US EPA says industry regulatory body must consider ‘climate damages’ of pending Natural gas projects

Aug 13, 2021 News

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Kaieteur News – According to international media house, S&P Global Platts, the US Environmental Protection Agency advised the Federal Energy Regulatory Commission (FERC) to begin incorporating the social cost of carbon into its environmental reviews. Considering the climate change impacts of Natural gas infrastructure projects could help the Commission put a dollar value on harm caused by project emissions, the EPA said.
That recommendation was consistent in recent comments filed by officials from Regional EPA offices about draft environmental reviews for various projects. The FERC approach to considering climate change impacts in permitting decisions continues to evolve while its staff has been at an impasse, repeatedly saying in the draft reviews released so far that they are “unable to determine significance” when it comes to climate change.
A US EPA official had recently said that “Climate change is inherently a major, significant impact of each fossil fuel project.” The EPA’s other recommendations in the recent comments included FERC taking a harder look at local and regional impacts of Methane emissions as a precursor to ozone, which can cause harmful effects on human health and the environment. The EPA also said FERC should consider attaching mitigation measures for climate change impacts for gas projects.
“Additional mitigation efforts to offset emissions associated with the proposed action, such as promoting carbon sequestration through revegetation efforts, should also be considered in the final [environmental impact statement],” an EPA official from New York wrote. The EPA also encouraged FERC to use state climate targets in its analyses. In the case of Marcus Hook project, an EPA official wrote that “it would be beneficial to require the proponent to mirror” state targets, including Delaware’s, saying as an example that the developer could consider as a goal of reducing its operational emissions by 80% by the end of the license term.
In the Iroquois filing, an EPA official said the agency acknowledged the uncertainty associated with using a social cost of greenhouse gases analysis but still encouraged FERC to use the estimates “that reflect the best available science and methodologies to incorporate the value to society” of emissions impacts associated with permitting decisions.
“For example, by applying the [social cost of greenhouse gases] analysis, the projected emissions associated with the proposed action equates to over $144 million in climate damages per year,” the EPA said.
In a recent ruling on permits for LNG projects, the US Court of Appeals for the District of Columbia Circuit also said FERC must explain whether it is required to apply the social cost of crbon or some other analytical framework.
The social cost of carbon (SCC) is used to estimate in dollars all economic damage that would result from emitting one ton of Carbon Dioxide into the atmosphere. It indicates how much it is worth to us today to avoid the damage that is projected for the future.
The social cost of carbon is used to help policy makers determine whether the costs and benefits of a proposed policy to curb climate change are justified. A higher SCC generally means that the benefits of a particular climate policy to cut CO2 justify its cost; a low SCC makes a policy seemingly cost more than the benefits it ultimately delivers. Theoretically, the SCC should increase over time because physical and economic systems will become more stressed as the impacts of climate change accumulate.
How is the social cost of carbon calculated?
To arrive at the SCC dollar amount, information is fed into three computer models that link social, economic and physical features into one framework. The models integrate four types of information:
1. Socioeconomic predictions: For example, what will the population be in a given future year? How much will the economy grow? How much manmade carbon emission will result?
2. Climate projections: How will the climate respond to emissions? How long will CO2 remain in the atmosphere? How fast will sea levels and temperatures rise? What types of extreme weather could there be?
3. Benefits and costs: How will climate change affect agriculture? How much will adapting to sea level rise cost? How does additional warming affect energy use? How will workers’ productivity be affected?
4. The discount rate: Since most benefits from policies will come in the form of avoided damage in the future, and the policy will be paid for today, the discount rate indicates the rate at which society is willing to trade present benefits for future ones. A high discount rate implies more greatly valuing the money in hand, and spending less today to allow future generations to bear more of the costs; a low discount rate indicates a willingness to spend more today to protect future generations.
A quantification of the effects of pollution from fossil fuel projects in terms of a monetary value arguably presents an invaluable tool in assessing the effects of proposed fossil fuel projects. Such an approach, if adopted by the Guyanese EPA in its Environmental Impact Assessment of the proposed Gas-to-Energy Project, would undoubtedly be heralded for its utility.

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