The Biden LNG Export Gambit Fails

Granholm and Podesta wanted a permanent ban, but a DOE study shows natural gas exports are in the U.S. ‘public interest.’

WSJ editorial. 

"The November election changed America’s direction in many ways, but none more than energy policy. For an example, consider the Biden Administration’s political two-step designed to give a President Kamala Harris the ability to block liquefied natural gas export projects. 

Recall that in January President Biden, prodded by White House climate adviser John Podesta, announced the Administration was pausing approvals for new LNG projects in order to study their impact. Now we know the “pause” was a political ruse. The study by the Energy Department was released this week, and Secretary Jennifer Granholm makes clear she thinks it justifies a permanent ban.

Her problem is that the study’s facts are at war with her conclusions. DOE can approve permits for LNG exports to countries without a U.S. trade agreement only if they are in the “public interest.” The study essentially finds they are, but Ms. Granholm disagrees.

Her main argument is that exporting more LNG would boost U.S. natural gas, electricity and product prices. But U.S. gas prices are hovering near record lows even as exports have surged. That’s because growing U.S. production has more than offset domestic demand.

The DOE study finds that increasing LNG exports would result in only a 31% increase in wholesale domestic natural gas prices—from $3.53 per MMBtu to $4.62 in 2022 dollars—by 2050. This means in 25 years gas prices would still be more than two-thirds lower in the U.S. than they are today in Europe.

Ms. Granholm also claims that more U.S. exports aren’t needed since the world will soon be awash in gas. Europeans and Japanese disagree, and the DOE study stresses that “U.S. LNG has played a role in enhancing supply security for markets looking to reduce coal in their energy mix while prioritizing both renewables and gas.”

The study also warns that sources of LNG like Qatar are precarious because they “face the potential threat of Iran closing or blockading the Strait of Hormuz amid rising tensions with Israel.” Resulting price volatility might cause governments to “switch to alternatives like coal,” which is “typically more affordable and has more predictable prices compared to LNG.”

As the report points out, Pakistan’s energy minister last year announced plans to quadruple domestic coal power capacity because increased global demand for LNG had pushed up prices. More U.S. LNG exports would help reduce global coal consumption and thereby CO2 emissions.

Ms. Granholm claims U.S. LNG would “displace more renewables than coal globally.” Wrong again. The study finds that U.S. LNG would mostly displace fossil fuels and at most increase global CO2 emissions cumulatively by 0.05% through 2050. The hundreds of new coal power plants that China is building will have a far bigger climate impact.

As it happens, China is the world’s biggest LNG importer. Ms. Granholm suggests that permitting more LNG exports isn’t in the public interest since some might go to China. Would she prefer that Russia supply China with gas, or that China burn more coal instead? Why would exporting LNG to China harm Americans?

The study finds that increasing LNG would boost U.S. jobs. “Natural gas production tends to increase employment and wages in regions and communities where it occurs” and generate “new revenues to local governments,” the study says, adding that “construction and operational phases of LNG export terminals provide for high-wage employment.”

All of this good news couldn’t stand by itself, so the study adds that the resulting economic growth from LNG could lead to “noise, light pollution, increased traffic, and social disruptions due to the cyclical nature of the production industry.” It could also worry Gulf Coast fisheries “struggling with the effects of climate change, hurricanes, and particularly with low-cost imported shrimp.” Yes, more jobs and higher incomes could be vexing.

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Our sources say the Biden National Security Council and career officials at Energy’s National Laboratories disagree with Ms. Granholm’s conclusions. But her views and Mr. Podesta’s almost certainly would have carried the day in a Harris Administration given the power of the climate lobby in Democratic politics.

We trust that Chris Wright, Donald Trump’s Energy nominee, has other ideas. The U.S. and the world will be better for it."