The American Petroleum Institute (API), the Marcellus Shale Coalition (MSC), and the U.S. Chamber of Commerce on Tuesday called on the Biden administration to lift its temporary pause on liquefied natural gas (LNG) exports from the United States, just as U.S. Energy Secretary Jennifer Granholm warned that increasing those exports could be economically detrimental to America’s consumers and manufacturers.
Responding to the U.S. Department of Energy’s (DOE’s) newly released study on the impacts of such exports, the organizations say the time is now for the federal government to move forward with exports of U.S. LNG.
“It’s time to end this blatant political charade from the Biden administration and start processing LNG export permits,” said MSC President David Callahan on Tuesday, referring to the permit freeze issued in January. “Lifting the permit freeze helps the U.S. achieve both domestic and international policy goals.”
“Abroad, U.S. LNG exports enhance energy security and environmental advancement,” Callahan added. “At home, exports promote jobs across the natural gas value chain and deliver energy savings for consumers.”
API President and CEO Mike Sommers agreed, saying it’s time to restore American energy leadership around the world.
“After nearly a year of a politically motivated pause that has only weakened global energy security, it’s never been clearer that U.S. LNG is critical for meeting growing demand for affordable, reliable energy while supporting our allies overseas,” said Sommers.
Multiple independent studies have proven the net benefits of continued LNG exports for strengthening the economy, driving climate progress, and bolstering global energy security, Sommers said.
The DOE’s report, entitled “2024 LNG Export Study: Energy, Economic, and Environmental Assessment of U.S. LNG Exports,” is a multi-volume study that updates DOE’s understanding of the potential effects of U.S. LNG exports on the domestic economy; U.S. households and consumers; communities that live near locations where natural gas is produced or exported; domestic and international energy security, including effects of U.S. trading partners; and the environment and climate.
The report is not intended to serve as a forecast of U.S. LNG exports and impacts, according to the report’s 58-page summary. Rather, it is an exercise exploring alternative conditional scenarios of future U.S. LNG exports and examining their implications for global and U.S. energy systems, economic systems, and greenhouse gas (GHG) emissions.
Granholm said Tuesday that the Energy Secretary, with authority from the Natural Gas Act, has the responsibility to evaluate whether authorizations for the export of LNG to non-free-trade-agreement countries is consistent with the public interest.
The DOE analysis, she said, exposes “a triple-cost increase to U.S. consumers” from increasing LNG exports: the increasing domestic price of the natural gas itself, increases in electricity prices (natural gas being a key input in many U.S. power markets), and the increased costs for consumers from the pass-through of higher costs to U.S. manufacturers.
“Special scrutiny needs to be applied toward very large LNG projects,” Granholm said. “An LNG project exporting 4 billion cubic feet per day — considering its direct life cycle emissions — would yield more annual [GHG] emissions by itself than 141 of the world’s countries each did in 2023.”
The demand for LNG in the People’s Republic of China (PRC) — already the world’s largest importer — is expected to nearly double between now and 2030 and become the highest of any country by 2050, she added, noting that PRC entities have already signed several contracts with operating or proposed U.S. LNG projects.
“In the decade to come, we will see strong and mounting pressure within our democratic system to ensure that the United States uses its market position in a way that truly advances our national interest and energy security, which must include the needs of American workers, American families, and our responsibility to address the climate crisis,” said Granholm. “In our view, the question is not whether U.S. export policy will be forced to respond to those interests, but when and what that response is.”
Differing perspectives
According to the U.S. Chamber, the DOE study conflicts with independent data and analyses confirming U.S. LNG exports are key to global decarbonization and have little to no impact on domestic prices.
“We will thoroughly review the DOE report, but it appears to rely on questionable methodology and puts a thumb on the scale to downplay the clear economic, environmental and security benefits of U.S. LNG,” said U.S. Chamber of Commerce Senior Vice President of Policy Marty Durbin. “This contradicts many other analyses that detail the benefits of LNG exports—including Phase 1 of the Chamber-supported study released today by S&P Global.”
S&P Global says in its report, A U.S. LNG Impact Study – Phase 1 , released Dec. 17, that U.S. LNG exports have had no major impact on domestic natural gas prices.
In fact, the report says, America’s tremendous natural gas resources have supported U.S. domestic natural gas production growth of over 40 bcf/d since 2010, dwarfing LNG export growth by a 3 to 1 ratio, while driving a sustained reduction in U.S. prices.
“These significant reserves were unlocked by the combined effect of two technologies: hydraulic fracturing and horizontal drilling (collectively referred to as the Shale Revolution),” the report says. “U.S. domestic wholesale gas prices have continued their downward trend, interrupted only temporarily by the combination of rapid post-COVID growth and Russia’s invasion of Ukraine in 2022.”
Importantly, the S&P report says, is that the U.S. LNG industry is critical to serving the world’s energy needs and has rapidly become an integral contributor to the U.S. economy.
For example, it is the source of $408 billion in GDP contribution since 2016, supporting an average of 273,000 direct, indirect, and induced U.S. jobs, and as of 2023, U.S. LNG has larger revenues than U.S. corn and soybean exports, roughly double U.S. movie and TV-related exports, and half of U.S. semiconductor exports.
It is also the No. 1 global supplier meeting the world’s energy needs, including replacing almost half of lost Russian gas into Europe.
S&P Global also reported that U.S. LNG industry growth is expected to double its U.S. economic footprint through 2040 with $1.3 trillion in GDP contribution supporting an average of 495,000 direct, indirect, and induced U.S. jobs; $2.5 trillion in revenues for U.S. businesses, over $900 billion in expenditures, $165 billion in tax revenue, and $250 income per year per household.
“However, an array of regulatory and legal risks is jeopardizing more than $250 billion in incremental GDP and over 100,000 jobs annually through 2040,” says S&P Global. “Furthermore, if U.S. export growth potential were not to materialize, 85 percent of the resulting gap would be filled by fossil fuels from outside the U.S.”
“Regulatory and legal uncertainty, beyond potential lifting of the LNG pause, is putting growth at risk,” the firm says.
Conversely, Energy Secretary Granholm said that U.S. LNG exports have already tripled over the past five years, will double again by 2030, and could double yet again under existing authorizations.
“The quantities already approved for export equate to roughly half of the U.S.’s total current natural gas production today,” she said. “In four of five modeling scenarios included in today’s study, the amounts that have already been approved will be more than sufficient to meet global demand for U.S. LNG for decades to come.”
And while these “dramatically increasing LNG exports” generate wealth for the owners of export facilities and create jobs across the natural gas supply chain, Granholm said the DOE’s updated study finds that a wide range of domestic consumers of natural gas — from households to farmers to heavy industry — would face higher prices from increased exports. Specifically, the DOE study found that “unfettered exports of LNG” would increase wholesale domestic natural gas prices by over 30 percent, she pointed out, while unconstrained exports of LNG would increase costs for the average American household by well over $100 more per year by 2050.
The U.S. Chamber underscored that S&P Global’s study, in contrast, stated that continued export growth will have a negligible impact on U.S. residential natural gas prices (less than 1%).
“LNG exports are not only in America’s national interest, but also in the world’s interest, including our European allies seeking to break free from dependence on Russian gas,” said the U.S. Chamber’s Durbin. “From the beginning, the White House moratorium on new LNG export facilities was a politically-driven exercise with harmful impacts on the U.S. economy and the energy security of America’s allies. It should end immediately.”
The DOE study will have a 60-day comment period that will begin once published in the Federal Register.