Top Trump official talks coal, climate change and clean energy

By Sammy RothStaff Writer

Feb. 20, 2020 2 AM PT

The American power grid is getting cleaner. And Neil Chatterjee is feeling optimistic.

Chatterjee was tapped by President Trump to chair the Federal Energy Regulatory Commission, or FERC, an important but little-known agency that governs interstate electricity markets and decides whether to approve pipelines, liquefied natural gas terminals and hydropower projects. Before joining FERC, he advised Sen. Mitch McConnell, the Republican majority leader, on energy policy, helping to orchestrate the resistance to President Obama’s so-called war on coal.

Like McConnell, Chatterjee was raised in Kentucky, where the coal industry has long been a critical economic engine.

But in a recent interview with The Times, Chatterjee described himself as “a Republican from Kentucky who believes that climate change is real, who believes that man has a significant impact and we need to reduce emissions.” He lauded the growth of solar and wind power, which has been fueled by falling prices. He expressed hope that ever-cheaper batteries will help renewables increase their share of the energy mix, by banking clean electricity for times when the sun isn’t shining and the wind isn’t blowing.

Chatterjee also argued that natural gas, a fossil fuel, “can have a really positive effect on reducing global carbon emissions.” He touted liquefied natural gas export terminals as a way for America’s abundant gas supplies — largely produced by the drilling technique known as hydraulic fracturing, or fracking — to displace dirtier coal in developing countries.

The following excerpts from the conversation have been edited for clarity and length. At times, Chatterjee declined to discuss issues that are pending before his agency, to avoid violating rules prohibiting communications outside official proceedings.

The highest-profile issue FERC has dealt with during your tenure was a proposal from then-Energy Secretary Rick Perry, in 2017, to provide financial support to struggling coal and nuclear power plants. Critics called it a bailout. But FERC commissioners from both major political parties, yourself included, ultimately rejected the proposal.

It was a unanimous decision. Most of what we do, we do on a bipartisan basis.

I think that for all the concerns people had about what the president’s election would mean for the environment, in the power sector, carbon emissions continue to decline. And I think that is occurring not because of regulations, not because of mandates, but because of market forces. Consumers are making choices regarding their energy consumption. The markets are working to squeeze out carbon emissions.

One of the things I’m proudest of is we recently finalized a rule to remove barriers to entry for battery storage technology. And I think that kind of approach — enabling storage resources to be compensated for all their attributes — will not just accelerate the deployment of storage resources, accelerate the deployment of renewable resources; I think it will also drive innovation. And I really think that the co-location of solar and storage could really fundamentally alter the energy landscape.

What do you think the power grid will look like in 2040?

It’s hard to speculate. If you had asked me 10 years ago what the grid would look like today, I think we all would have been way off and wrong. Twenty years ago, we were talking about siting liquefied natural gas import facilities in the U.S. I think wind and solar were still in their relative infancy.

I am optimistic on what innovation will yield. What we’ve seen in terms of energy storage — what we’ve seen in terms of the declining cost and greater efficiency of cleaner sources of energy — it’s been exciting, and I think it will only continue.

The one thing I will confidently say is the business case for clean energy is continually improving. And I for one am bullish that there is a business case to be made for renewables: that renewables can compete on their own without subsidies, without mandates, and that ultimately in a competitive market, when you have a generating source that has no fuel cost, you’re going to win out.

Will we still have coal on the power grid in 20 years?

Depends on different parts of the country. If you look to my home, the Commonwealth of Kentucky, there are still communities there that are highly dependent on coal and coal-fired generation, not just for their energy, and not just for their livelihood, but for the cultural lifeblood of these communities.

I hosted a pretty big energy conference back in October called the EnVision conference, where I invited people from across the policy landscape to come to Kentucky. I wanted to hold it in Lexington specifically. Obviously I’m biased; it’s my hometown. When you fly into Lexington, when you fly over the beautiful horse farms and the beautiful landscape — I think a lot of people maybe had this view of Kentucky as this industrial hellscape with coal plants and people smoking cigarettes everywhere.

I wanted people to appreciate that Kentuckians aren’t clinging to coal-fired generation because we’re dismissive of environmental concerns. There are real, genuine reasons for that, and I wanted folks who are leaders in the national and international energy conversation to be able to hear firsthand from Kentuckians on the challenges that the commonwealth was seeing in the energy transition.

But I also am cognizant that a lot of Kentuckians were perhaps apprehensive about the energy transition because they do view it as potentially challenging due to the state’s long dependence on coal. I wanted them to be introduced to players in the clean energy space, so they could see that there’s opportunity for Kentucky in the energy transition.

You’ve talked about your confidence in the market to reduce planet-warming pollution. But there’s a lot of science showing emissions aren’t going down fast enough to avoid the worst impacts of climate change, and suggesting the world needs to move away from not just coal but also natural gas much more quickly. Do you think the market on its own is capable of tackling the climate crisis?

I have seen firsthand in the U.S. power sector how gas displacing more carbon-intense sources of fuel — along with the accelerated deployment of renewables that rely upon gas as their backbone — has led to dramatic decreases in carbon emissions. And I think that is a model that can be exported. And so the reason I am excited about the prospect of U.S. liquefied natural gas exports isn’t just for the domestic economic benefits or the clear geopolitical benefits — it’s environmental as well.

I get frustrated sometimes when people roll their eyes at me when I talk about the role that U.S. liquefied natural gas can play in the global carbon mitigation crisis. If we’re going to seriously tackle reducing carbon emissions, we have to be smart, practical and pragmatic about it.

During your tenure, FERC has largely refused to consider climate change impacts when deciding whether to approve gas pipelines, despite a court ruling that some experts say compels the commission to do so. Do you think addressing climate change ought to be part of FERC’s mission?

We’re an independent agency that is governed by statute. And I don’t believe that we should have an expansive reading of the statutes that govern the agency. I think Congress would have to explicitly authorize us to change our process and go in that way.

Should Congress do that?

Obviously if Congress were to take action in that regard, we would comply with the law. But I think in the interim, our process works well. We carefully evaluate projects. I think ultimately the reviews that we do and the oversight we do ensures that these infrastructure projects are built in a clean, environmentally friendly, safe manner.

Several states have adopted 100% clean energy targets: California, Maine, Nevada, New Mexico, New York and Washington. More states are likely to follow. How will FERC respond to those types of policies as they become more common?

This is something that we’ve wrestled with. I’m a big believer in states’ rights, and I’m conservative. And conservatives believe fundamentally in the ability of states and local governments to make decisions about their energy future. But I also believe in these markets. And I want these markets to succeed.

One of the challenges that we’re seeing — and I have to be very careful, because we have pending matters before the commission — is that properly functioning markets and accurate price signals, which are leading to great benefits for consumers and the environment, are coming into contact with these state policies. I don’t begrudge the states the ability to make decisions about their local resource mix, but when those decisions are impacting the broader market, it can be a challenge.

Regarding California’s push to 100% clean energy by 2045, you recognize the challenges to that. California still gets a third of their electricity supplied by gas. Even if you remove gas, there’s this push to electrification — electrification of buildings, electrification of the vehicle fleet. How do you do that while maintaining reliability?

These are really, really complex issues. It’s not black-and-white. There’s a lot of gray and a lot of nuance and a lot of challenge here.

There’s been debate in California about whether to join with other western states to form a regional power market, like other parts of the country have. Supporters say a regional market would make it easier to share low-cost renewable energy across state lines, but critics worry that California would be forced to buy coal-fired electricity from Utah and Wyoming. There’s already a more limited energy imbalance market, led by California, with participants from most western states. What do you think?

I would think that there’s advantages to western expansion. I know the concerns around it well, that it could potentially lead to the importation of dirtier electricity into California. And there’s reluctance on the part of other states that they don’t want to be subjected to California policies.

I’m a big believer in markets. I think markets provide tremendous benefits to the consumers, to efficiency, to the economy and to the environment. What we have seen, for example, in the energy imbalance market — all participation that we’ve seen there has led to a reduction in fossil emissions among participants. So I do think some of the concerns around that component of it are unfounded.

Some environmentalists are concerned that if California joined a regional market, FERC might compel it to accept dirtier power from other states.

I think those concerns are unfounded. I think my colleagues and I all pride ourselves on the independence of the agency, and on a record-based approach to evaluating the different filings. Obviously different regions of the country have different opportunities and different challenges, and we look to things in that way.

You’ve faced similar concerns in one of the major eastern power markets, where critics say FERC’s Republican majority has interfered with state-level policies by making it harder for clean power sources to compete.

Can’t talk about it. But I will just say, at a high level what’s happening is, as states are pursuing these objectives, they’re basically hiding the costs of their policy from their consumers and from their constituents in the form of these subsidies. And I think that’s the issue. I don’t have a problem with states promoting the policies that they feel are best-suited for their constituencies. They just have to be honest and transparent with their voters about what the costs of those policies are.

You could also argue that the market doesn’t take into account the damages caused by climate change emissions and air pollution, and that state policymakers are trying to balance out those costs by promoting clean energy.

Obviously we have a number of comments in that regard that were filed in our docket, that we’ll take very seriously.