Senate greenhouse gas bill poses concerns

Pipeline & Gas Journal, Feb, 2008

The greenhouse gas reduction legislation which passed a Senate committee in December and is headed to the Senate floor this winter could have a big impact on pipelines and their customers. But according to Martin Edwards, 1NGAA's vice president of legislative affairs, "could" is the operative word. Not only are some of the definitions in America's Climate Security Act (S. 2191) unclear, but so are some of its implications, Edwards says.

First, the cap on greenhouse gas emissions the legislation would impose on various U.S. sectors would apply, in the case of natural gas, to processors and importers. So interstate pipelines would not be affected by any cap, at least if the plain English of the bill is to be believed. But the legislation is still a work in progress, and when it comes to the floor, there is always the possibility that pipelines could, in some way, shape or fashion, be included under the cap, for compressor emissions, for example.

More significant, at least in terms of the current version of the bill, is the legislation's impact on users of natural gas, both commercial and residential. They, too, would be forced to reduce emissions of greenhouse gases to some, as yet undetermined extent, meaning they would have to wring reductions out of their natural gas appliances. There is the threat this could force buyers away from natural gas and toward electric appliances.

A third issue deals with "offsets," or reductions in emissions one company makes and then sells to a second company which then reduces its emission requirements. Theoretically, pipelines could sell offsets to gas producers. Interstate pipelines want to get credit for reductions of non-CO-2 methane fugitive emissions from compressor stations which they could then sell to natural gas processors or importers. It is not clear from the language of the bill passed in December by the Senate Environment and Public Works Committee whether reductions in methane emissions would count as offsets. The amount of offsets available to processors and importers is important, because the greater the total offsets available, the less natural gas prices to consumers would rise.