“Energy Department’s Gas Export Study Leaves Big Questions Unanswered” By DAVID BLACKMON
“This study mirrors the Biden administration’s entire four-year approach to advancing a clean energy future: weak and half-hearted,” said the activist group’s policy director, Jim Walsh.“
Energy Department’s Gas Export Study Leaves Big Questions Unanswered
DEC 17, 2024
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The U.S. Department of Energy (DOE), headed by Secretary Jennifer Granholm, released its long-awaited study related to the Energy, Economic, and Environmental impacts of U.S. exports of liquefied natural gas (LNG) Tuesday afternoon. To no one’s real surprise, the study’s release immediately resulted in controversy between representatives of the domestic oil and gas industry and its critics in the climate movement.
A Wealth Of Conflicting Responses
Industry opposition group Food & Water Watch got a head start, issuing a release headlined “Biden's LNG Export Study is a Weak Response to Inherent Harms of the Industry” hours before the DOE report itself was released. “This study mirrors the Biden administration’s entire four-year approach to advancing a clean energy future: weak and half-hearted,” said the activist group’s policy director, Jim Walsh.
American Gas Association (AGA) president and CEO Karen Harbert to a competing stance, labeling the report “a clear and inexplicable attempt to justify their grave policy error,” adding that AGA “look[s] forward to working with the incoming administration to rectify the glaring issues with this study during the public comment period.”
Mike Sommers, president and CEO of the American Petroleum Institute, said, “It’s time to lift the pause on new LNG export permits and 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.”
But Cathy Collentine, director of the Sierra Club’s Beyond Dirty Fuels campaign took the opposite view, saying that, “Halting the expansion of LNG exports has never felt more urgent than it does now, as we face another four years of an administration that prioritizes polluter handouts over people. We will not stop fighting against the buildout of LNG exports, as we continue to support communities who are on the frontlines of this climate disaster.”
Granholm’s Leaked Letter Overstates The Findings
Rather than simply release the study and let it stand on its own merit, outgoing Energy Secretary Granholm chose to preview it with an aggressively worded 3-page letter that somehow managed to be leaked to the New York Times a day ahead of the study’s release. It’s the sort of political tactic of which voters have grown weary, the kind of gamesmanship that may have helped lead to the November 5 election results.
In her letter, the New York Times reports a Granholm claim that “unfettered exports” would create domestic shortages of and higher prices for natural gas despite the very first key finding in the study itself that, “Across all scenarios, modeled U.S. domestic natural gas supply is sufficient to meet modeled global demand for U.S. LNG while continuing to meet domestic demand. This result holds across sensitivity scenarios on U.S. oil and gas supply.”
Granholm adds 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.” That’s all no doubt correct, but left out of that thought process is the reality that markets left to work outside of government limitations tend to be self-limiting. Should the current strong demand for U.S. LNG start to diminish in the future - an eventual inevitability - the ability to secure funding for new export facilities will diminish accordingly.
Critics of the LNG pause implemented by Granholm and President Joe Biden last January point to several instances in which fright claims about exports causing rising gas prices and shortages failed to come about, going back to 2012. In that year, Bloomberg reported on a study published by DOE itself which projected that LNG exports at the volumes achieved in 2023 would result in a 54% price increase for U.S. consumers. Instead, the 2023 average Henry Hub gas price was 31% lower than the price in 2012.
Granholm goes onto assert that the “DOE analysis exposes a triple-cost increase to U.S. consumers from increasing LNG exports.” It’s an assertion that flies in the face of the clear disclaimer in the Forward section of the study which reads, “This study is not intended to serve as a forecast of U.S. LNG exports and impacts.” The study does not in fact “expose” what Granholm claims.
Later in the same paragraph, Granholm says “the new study finds that from 2020 to 2050, the overall energy costs for the industrial sector would go up $125B.” Again, the study itself is careful to never say costs “would” do any such thing.
The Gas Export Study Is What It Is
The study does find that such a cost increase is possible based on a collection of many assumptions input into the scenario analysis model on which the study’s 5 scenarios are based, some or none of which might ever resemble what happens in the marketplace in the real world. Or, as the study’s authors note in the Forward section, “Each scenario relies on input assumptions regarding many domestic, international, economic, and non-economic factors, such as future socioeconomic development, technology and resource availability, technological advancement, and institutional change.”
Importantly, the authors then add this: “A full uncertainty analysis encompassing all underlying factors is beyond the scope of this study.”
All that said, the study is what it is: No doubt a sound product from the kind of scenario analysis on which it is based. As such, it makes an array of findings related to its areas of analysis that bear scrutiny and consideration in light of the climate-related commitments and goals to which the U.S. has been obligated under the Paris Accord and other international agreements. When considered in the proper light of what they truly represent, such findings can serve as useful guideposts in the formulation of future energy and climate policy.
The Bottom Line
The question that still begs to be answered in a real, direct way, though, is whether the conduct of this study rose to such urgency necessary to justify the suspension of federal permitting actions for one of America’s strongest growth industries in recent years. The political games that were played with the release of this study only serve to reinforce the impression many have held since the permitting pause was imposed in January, which is that the entire thing has from Day One been an exercise in political gamesmanship.