The Biden administration is taking a fresh look at what U.S. liquefied natural gas exports mean for climate change. And the review could push the Energy Department to make President Joe Biden’s temporary pause on new LNG approvals permanent.
Experts say the review will likely focus on two key assumptions that DOE has made under both the Trump and Biden administrations: that gas is a relatively clean fuel and that U.S. exports would replace other fossil fuels abroad, but not renewables.
DOE’s current assertions on both issues came from a 2019 National Energy Technology Laboratory report, which found that “cradle-through-delivery” emissions from LNG exports are negligible. But experts see serious flaws with its methodology.
The climate test announced by Biden last week could reverberate through global energy markets. If DOE finds that LNG exports are a significant driver of rising temperatures, it would be harder for the department to justify future export projects based on public interest. The Natural Gas Act requires that DOE make such a determination before approving export projects — a provision intended to safeguard U.S. consumers from high gas prices.
If the department updates its analysis to attribute hefty carbon emissions to LNG facilities, that change, coupled with higher social cost of greenhouse gas figures recently adopted by the administration, could show that the climate harms of new projects greatly outweigh their economic benefits.
“There’s a reason that we’re so happy and the oil and gas lobby is so panicked,” said Jeremy Symons, an environmental consultant and former EPA climate policy adviser. “And that is both of us know the same thing: These projects just won’t stand up to this kind of scrutiny.”
Changing gas math
The national lab’s cornerstone report in 2019 on life-cycle greenhouse gases of LNG relies on data from EPA’s Greenhouse Gas Reporting Program, which covers about 8,000 oil and gas sources, and from an annual inventory of emissions and carbon sinks the U.S. submits to the U.N. climate body.
Environmentalists have long criticized those programs for relying on industry-furnished data based on assumptions about equipment leak rates that didn’t track with emissions levels detected through independent aerial surveys.
Symons, who published a paper in November on the climate consequences of LNG exports, noted that several peer-reviewed studies based on empirical data were published in the last several years. Many of them showed that leak rates from production, processing and transmission are substantially higher than the lab’s report estimates.
“Methane leaks at every stage of the process in our data has been slow to catch up, but we know a lot more now about what’s happening now,” Symons said.
The Biden administration is now engaged in a broader overhaul of its assumptions about the life-cycle emissions of gas. So far, that has included tough new Clean Air Act standards and a proposal to increase default leak rates at oil and gas operations. The latter policy, which is due to be final this year, could greatly increase both the number of oil and gas operations required to report methane — the main ingredient in natural gas — and the volume of emissions they report.
A forthcoming report by Cornell University ecology professor Robert Howarth, currently undergoing peer review, found that U.S. LNG exports have higher life-cycle emissions than coal, when the updated data was used.
Max Sarinsky, an attorney with the Institute for Policy Integrity at New York University Law School, said if the Energy Department updates its analytical assumptions for gas, it could significantly change its calculus on approving new projects.
But what would happen if the U.S. didn’t ship LNG?
“The harder piece of it is thinking through more seriously how exporting gas will affect the energy mix globally — and particularly in the countries that we’re exporting to — and what that could mean for the pace of renewables going forward,” said Sarinsky.
The 2019 report acknowledged that gas has a climate footprint. The reason it asserted that exporting it abroad is neutral for the climate, or even mildly positive, hangs on another assumption: that an influx of U.S. gas to foreign markets will push aside other kinds of fossil fuels, but not renewable power.
To reach that conclusion, the federal laboratory analyzed U.S. LNG’s potential to compete with three kinds of fuel: regional coal, LNG from other countries, and Russian gas transported by pipeline to Europe or Asia.
“The use of U.S. LNG exports for power production in European and Asian markets will not increase global [greenhouse gas] emissions from a life cycle perspective,” the laboratory said.
DOE has repeated that assertion when approving LNG export projects under both the Trump and Biden administrations.
“To the extent U.S. LNG exports are preferred over coal in LNG-importing nations, U.S. LNG exports are likely to reduce global GHG emissions on per unit of energy consumed basis for power production,” the Biden DOE concluded when approving Cheniere Energy’s Corpus Christi liquefaction facility in March 2022. “Further, to the extent U.S. LNG exports are preferred over other forms of imported natural gas, they are likely to have only a small impact on global emissions.”
The assumption that LNG doesn’t compete with renewable energy has become increasingly problematic as some nations implement policies aimed at decarbonizing their grids to meet the objectives of the Paris Agreement.
In the wake of Russia’s invasion of Ukraine two years ago, more U.S. LNG has been exported to the European Union, which is retiring coal-fired power plants and expanding renewable generation under its new climate law.
LNG projects that have already been approved in the U.S. won’t be affected by Biden’s pause last week. The projects that will be would have come online around the end of this decade. And their owners expect them to remain in operation for decades — well past when scientists say the world must stop burning fossil fuels.
White House climate adviser Ali Zaidi on Friday linked the pause to last month’s agreement by nearly 200 nations to transition away from fossil fuels.
Social cost of greenhouse gases
The Biden administration’s recent adoption of new, higher values for climate damages could make it less likely that that the economic benefits of a new LNG project will outweigh its environmental harms.
Sarinsky of NYU and his colleague, Minhong Xu, released a report Friday that tallied the climate damages of expanded U.S. LNG exports using two sets of social cost of greenhouse gas metrics — the administration’s interim figures and updated EPA values.
The social cost of greenhouse gases assigns a monetary value to the climate damage done by each ton of heat-trapping emissions. The administration’s interim figures put the cost of carbon for 2020 at around $51 per ton, while EPA increases that to $190 per ton. The White House has said departments are free to choose which metrics to use.
The report found that if the U.S. exports 1 billion cubic feet of LNG per day for one year, the environmental cost will be between $930 million and $7.63 billion. The range reflects differences in social cost metrics and assumptions about the kind of fuel that would be displaced in other markets and whether carbon would be captured.
“Our findings provide a potential basis for DOE to rationally conclude that future export applications do not serve the public interest,” the authors wrote.
But analyzing the climate impact of U.S. gas exports means grappling with how international energy markets would have worked if American gas wasn’t in the mix. And that’s tricky.
While some U.S. fuel might displace zero-carbon energy or discourage conservation, some would be substituted for carbon-intensive fuels. What the right ratio is will be a subject of hot debate.
And U.S. exports can impact global consumption trends in unexpected ways — with both positive and negative climate effects.
James Stock, a Harvard University professor who served on the White House Council of Economic Advisers during the Obama administration, said the export of LNG has reconnected U.S. gas prices to international markets, following years in which American consumers benefited from a glut of cheap gas thanks to the hydraulic fracturing boom.
Twenty percent of U.S. gas is now liquefied and shipped to foreign markets, he said. And the Energy Department has already signed off on projects that could double exports. So U.S. consumers and industry are seeing prices rise in response to higher global demand.
“Higher natural gas prices domestically means that — all else equal — it’s more expensive to use natural gas for generating electricity or for heat,” Stock said. “Which in our current situation is quite advantageous to renewables. It’s another shot in the arm for renewables, just like the [Inflation Reduction Act] was a shot in the arm to renewables.”
