• Home
  • Proposal paper
  • US FERC: The Next Battleground to Define “Responsibly Sourced Natural Gas”

US FERC: The Next Battleground to Define “Responsibly Sourced Natural Gas”

By on June 7, 2022 0

The U.S. Federal Energy Regulatory Commission (FERC) is expected to issue an order later this month that could influence the development of “responsibly sourced natural gas” (RSG), natural gas certified by a qualified third party as meeting certain performance and operating criteria. Some players in the energy sector have touted the RSG as a way to achieve net zero emissions and lower carbon emissions.

For the second time this year, FERC is being asked to consider a proposal from Tennessee Gas Pipeline, LLC (Tennessee), one of the largest natural gas carriers on the U.S. East Coast, to set up points paper pooling where its senders could consolidate RSG. FERC rejected Tennessee’s initial Producer Certified Gas (PCG) pooling service option for its rate schedule supply aggregation without prejudice on April 29, 2022, as it included proposed rate wording defining PCG criteria. FERC was concerned that the formal wording of the tariffs “could impede the development and acceptance of future RSG standards and third-party certification providers, and … adversely affect a shipper’s ability to classify gas as RSG.”

Tennessee refiled the proposal on May 11, 2022, retaining the key attributes regarding the pooling of RSGs while removing the PCG criteria from its tariff. Instead, it offers to display the same information on its interactive website, subject to change from time to time to meet the changing needs of the RSG market. Tennessee is seeking an effective date of July 1, 2022 for its proposal.

The Environmental Defense Fund (EDF) is a party seeking rejection of Tennessee’s revised proposal. In a May 23, 2022, demonstration, EDF deemed the Tennessee filing “precedent” and asked FERC to reject the proposal to prevent similar filings by other pipeline companies while the RSG industry grows. He argued that the approval would open the door for pipeline companies to make critical policy decisions, such as who would qualify as a third-party certifier, what standards would apply to certifiers, and what percentage of methane intensity would apply to the RSG gas. EDF’s main concern is that shippers use an RSG label and sell RSG at a higher price, without any certainty that the gas designated RSG actually reduces emissions. However, EDF said it would support Tennessee’s implementation of its proposal as a pilot program subject to detailed reporting and measurement.

A FERC order approving Tennessee’s proposal would be an important step toward commercializing RSG, and it could unlock significant value for the natural gas industry, especially at a time when emissions litigation has stymied construction. certain liquefied natural gas export projects and interstate pipelines. . Recent analysis has indicated that “responsibly sourced” gas can earn up to a 2% premium over other commoditized gases, and Tennessee has acknowledged that it trades at a premium.