Is it US Permitting and Regulatory Uncertainty that will Impact US LNG Projects, or that Developers just did not follow the Environmental Justice Law since February 1994.
The early storage withdrawals and tight LNG market present a concerning situation for Europe’s winter energy outlook. This challenge is compounded by potential environmental justice (EJ) issues in the U.S. that may force the Federal Energy Regulatory Commission (FERC) to reconsider permits granted before the Chevron Doctrine ruling. Projects that failed to adequately account for EJ concerns could face delays or cancellations, jeopardizing U.S. LNG supply forecasts.
Impact of Environmental Justice on U.S. LNG Projects
The 10th District Court of Appeals order for FERC to Remand the Permits on projects is a direct reflection of the Supreme Court ruling on the Chevron Doctrine: The Chevron Doctrine ruling could lead FERC's obligation to comply to remand permits previously granted for major LNG and energy projects if they did not properly consider environmental justice (EJ) impacts. EJ regulations require that marginalized communities not bear disproportionate environmental harms, and projects that did not address these concerns may now be vulnerable to legal challenges. Developers need to investigate obtaining a Social License to Operate, Visit https://learningforsustainability.net/social-license/
Further Potential Legal Actions is expected by Sierra Club and Greenpeace, Environmental Groups: Advocacy groups like the Sierra Club and Greenpeace, visit: (https://www.greenpeace.org/usa/reports/permit-to-kill/) are expected to sue FERC over projects with unresolved EJ issues. These lawsuits could target projects where the statute of limitations has not expired, creating delays or possibly halting projects altogether. Projects facing litigation or requiring re-permitting will likely see timelines extended, threatening U.S. LNG volumes expected to come online in the near term.
EJ will Jeopardize U.S. LNG Volumes: The risk of project delays or closers due to EJ issues could directly impact U.S. LNG export volumes, which are critical for global supply. With Europe heavily relying on LNG imports, any delays or reductions in U.S. output could exacerbate the already tight LNG market, pushing Europe to compete even more fiercely with Asia for available cargoes.
Recommendations and Forecast Adjustments
Closer Monitoring of U.S. LNG Projects: Europe must closely monitor the progress of U.S. LNG projects and adjust its import strategies accordingly. If significant volumes from the U.S. are delayed, Europe will need to diversify its LNG suppliers further.
Regulatory Scrutiny and Compliance: LNG projects should enhance compliance with environmental regulations and ensure EJ (https://ejscreen.epa.gov/mapper/) issues are addressed upfront. This will minimize litigation risks and help stabilize future supply forecasts.
Off takers must move quickly to securitize Long-Term Contracts and Diversification of LNG supply: Europe could mitigate risk by negotiating more long-term contracts with U.S. LNG suppliers or diversifying LNG import sources to include regions like Africa, where fewer environmental regulatory constraints might be present.
While Environmental Justice issues threaten to slow down U.S. LNG production, Europe must maintain an aggressive flexible import strategies to manage its winter supply risks. The legal and regulatory landscape, particularly in the U.S., will play a critical role in determining whether the forecasted volumes of U.S. LNG will materialize, and Europe’s ability to outbid Asia will be essential in securing needed supplies.
This evolving dynamic requires close attention to potential lawsuits from environmental groups and FERC’s actions considering the Chevron Doctrine, which could reshape the landscape of U.S. LNG permits and impacting exports.
FERC is your projects friend, they help you locate errors in drawings and engineering that the EPC's have overlooked, resulting in large financial savings due to unexpected change orders during construction.
America does not have an LNG permitting issue, but a strict requirement that developers make their best efforts to follow the development process, rules and regulations, The Future of LNG will begin and end with proper site selection. Sites must have local community support for the project and it is no question they must comply with the Environmental Justice rules.