In a recent piece, I addressed the need for an integrated federal climate/energy policy that balances decarbonization with US national and economic security. My central theme was that we must move from rhetoric to action to address climate change. However, it seems we’re continuing to go in the opposite direction.
The Biden Administration caved under pressure from environmental groups and wealthy donors in late January. It announced a hold on all pending and future applications for Liquified Natural Gas (LNG) export terminals in the U.S.
The Administration justified its decision by asserting that the U.S. already leads the world in LNG exports and that hitting the pause button would permit it to study the impact of future plants on climate change, domestic natural gas prices and the communities surrounding the potential terminals. None of these are valid concerns and instead the decision will actually result in greater GHG emissions, have little if any gas price or environmental impact, but will adversely affect job creation, GDP growth and US energy security.
Economic and Strategic Benefits of US LNG Exports
US LNG exports promote economic development as well as our foreign policy goals. Only two years ago, Europe faced the prospect of a long, cold winter as it sought to meet the challenges of losing access to Russian pipeline gas. The US natural gas industry came to the rescue, as it was well-positioned to meet the EU’s critical supply needs. Since then, Europe’s energy security has improved with the accelerated commissioning of new LNG import facilities and coal-fired generation plants continuing to “keep the lights on.” Temperate winter weather also helped Europeans get through peak winter energy demand.
“… expanding the reach of US LNG into Asia, Africa, and Latin America will provide geopolitical leverage of the kind sought by China from its Belt and Road Initiative…”
Still, LNG remains a pivotal component of energy supply in the EU and increasingly across other industrialized and developing countries that require reliable and cost-effective energy to foster economic development. These buyers have choices for where to obtain their LNG, which is now produced and shipped globally, although from a limited number of countries. As a result, LNG is likely to grow in importance as a geopolitical commodity. Specifically, while US LNG is supplied by private companies, expanding the reach of US LNG into other parts of the world, including Asia, Africa, and Latin America, will provide geopolitical leverage of the kind sought by China from its Belt and Road Initiative and Russia with its advanced military technologies. Therefore, it is in the inherent national interest of the US to expand LNG exports. Importantly, this can be done in a way that is also sensitive to the need to reduce carbon emissions.
Industry consensus has been that once the EU establishes sufficient LNG import capacity to replace Russian gas, it will focus on suppliers with lower levels of CO2 per “molecule.” This notion was further reinforced by the EC’s 2023 approval of a cross-border carbon adjustment mechanism, which would impose a tariff on imports to the EU based on carbon intensity, including GHG emissions upstream of the delivery point into the EU.
How LNG Can Help Secure a Lower-Carbon Future
If Europe (and the world) wants lower-carbon natural gas, America is positioned to deliver it. America’s natural gas resources, such as Appalachian shale, have very low CO2 content. Further, US natural gas is disproportionally produced by a relatively small number of majors that have the technical resources and financial capability to make investments in significantly reducing upstream emissions from production, gathering, processing, and transportation. Blocking new LNG projects squanders our significant advantage and the GHG benefits of US supply.
