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Energy Industry Expecting Delayed Oil, Gas Permitting with Updated Federal GHG Guidance

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Federal guidance updating how climate impacts should be assessed during environmental reviews for permitting energy infrastructure is drawing criticism from the oil and natural gas industry. 

The White House Council on Environmental Quality (CEQ) earlier this month released updated Guidance on Consideration of Greenhouse Gas Emissions and Climate Change. The interim guidance, which is under public review through March, would be used to help federal agencies better assess and disclose climate impacts during environmental reviews. 

Directed by President Biden’s Executive Order 13990, the guidance would advance a commitment to “restore science in federal decision making, fight climate change and build resilient infrastructure,” according to CEQ. 

CEQ Chair Brenda Mallory said the “guidelines will provide greater certainty and predictability for green infrastructure projects, help grow our clean energy economy and help fulfill President Biden’s climate and infrastructure goals.”

The new guidance builds on the final first phase of the National Environmental Policy Act (NEPA) rule issued last April. The update replaces 2016 greenhouse gas (GHG) emissions guidance, CEQ noted.

The American Petroleum Institute (API) and the American Exploration and Production Council (AXPC) each took some exception to the updates.

“The natural gas and oil industry is committed to solving the dual challenge of advancing a lower carbon future while providing consumers with reliable energy,” API’s Vice President Aaron Padilla of Corporate Development told NGI. “As the current energy crisis has revealed, the world will need more energy, not less. 

“The administration’s interim NEPA GHG guidance complicates the current regulatory framework and could delay the development of critical energy projects. API urges CEQ to view our industry as a vital partner in the efforts to reduce our nation’s GHG emissions, not as an obstacle,” he said. 

“Produced under stringent safety and environmental standards, American natural gas and oil serve as a stabilizing force in global markets and provide a critical GHG emissions reduction pathway for countries around the world.”

AXPC CEO Anne Bradbury said “the White House is blatantly picking energy winners and losers. The administration’s interim NEPA guidance is a policy attack on American-made oil and natural gas…” 

The guidance, Bradbury said, “could threaten permits for emissions reductions technologies considered critical to a lower emissions future, such as hydrogen and carbon capture, utilization and storage.

“The guidance creates even greater delay, uncertainty and legal vulnerability in the federal permitting process, which could make energy more expensive and less reliable for the American people,” she added.

Analysts with ClearView Energy Partners LLC in a note said the interim guidance is “setting the stage for the White House to lean into greening…Our initial take…is that it goes well beyond empowering agencies to use a plussed-up social cost of greenhouse gasses in NEPA reviews.”

The ClearView team said the interim guidance “still hews to the concept that NEPA reviews are disclosure versus decision exercises. We see nothing implying that the CEQ has empowered agencies to select alternatives to proposed projects, but agencies could have more reasons to select ‘no action’ options,” i.e. deny permits. 

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