A LNG terminal. Photo: Think Defence

The President’s ‘Energy Week’ is an Ode to Fossil Fuel Addiction

, lead economist and climate policy manager | June 28, 2017, 4:37 pm EDT
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Tomorrow, as part of the Trump Administration’s so-called ‘Energy Week’ events, President Trump is scheduled to give a speech at the Department of Energy trumpeting US ‘energy dominance’ via the export of coal, oil, and natural gas around the world. It’s clear that Mr. Trump has little regard for the health impacts of our fossil fuel addiction or the growing costs of climate change. What’s more, he fails to grasp the incredible business opportunities in clean energy leadership.

Projections of increased LNG exports

A major focus of President Trump’s speech is likely to be liquefied natural gas (LNG) exports. According to the EIA, the US is set to become a net exporter of natural gas by 2018, having been a net importer as recently as 2016. This trend is projected to be driven primarily by growing LNG exports, rather than pipeline exports. (Note that these projections were released on January 5, 2017, before the Trump administration took office—just in case the President chooses to indulge in a bit of revisionist history and take credit for this).

For a number of years now, prompted by low shale gas prices in the US, there has been talk US exports of LNG taking off. A number of LNG export terminals have been proposed or built, as well as some LNG import terminals repurposed.

EIA, based on data from FERC as of March 2016

(As an aside: To take advantage of the proximity to existing oil and gas operations and pipelines, many of these terminals are located in the Gulf Coast of the US. The irony here is profound—these same low-lying areas are hot spots of sea level rise, vulnerable to flooding and worsening storm surge.)

The first US exports of LNG began last year from Cheniere Energy’s Sabine Pass terminal in Louisiana. US LNG has started arriving in the Netherlands, Poland, and other European destinations. A contract has just been signed for exports to Korea. President Trump is also looking to expand exports to China, India, Japan and other parts of Asia.

Consequences of increasing US LNG exports

In a world hungry for energy, exporting LNG seems like an attractive proposition for US companies. It may not be a great deal for US consumers though. The growth of the export market could lead to rising domestic prices for natural gas, which could hurt the pocketbooks of those who depend on natural gas for electricity and heating. Price spikes during cold winter months could be particularly problematic.

A 2012 study from the EIA bears out these consumer price impacts, which will be greater the more quickly exports ramp up. Similarly a recent DOE study also found that “greater LNG exports raise domestic prices and lower prices internationally.”

EIA scenarios for LNG exports: Natural gas wellhead price difference from AEO2011 Reference case with different additional export levels and speed of expansion.

Rising natural gas prices in the US could raise the specter of reversing some of the ongoing market-driven shift away from coal to natural gas, which could cause carbon emissions to rise. On the plus side, it could also make lower carbon resources like nuclear power and renewable energy more competitive in some places. In countries that are ramping up natural gas imports, competition from cheap natural gas could harm the growth of renewable energy.

The US is growing increasingly over reliant on natural gas as it transitions away from coal-fired power. Exporting that overreliance to other countries would be a real problem from a climate perspective. Natural gas is a fossil fuel, albeit cleaner burning than coal. Leakage of methane (a potent heat-trapping gas) associated with the production, storage, and transport of natural gas also contributes to global warming.

(The “all of the above” energy strategy pursued by the Obama administration was also problematic on this count.)

A switch from coal to gas could bring significant near-term public health benefits, especially in China and India which are plagued by terrible air pollution challenges. A combination of natural gas and renewable energy could help drive out coal more quickly, but doing so in a way that limits the risks of overreliance on natural gas will be critical to long-term climate goals.

With low-cost renewable energy surging in those countries, a much more attractive option from an economic, health and climate perspective would be to skip the over-dependence on natural gas imports and focus primarily on ramping up renewable energy and other low-carbon energy options.

A fossil fuel industry strategy

Rolling back critical environmental and health safeguards—such as the Clean Power Plan and standards to limit methane emissions from oil and gas operations—in order to promote fossil fuel extraction, as the Trump administration aims to do, is a bad deal for the American public. Lest there be any doubt, the Trump administration’s ‘Energy Week’ rhetoric is all about advancing fossil fuel interests.

On the international front, with coal on the decline in the US (primarily because of pressure from low natural gas prices), coal companies are looking to exports as a way to stave off bankruptcy. This is similar to a strategy employed by the US tobacco industry, which sought to expand to international markets when they saw the writing on the wall in the US (much to the detriment of public health in those countries).

If major fossil fuel companies are serious about committing to the Paris Agreement as a few have claimed (see here, here and here), then they should stop trying to undermine its goals by using their political influence to expand fossil fuel extraction and exports.

Missing the opportunity for clean energy dominance

Mr. Trump’s recent offhand remarks disparaging wind power in Iowa betray his lack of understanding of the economic opportunities clean energy can bring. (His comments were also singularly tone-deaf in a state that gets about 37 percent its power from wind, and generates significant numbers of jobs and economic benefits in the process.)

Instead of trying to export an addiction to fossil fuels, the Trump administration should look for ways to advance exports of US renewable energy technology, one of the fastest growing industries in the world today. In fact, when it comes to the US power sector, wind and solar power are bigger job creators than coal today—including in rural areas that supported his presidential bid.

Rather than the decidedly backward-looking rhetoric focused on the expansion of fossil fuel extraction, what we need is visionary leadership to take us into a clean, low-carbon, energy future, brimming with economic opportunities and consumer benefits.

Photo: Think Defence

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