On January 6th, the White House Council of Environmental Quality (“CEQ”) released a new Guidance on Consideration of Greenhouse Gas Emissions and Climate Change (“the Guidance”) in permitting decisions, with significant implications for energy and infrastructure projects.  Though this Guidance is effective as of the date of publication, it was issued on an interim basis and CEQ will consider comments until March 10th, after which it could be revised further. 

CEQ’s recommendations will influence the Biden Administration’s analysis of greenhouse gas (“GHG”) emissions in environmental reviews under the National Environmental Policy Act (“NEPA”), applying immediately to all newly proposed actions as well as some on-going NEPA reviews.  While the Guidance is largely framed as a series of recommendations rather than requirements, it highlights best practices for environmental reviews that could help expedite project completions, improve agency decision making, and minimize litigation risks for developers.  Ultimately, CEQ is trying to ensure that agencies and project developers pay sufficient attention to climate impacts, without causing unwarranted delays to agency decision-making, particularly considering that accelerating clean energy infrastructure is a key component of the Biden Admiration’s climate agenda. 

The Guidance seeks to foster a greater understanding of GHG impacts and the tradeoffs among alternatives, thus raising expectations around the quality of federal GHG analyses.  Project developers will want to work closely with federal regulators to ensure the sufficiency of agency NEPA reviews. Failures to do so may provide project opponents a pathway to litigation. 

This Guidance seeks to create a framework that, among other things, will:

  • promote consistency in agency analysis of GHG emissions,
  • encourage environmentally beneficial decision-making, and
  • regularize up-front community engagement and consideration of environmental justice impacts.  

Below we analyze these three key themes in greater detail. 

I. Encouraging Consistency in Agency Analysis of GHGs

CEQ’s Guidance builds upon an earlier 2016 policy document, and is the latest in a series of efforts aimed at enhancing certainty in agency GHG analysis.[1]  This Obama-era 2016 guidance was revoked and replaced by the Trump Administration,[2] and then ultimately reinstated by the Biden Administration in early 2021.[3]  In the interim, court decisions have required some kind of analysis of project climate impacts under NEPA, without articulating clear generally applicable guidelines as to what level of review would be sufficient, thus resulting in uncertainty.[4]

CEQ is encouraging more certainty in addressing GHG consequences, while acknowledging that any such analysis must be conducted in a measured, proportional, yet thorough manner.  CEQ accomplishes this mainly by recommending agencies quantify and then contextualize relevant GHG impacts.  

A. Quantifying GHG Emissions and Reductions

CEQ recommends agencies first quantify all reasonably foreseeable GHG emissions and reductions of a proposed action, any reasonable alternatives, and a no action alternative.  In doing so, CEQ recognizes the unique nature of the climate emissions challenge, where the effects arise from a wide range of emissions activities.  It thus notes, “NEPA requires more than a statement that emissions from a proposed Federal action or its alternatives represent only a small fraction of global or domestic emissions.”[5]  In other words, an agency is not absolved from analyzing GHG emissions because no single agency action has the ability to mitigate climate change on its own.  Instead, an agency must recognize that adequate reforms will occur incrementally, and therefore analyze the emissions impacts of significant federal actions that contribute to, or remediate, climate impacts.[6]  To do so, CEQ directs agencies to use tools that are commonly deployed by the private sector and government to quantify emissions.[7] 

Using these tools, emissions increases and reductions should be quantified individually by constituent greenhouse gases, as well as aggregated in terms of total carbon dioxide equivalency.  Additionally, where feasible, agencies are encouraged to represent the proposed action’s annual emissions or reductions, especially when those emissions might vary over the life of the project.[8]  

CEQ further instructs that agencies evaluate direct, indirect, and cumulative emissions as part of their environmental review.  Among other things, CEQ notes that quantifying direct and indirect emissions “is generally essential to reasoned decision making.”[9]  Cumulative emissions are critical to consider given the nature of the climate problem, where detrimental effects flow from the accumulation of historic GHGs.  Consideration of cumulative effects can be accomplished by summarizing and citing to the relevant scientific literature, as well as monetizing and contextualizing emissions as noted in the following section.[10]  

Analyzing direct, indirect, and cumulative emissions is likely to be one of the most challenging aspects of CEQ’s guidance to implement, and similar recommendations have already been the source of some controversy.  For instance, in February 2022, the Federal Energy Regulatory Commission (FERC) issued a policy statement stating that for gas pipeline approvals FERC would review “GHG emissions that are reasonably foreseeable” including those resulting from upstream impacts—such as those tied to construction and operation of the project—and downstream impacts—such as emissions resulting from the combustion of transported gas.[11]  Barely a month later, FERC re-designated this policy statement as a draft and invited additional comments after it garnered significant industry and political criticism.

CEQ attempts to tamp down such controversy by making clear that any analysis of GHGs should be bounded by principles of proportionality.  They caution against “an in-depth analysis of emissions regardless of the insignificance of the quantity of GHG emissions that the proposed action would cause.”[12]  For example, “the relative minor and short-term GHG emissions associated with construction of certain renewable energy projects, such as utility-scale solar and offshore wind, should not warrant a detailed analysis of lifetime GHG emissions.”[13]  In order to further enhance efficiency and avoid duplicative efforts, CEQ expects that agencies will rely on and incorporate scientific and technical information on impacts from other, more expert, agencies, as well as international organizations and academic literature.[14]

B. Monetize and Contextualize GHG Emissions

Agencies should contextualize GHGs associated with a project after quantifying them.  This can include monetizing climate damages using the “best available estimates” of the social cost of GHG (“SC-GHG”) and placing emissions in the context of relevant climate goals and commitments. 

The best available SC-GHG figure is currently in flux.  Two years ago, the Biden Administration reconstituted an Interagency Working Group (IWG) on the SC-GHG, which issued an interim estimate of the SC-GHG in the spring of 2021.  As detailed in a prior blog post, that estimate has been the subject of litigation and the IWG has yet to issue a final SC-GHG.  More recently, EPA issued a regulatory document in the fall of 2022, which previewed a much higher SC-GHG than contemplated in the IWG’s interim estimate.[15]

CEQ nonetheless notes that “in most circumstances” agencies should use the SC-GHG to analyze a proposed action and its alternatives.  In doing so, the SC-GHG will empower agencies to make clearer comparisons of the GHG impacts of each action.[16]  Monetizing emissions is particularly useful if: (a) the NEPA review monetizes other costs and benefits from the proposed action; (b) the alternatives differ in GHG emissions over time or in the type of GHGs emitted; and (c) the significance of the climate impacts are hard to assess or not readily apparent without monetization.[17]  Any such SC-GHG should be global in nature and utilize a discount rate that accurately reflects the harms climate change inflicts on future generations.[18]  

Despite encouraging the monetization of GHG impacts, CEQ clearly states that “NEPA does not require a cost-benefit analysis where all monetized benefits and costs are directly compared.”  Utilizing SC-GHG to estimate the societal cost of GHG emissions does not create a requirement to do so.[19]  However, if an agency considers a formal cost-benefit analysis appropriate, it is not prohibited from including or appending this analysis to its NEPA documents.

For any actions “with relatively large GHG emissions or reductions” or that “perpetuate reliance on GHG-emitting energy sources”—such as fossil fuels—agencies should explain how the proposed action and its alternatives would meet or detract from broader climate goals and commitments, such as federal or state goals or international agreements.[20]  For example, agencies could discuss how the actions align with the U.S. Nationally Determined Contribution under the Paris Agreement.

Finally, agencies should consider using more colloquial or accessible means of describing GHG emissions.  Some examples of this approach could include the use of “familiar metrics such as household emissions per year, annual average emissions from a certain number of cars on the road, or gallons of gasoline burned.”[21]

II. Encouraging Better Environmental Decision Making

CEQ is also using this Guidance to encourage agencies to take actions that lower GHG emissions by building such considerations into the process.  This underlines CEQ’s desire to align government decision making with the Biden Administration’s net-zero ambitions.  Embedded in this approach is the hope that a more complete consideration of GHG impacts will lead to more climate-positive decision-making, even though NEPA does not require agencies to opt for the most environmentally friendly alternative.[22]

CEQ provides advice on how to consider reasonable alternatives and mitigation measures that might address short- and long-term climate change effects, with the aim of promoting emission mitigations.[23]  CEQ notes that agencies should also acknowledge the impacts of climate change on the proposed action (not just the impact of the proposed action on the climate) and embed considerations of climate adaptation and resilience into the formulation of the proposed action and alternatives.[24]

CEQ also recommends evaluating reasonable alternatives that have lower GHG emissions, including technically and economically feasible clean energy alternatives to proposed fossil-fuel projects.[25]  CEQ notes how “[s]ome proposed actions, such as those increasing the supply of certain energy resources like oil, natural gas, or renewable energy generation, may result in changes to the resulting energy mix as energy resources substitute for one another on the domestic or global energy market.”

CEQ encourages agencies to conduct a “substitution analysis” to understand how any energy project proposals will affect the resulting energy mix and GHG emissions.  When doing this analysis, agencies should not assume that if any project does not go forward it will be replaced by one that generates identical emissions, such that net emissions relative to a baseline are zero.[26]  Instead, agencies should conduct modeling that “accurately account[s] for reasonable and available energy substitute resources, including renewable energy.”[27]  By encouraging the consideration of renewable energy alternatives to fossil fuel infrastructure early in the NEPA process, CEQ is pushing agencies to prioritize permitting cleaner forms of energy, consistent with the Administration’s broader climate policy goals.

III. Up-Front Community Engagement and Environmental Justice  

CEQ is encouraging up front community engagement, with an emphasis on the consideration of environmental justice impacts related to GHG emissions.  One of the most effective ways to accomplish this, according to CEQ, is to leverage early planning processes to integrate GHG emissions and climate change considerations into the identification of alternatives to the proposed action, as well as any reasonable mitigation efforts.

CEQ recommends that agencies use the scoping process to identify potentially affected communities and provide early notice of opportunities for public engagement, which is especially important “for communities of color and low-income communities, including those who have suffered disproportionate public health or environmental harms and those who are at increased risk for climate change-related harms.”[28]  Community engagement should begin in the scoping process and should recognize any unique climate-related risks and concerns posed by the proposed action. 

For example, CEQ discusses how “chemical facilities located near the coastline could have increased risk of spills or leaks due to sea level rise or increased storm surges, putting local communities and environmental resources at greater risk.”[29]  In these types of scenarios, agencies should meaningfully engage with affected communities in designing the action and selecting alternatives, “including alternatives that can reduce disproportionate effects on such communities.”[30] Such early project engagement, before the contours of a project are fully fixed, can assist in improving project outcomes and building greater community-level support for a project.

We will continue monitoring developments pertinent to NEPA reviews of energy and infrastructure projects in the coming months, including CEQ’s final guidance on GHG analysis expected in March, and other efforts by the Biden Administration and Congress to reform federal permitting processes.

[1] CEQ, Final Guidance for Federal Departments and Agencies on Consideration of Greenhouse Gas Emissions and the Effects of Climate Change in National Environmental Policy Act Reviews, 81 FR 51866 (Aug. 8, 2016).

[2] First, on April 5, 2017, CEQ withdrew the final 2016 guidance.  CEQ, Withdrawal of Final Guidance for Federal Departments and Agencies on Consideration of Greenhouse Gas Emissions and the Effects of Climate Change in National Environmental Policy Act Reviews, 82 FR 16576 (Apr. 5, 2017). Then, on June 26, 2019, CEQ issued a modified draft GHG guidance. CEQ, Draft National Environmental Policy Act Guidance on Consideration of Greenhouse Gas Emissions 84 FR 30097 (June 26, 2019).

[3] CEQ, National Environmental Policy Act Guidance on Consideration of Greenhouse Gas Emissions, 86 FR 10252 (Feb. 19, 2021).

[4] See San Juan Citizens All. v. United States Bureau of Land Mgmt., 326 F. Supp. 3d 1227, 1244 (D.N.M. 2018) (“The failure of BLM to quantify and analyze the impacts of the downstream greenhouse gas emissions requires remand of this case”); see also WildEarth Guardians v. Bernhardt, 501 F. Supp. 3d 1192, 1212 (D.N.M. 2020) (use of the social cost of carbon protocol was not required under NEPA).

[5] Guidance at 1201.

[6] The Supreme Court recognized the same in 2007 when it rejected EPA’s argument that its refusal to regulate greenhouse gas emissions was not justiciable because any regulatory action would be unable, on its own, to mitigate global climate change.  Instead, the Supreme Court noted that “[a]gencies, like legislatures, do not generally resolve massive problems in one fell regulatory swoop.”  Massachusetts v. E.P.A., 549 U.S. 497, 524 (2007) (citing Williamson v. Lee Optical of Okla., Inc., 348 U.S. 483, 489, (1955) (“[A] reform may take one step at a time, addressing itself to the phase of the problem which seems most acute to the legislative mind”)).

[7] Guidance at 1201-1202.  CEQ keeps a list of these tools on their website.  See CEQ, GHG Tools and Resources, https://ceq.doe.gov/​guidance/​ghg-tools-and-resources.html.

[8] Id. at 1201.

[9] Id. at 1205.

[10] Id. at 1206.

[11] FERC, Consideration of Greenhouse Gas Emissions in Natural Gas Infrastructure Project Reviews, Docket No. PL21-3-000, February 18, 2022.

[12] Guidance at 1201.

[13] Id.

[14] For instance, CEQ notes that “agencies may summarize and incorporate by reference the relevant chapters of the most recent national climate assessments or reports from the USGCRP and the IPCC” and encourages them to “engage other agencies and stakeholders with knowledge of related actions to participate in the scoping process to identify relevant GHG and adaptation analyses from other actions or programmatic NEPA documents.”  Guidance at 1208, 1210.

[15] Specifically, the February 2021 IWG estimates places the social cost of carbon at $51/ton, while the EPA in the fall of 2022 estimated the social cost of carbon at $190/ton.  This larger estimate was derived in part by using lower discount rates. See Supplementary Material for the Regulatory Impact Analysis for the Supplemental Proposed Rulemaking, “Standards of Performance for New, Reconstructed, and Modified Sources and Emissions Guidelines for Existing Sources: Oil and Natural Gas Sector Climate Review,” EPA External Review Draft of Report on the Social Cost of Greenhouse Gases: Estimates Incorporating Recent Scientific Advances, EPA-HQ-OAR-2021-0317 (September 2022).

[16] Guidance at 1202.

[17] Id.

[18] CEQ further notes that in utilizing a SC-GHG, agencies should keep in mind that currently available estimates “may be conservative underestimates because various damage categories (like ocean acidification) are not currently included.”  Id. at 1203.

[19] Id. at 1211.

[20] Id.

[21] Id.

[22] CEQ itself recognizes that “[n]either NEPA, the CEQ Regulations, or this guidance require the decision maker to select the alternative with the lowest net GHG emissions or climate costs or the greatest net climate benefits.”  Id. at 1204.

[23] Id. at 1203.

[24] Id. at 1208-1209.

[25] Id. at 1205

[26] Id.

[27] Id.

[28] Id. at 1211.

[29] Id. at 1209-1210.

[30] Id. at 1209.

Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Gary S. Guzy Gary S. Guzy

Gary Guzy brings thirty five years of experience in environmental law, regulation, and public policy. He provides counsel to industry leaders in the transportation, energy, technology, and consumer sectors on emerging environmental and clean energy issues. He is skilled at creating strategic partnerships…

Gary Guzy brings thirty five years of experience in environmental law, regulation, and public policy. He provides counsel to industry leaders in the transportation, energy, technology, and consumer sectors on emerging environmental and clean energy issues. He is skilled at creating strategic partnerships that bring together diverse groups to resolve challenging public policy controversies through close work with industry and environmental community leaders. Mr. Guzy co-chairs the firm’s Energy Industry Group.

Mr. Guzy served as Deputy Director and General Counsel of the White House Council on Environmental Quality (CEQ). In this position, he helped develop and guide the Obama Administration’s environmental, public health, and clean energy agenda, bringing business insights to government policy and coordinating policy across government agencies. He spearheaded negotiations that achieved the Obama Administration’s agreement to double motor vehicle fuel efficiency standards and significantly cut greenhouse gas emissions with the support of automobile manufacturers, states, labor unions, environmental and consumer groups, and Congress. Mr. Guzy also led CEQ’s efforts to modernize permitting and environmental review under the National Environmental Policy Act, and counseled federal agencies on how to fulfill their NEPA obligations for dozens of high profile decisions and assisted in resolving NEPA controversies at numerous complicated sites.

Mr. Guzy served as General Counsel of the U.S. Environmental Protection Agency and Counselor to the EPA Administrator during the Clinton Administration. He was a member of the Administrator’s senior policy team, setting regulatory, legislative, and communications strategy. He led efforts to design regulatory approaches to protect children’s environmental health, develop and defend new air quality and motor vehicle standards, defend EPA from Congressional oversight investigations, and protect iconic ecosystems such as the Everglades and Yellowstone National Park. He also authored climate change opinions that were later ratified by the U.S. Supreme Court in its landmark decision finding that greenhouse gases are pollutants under federal law.

Mr. Guzy has also served as the chief legal officer, sustainability officer, and climate strategist for a variety of business organizations

Martin Levy

Martin Levy is an associate in the firm’s Washington’s office. He is a member of the Environmental and Energy Regulatory practice, focusing on low-carbon and renewable energy incentives, carbon markets, environmental marketing claims, and other corporate climate change initiatives. He advises power generators…

Martin Levy is an associate in the firm’s Washington’s office. He is a member of the Environmental and Energy Regulatory practice, focusing on low-carbon and renewable energy incentives, carbon markets, environmental marketing claims, and other corporate climate change initiatives. He advises power generators, technology companies, and financial institutions on how to better align their business practices with “net zero” commitments. Before joining Covington, Martin was a vetting attorney with the Biden-Harris Presidential Transition, a law clerk at the Eastern District of New York, and an undergraduate environmental law instructor at Boston College.