November 5, 2019 at 5:01 am ET
The Senate Energy and Natural Resources Committee today “will consider two high-profile energy nominations,” including the next commissioner to the influential Federal Energy Regulatory Commission (FERC). This agency regulates the interstate transmission of natural gas, oil, electricity and hydropower projects. Natural gas has become the new global soft power weapon, giving the decisions made by FERC commissioners heightened domestic and international significance. This is why it is important for President Donald Trump’s FERC nominee — in this case current FERC General Counsel James Danly — to be thoughtful in reviewing and developing the nation’s energy security, which increasingly relies on natural gas instead of aging or now uncompetitive resources like coal and nuclear energy.
Why? To allow America to continue to dominate in the realm of energy exploration and exportation, FERC should avoid political favoritism and focus on approving new energy projects. Unfortunately, the Trump administration was distracted early on by the coal and nuclear industry’s efforts to obtain taxpayer support for their uncompetitive, aging power plants. Saving coal was a chief campaign promise of then-candidate Trump. With the recent bankruptcy announcement of Murray Energy — whose head, Robert Murray is a major Trump donor — calls to revive a dying industry take on increased significance and is a cause for concern.
The fact is, coal and nuclear are uncompetitive in terms of cost, and coal’s heavy carbon emissions make it unpalatable in a world increasingly concerned with clean energy. FERC needs to let markets function without the distortionary effects of taxpayer subsidies. In the case of nuclear, the agency should work toward lowering regulatory barriers, not subsidize uncompetitive operators. The Energy Information Administration (EIA) reported that between 2010-2019, 546 coal-fired power plants were shuttered, with another 17 gigawatts of coal-fired capacity will be retired by 2025. Likewise, since 2013, 19 nuclear plants have been shuttered or are slated to close.
In contrast, natural gas continues to grow, providing cheaper and more efficient energy for electricity. LNG produces 50 percent less CO2 than coal. Furthermore, the increased efficiency and lower cost reduces consumer electricity bills. The president would be wise to remember that people vote with their wallets, and energy costs are a major concern.
Natural gas development has domestic and international security implications, particularly in a world where Russia has a growing influence in the energy space. In fact, China’s demand for natural gas is expected to rise by more than 300 billion cubic meters (bcm) by 2035. That is 30 percent of global demand growth. Nominee Danly must be conscious of this reality. To double down on the strength of natural gas, FERC should consider the many benefits to approving LNG export terminals along the coasts to broaden market accessibility.
FERC needs to address the 70 outstanding LNG export terminal applications pending approval. Many natural gas pipelines still run through Mexico and Canada. FERC’s acknowledgement of an infrastructure review bottleneck created the need for a new Houston office opening, and increased staffing hires to expedite the review and approval process.
FERC’s mandate for natural gas pipeline cyber security is also important. Cybersecurity has become a major priority for pipeline operators, and they must work to proactively counter threats to their operation. The importance of pipeline cybersecurity became clear when the North American Electric Reliability Corporation reported a first-of-its-kind pipeline cyber attack earlier this spring.
While FERC doesn’t have direct jurisdiction over pipeline cyber security oversight, the commission works closely with the Transportation Security Administration (TSA) to ensure compliance with the TSA’s Pipeline Security Guidelines. Both TSA and FERC have clarified the threat landscape of pipeline cybersecurity threats. These agencies need clear but flexible guidance to allow them to adapt to the constantly evolving cybersecurity landscape. In Senate testimony, FERC Chairman Neil Chatterjee noted that cyber was a priority of his commission and stated his intent to continue to work with TSA to help improve their oversight of pipeline cybersecurity. Danly will need to share Chatterjee’s focus on the importance of prudent, flexible cybersecurity planning. One means of accomplishing this goal is leveraging a variety of established public-private partnerships such as the Oil and Natural Gas Information Sharing and Analysis Center, which provides the opportunity for government agencies to collaborate on risk identification and management to adapt quickly.
Ultimately, American energy dominance can only be achieved by moving forward on infrastructure development. Consumers are benefitting by cheap and plentiful natural gas while industry members and FERC are all leaning forward on getting projects approved and underway. Doubling down on natural gas and its strengthened pipeline components requires a complete FERC commission to do its full duty, and renew its focus on cost-effective energy sources over uncompetitive energy producers.
Todd Royal is an independent public policy consultant focusing on the geopolitical implications of energy. He is based in Los Angeles and is the co-author of the recent book “Energy Made Easy.”
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