US court orders federal regulators to assess emissions of Louisiana LNG project

By Timothy Gardner

WASHINGTON (Reuters) -A U.S. court on Tuesday ordered federal regulators to reassess the impact of greenhouse gas emissions from Commonwealth LNG's Louisiana liquefied natural gas project, potentially slowing full approvals for the venture.  

The U.S. Court of Appeals for the District of Columbia did not overturn the Federal Energy Regulatory Commission's 2022 approval of the project as it ordered the agency to reconsider the emissions after environmental groups had sued saying they were not taken seriously.

"We think it 'reasonably likely' that on remand, the Commission can redress the defects in its (greenhouse gas) emissions and cumulative-effects analysis and still authorize the Project," the court said in its decision.

Five environmental groups including the Natural Resources Defense Council sued FERC over the approval, saying it did not take climate and air pollution risks seriously when it approved the project in November 2022.

Commonwealth has not made a final investment decision (FID) yet. If developed, the project is expected to begin shipping 9.5 million tonnes a year of LNG from Cameron, Louisiana, in 2028. 

Lyle Hanna, a Commonwealth spokesperson, said the company will work with FERC during the reassessment and that it expects a FID in the first half of 2025.

Private equity firm Kimmeridge, through its subsidiary Kimmeridge Texas Gas, acquired a 90% stake in Commonwealth LNG, it said in June.

In the 2022 approval, Democratic members of FERC had listed concerns about the impact of emissions linked to warming the planet and on communities frequently exposed to other types of pollution, saying the terminal would produce the equivalent of about 3.5 million tonnes of carbon emissions annually. 

But they approved the project, saying federal natural gas law requires FERC to approve facilities unless they are contrary to the public interest.  

The NRDC said the ruling will help ensure an "honest" assessment by FERC. "This ruling underscores what we have said for years: FERC continues to violate bedrock national environmental legal obligations to assess the community and climate impacts of LNG projects," said Caroline Reiser, a lawyer at the nonprofit.

It was unclear whether the decision could delay any start of the project, but it could delay another necessary approval. ClearView Energy Partners, a nonpartisan research group, said the Department of Energy, which has the power to approve exports to major global markets from the Commonwealth project, may not act while FERC is reconsidering the emissions impact.

(Reporting by Timothy Gardner in Washington; additional reporting by Curtis Williams in Houston; Editing by Chizu Nomiyama and Matthew Lewis)