65079 (Dec. 19, 2018) (citation
omitted).
---------------------------------------------------------------------------
DOE next addresses the concerns raised by IECA, API, and CLNG
concerning the alleged deficiencies or errors in NETL's natural gas
modeling approach. First, IECA contends that the Update overlooks GHG
emissions from natural gas electricity consumption to compress the
natural gas into LNG and to operate the liquefaction facility. NETL's
model, however, has a unit process that accounts for all inputs and
outputs from liquefaction, including the portion of natural gas that a
liquefaction facility sends to gas-fired turbines to generate power for
the liquefaction trains.\143\
---------------------------------------------------------------------------
\143\ LCA GHG Update at App. B (Unit Process Descriptions).
---------------------------------------------------------------------------
Second, IECA claims that the Update does not account for GHG
emissions from the LNG liquefaction process inside-the-fence line,
including GHG emissions released during the refrigeration process. In
fact, NETL's unit process for liquefaction accounts for all GHG
emissions from both onsite energy generation at the liquefaction
facility and the operation of ancillary equipment at the facility. The
unit process also includes fugitive methane emissions as reported by
facility operators to EPA.\144\
---------------------------------------------------------------------------
\144\ See id.
---------------------------------------------------------------------------
Third, IECA contends that the Update does not account for methane
emissions inside-the-fence line, including those emitted during the
loading and unloading of LNG. IECA is correct that the Update does not
account for this emission source, but NETL has conducted a screening
analysis based on the length of a LNG tanker loading arm connector.
This screening analysis determined that the scale of these emissions
are miniscule in comparison to the fugitive emissions already accounted
for in the liquefaction unit process.
Fourth, IECA asserts that the Update does not account for the
methane emissions from pipelines used to serve the LNG facility, using
the EIA and EPA national average methane leakage rates. NETL's unit
process for transmission, however, is representative of a 971 km
natural gas pipeline with fugitive emissions of methane, as well as
intentional methane releases through routine blowdown and other
pipeline maintenance events.\145\ The data for these methane emissions
are representative of industry reporting to EPA and emission factors
used by EPA's Greenhouse Gas Inventory.
---------------------------------------------------------------------------
\145\ See April 2019 LCA of Natural Gas Extraction and Power
Generation, at 21 (Exh. 3-7), 62-64 (Exhs. 4-4 and 4-6).
---------------------------------------------------------------------------
Finally, IECA contends that the LCA GHG Update does not account for
national average EIA and EPA GHG emissions from drilling oil and
natural gas wells, plus any related power generation. On the other
hand, API and CLNG state that the Update likely overestimates other
categories of GHG emissions in the natural gas supply chain. NETL's
LCA, however, is a detailed, engineering-based life cycle model of the
U.S. natural gas supply chain. It includes well drilling energy and
emissions, as well as all ancillary systems used by the natural gas
supply chain. It uses data from EIA, EPA, and other government sources,
as well as data from peer-reviewed literature and fundamental
engineering concepts to represent the energy and material flow of the
entire natural gas supply chain.\146\ DOE also believes that the
uncertainty bounds strengthen the LCA by accounting for variability in
natural gas systems.\147\
---------------------------------------------------------------------------
\146\ See, e.g., LCA Update at 1-9; April 2019 LCA of Natural
Gas Extraction and Power Generation, at 57-58 (Exh. 4-1). With
regard to CLNG's concern about emissions from gathering and boosting
stations within the natural gas value chain, NETL modeled these
emissions based on the current state of science at the time of
analysis. Field measurement activities and related research are
currently focused on improving the understanding of methane
emissions and the representativeness to regional operations. DOE
agrees that this is an area of continual scientific research to
improve upon previous understandings of the contribution of
gathering and boosting operations to the total life cycle analysis.
\147\ See, e.g., LCA GHG Update at 9, 32.
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V. Discussion and Conclusions
Since August 2014, DOE's 2014 LCA GHG Report has been an important
part of DOE's decision-making in numerous non-FTA orders issued to
date. Although Sierra Club challenged DOE's conclusions based on the
2014 LCA GHG Report, the D.C. Circuit ruled in favor of DOE in
2017.\148\ In 2018, DOE commissioned NETL to undertake the LCA GHG
Update to ensure that the conclusions of the 2014 Report were still
valid based on newer information, including the IPCC's updated 100-year
GWP for methane.
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\148\ See supra at Sec. I.D (discussing Sierra Club I, 867 F.3d
at 202).
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NETL's detailed analysis, set forth in the LCA GHG Update dated
September 12, 2019, is based on the most current available science,
methodology, and data from the U.S. natural gas system to assess the
GHGs associated with exports of U.S. LNG. The Update demonstrates that
the conclusions of the 2014 LCA GHG Report have not changed.
Specifically, the Update concludes that the use of U.S. LNG exports for
power production in European and Asian markets will not increase GHG
emissions from a life cycle perspective, when compared to regional coal
extraction and consumption for power production.\149\
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\149\ LCA GHG Update at 32.
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The LCA GHG Update estimates the life cycle GHG emissions of U.S.
LNG exports to Europe and Asia, compared with certain other fuels used
to produce electric power in those importing countries. While
acknowledging uncertainty, the LCA GHG Update shows that, to the extent
U.S. LNG exports are preferred over coal in LNG-importing nations, U.S.
LNG exports are likely to reduce global GHG emissions on per unit of
energy consumed basis for power production. Further, to the extent U.S.
LNG exports are preferred over other forms of imported natural gas,
they are likely to have only a small impact on global GHG
emissions.\150\ The key findings for U.S. LNG exports to Europe and
Asia are summarized in Figures 1 and 2.\151\
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\150\ See id. at 21, 32.
\151\ See supra at Sec. II.I.
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Sierra Club continues to express its concern that exports of U.S.
LNG may have a negative effect on the total amount of energy consumed
in foreign nations and on global GHG emissions. The conclusions of the
LCA GHG
[[Page 86]]
Update, combined with the observation that many LNG-importing nations
rely heavily on fossil fuels for electric generation, suggest that
exports of U.S. LNG may decrease global GHG emissions, although there
is substantial uncertainty on this point, as indicated above.\152\
Further, based on the evidence, we see no reason to conclude that U.S.
LNG exports will increase global GHG emissions in a material or
predictable way. Neither Sierra Club nor the other commenters opposing
the LCA GHG Update have provided sufficient evidence to rebut or
otherwise undermine these findings.
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\152\ See LCA GHG Update at 32.
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In sum, DOE finds that the LCA GHG Update is both fundamentally
sound and supports the proposition that exports of LNG from the lower-
48 states will not be inconsistent with the public interest. As stated,
DOE will consider each pending and future non-FTA application as
required under the NGA and NEPA, based on the administrative record
compiled in each individual proceeding.
Signed in Washington, DC, on December 19, 2019.
Steven Winberg,
Assistant Secretary, Office of Fossil Energy.
[FR Doc. 2019-28306 Filed 12-31-19; 8:45 am]
BILLING CODE 6450-01-P