A highly anticipated Department of Energy study released Tuesday found that big increases in liquefied natural gas exports would cause U.S. prices to spike — but it didn’t deliver a knockout blow to LNG supporters awaiting President-elect Donald Trump’s return to the White House.
DOE’s new report is likely to provide fodder for legal challenges to LNG projects in the future, though the Trump administration is expected to move ahead quickly with new gas export approvals. The report didn’t directly call for a hard limit on U.S. LNG exports.
A need for new analysis was the rationale behind DOE’s pause on LNG exports to countries that don’t have a free trade agreement with the United States — a bucket that makes up the majority of the world. DOE’s pause under President Joe Biden didn’t affect previously approved exports, but it instead applied to pending and future non-free trade agreement export applications.
“Unconstrained exports of LNG would increase costs for the average American household by well over $100 more per year by 2050,” Energy Secretary Jennifer Granholm said in a statement.
Granholm added that middle- and low-income households “already face energy bills that are too high,” arguing that an export-related price increase would challenge the ability of some consumers in the U.S. South “to meet basic needs.” She also pointed to concerns about how pollution from natural gas operations affects local communities and said the effects of associated greenhouse gas emissions need a close look because of climate change.
Still, the opening for Trump is related in part to timing. DOE announced a 60-day comment period for the study that won’t end until well after Trump takes office on Jan. 20.
While the independent Federal Energy Regulatory Commission approves the siting of onshore and near-shore LNG terminals, DOE is responsible for deciding if LNG exports are in the public interest. Biden officially unveiled the pause in late January, though it was later overturned by a court.
The new study suggested that by 2050 U.S. LNG exports could increase domestic prices more than 30 percent. That assumes export volumes of more than 56 billion cubic feet per day — more than four times current export levels.
Paul Cicio, president of the trade association Industry Energy Consumers of America, said the exports would leave U.S. consumers “completely exposed.”
Environmental critics echoed that position.
“This report highlights the stark and obvious reality that ever-expanding LNG exports are not in the public interest,” Gillian Giannetti, a senior attorney at the Natural Resources Defense Council, said in a statement. “LNG exports threaten frontline communities and American pocketbooks.”
The Trump transition team didn’t respond directly to a question about LNG when asked Tuesday by POLITICO’s E&E News.
“When he takes office, President Trump will make America energy dominant again, protect our energy jobs, and bring down the cost of living for working families,” said Karoline Leavitt, a spokesperson for the Trump transition team.
Assessing the report
Interested observers are already drawing conclusions over how the new report may be used in the months and years ahead — and how it may require some extra work.
Scott Segal, a partner at the Bracewell law firm, said the comment period will allow for an administrative record that calls into question some of the document’s flaws.
“In all likelihood, the report will be withdrawn by the next Administration to remove any patina of authoritativeness it might have,” Segal said in a statement. “One thing that should not be tolerated would be the use of this report in future legal challenges on whether export approvals are in the public interest.”
But Mark Brownstein, senior vice president for energy transition at the Environmental Defense Fund, said Congress requires any administration to make a “national interest” determination on gas exports regardless of who occupies the White House.
“Whether or not the next administration chooses to use the work of this study or not, they need to make a national interest determination” and that decision must be made “on the basis of data and facts,” Brownstein said Tuesday.
If they fail to make a determination — or make one that’s “on its face arbitrary and capricious” — that’s going to result in a challenge, he added.
The U.S. exported 11.9 billion cubic feet per day (Bcf/d) on average in 2023, enough to power millions of homes and industrial operations. All told, DOE has approved LNG projects that could bring exports to at least 48 Bcf/d in the coming years, according to the department.
The study released Tuesday found that U.S. export volumes and domestic prices are heavily contingent on U.S. supply. Negotiations over a permitting bill that could have sped up LNG approvals and pipeline construction died on Capitol Hill this week.
Some LNG experts contested the export volumes DOE modeled, arguing that the U.S. will face a stiff challenge in reaching those levels.
S&P Global published a separate study Tuesday that predicts 29 bcf/d in 2040, at which point gas prices would rise only 3 percent on the wholesale market and 1 percent for households above 2025 levels.
Eric Eyberg, vice president of gas and power consulting at S&P Global Commodity Insights said the DOE model of 56 bcf/d of exports “not a realistic scenario in our view.”
That level of exports “would effectively say that no one else in the rest of the world builds LNG capacity,” he said.
Paul Bledsoe, a professor at American University and former DOE consultant during the Obama administration, said gas demand “is growing in the U.S. and globally.”
“U.S. industry has the opportunity to limit methane emissions deeply, making [U.S.] gas far cleaner than Russian gas or Chinese coal, even while increasing production,” he said in an email.
A Commonwealth LNG export project, as well as Venture Global’s Calcasieu Pass 2 project — both planned to get built in Louisiana’s Cameron Parish — are among the export applications that have been submitted to DOE for review. Developers for those projects didn’t provide a comment Tuesday to E&E News.
What’s ahead
DOE’s assessment, which included five modeling scenarios, said previously authorized exports from the United States are more than enough to meet global demand for the fuel.
In a scenario where U.S. LNG exports surpass currently authorized levels, that would mean direct emissions of 1.5 gigatons of carbon dioxide equivalent annually by 2050, the study said. That’s “just over 25 percent of current U.S. annual greenhouse gas emissions,” Granholm said in her Tuesday statement.
The analysis also noted that, while Europe has been the main destination for U.S. LNG from 2016 to the present, “European policies are moving to reduce the use of fossil fuels” — including natural gas — and demand for the fuel in Asia is anticipated to grow across most scenarios.
China — viewed by 42 percent of Americans as an enemy of the United States, according to a May report from the Pew Research Center — has recently become the biggest global importer of LNG. Its hunger for LNG through 2050 shows no signs of slowing down, DOE said in the report.
The U.S. District Court for the Western District of Louisiana overturned the pause in July. Still, over Labor Day weekend, the Biden administration granted a non-free trade agreement authorization to an LNG project in eastern Mexico that exports U.S.-sourced gas. Observers, however, considered that to be an exception to the pause.
A Republican lawmaker from West Virginia — a major natural gas producer — said DOE’s LNG study won’t hobble the incoming Trump administration as it seeks to carry out its energy dominance agenda.
“The American people overwhelmingly voted for President Trump’s agenda to reestablish American energy dominance on the world stage,” said Rep. Carol Miller (R-W.Va.) in a news release Tuesday. Miller is a co-chair and founder of the Energy Export Caucus.
“No amount of bureaucracy or reports from unelected officials will stop President Trump from lifting Biden’s ban on LNG export permits on his first day in office,” she added.
Similarly, Mike Sommers, the head of the American Petroleum Institute, said Tuesday that “it’s never been clearer that U.S. LNG is critical for meeting growing demand for affordable, reliable energy while supporting our allies overseas.”
Asked on Tuesday about whether the new study will give LNG opponents legal grounds to fight new export authorizations in court, a senior DOE official told reporters that “the kind of rigorous analysis that’s here” should be a consideration for anyone involved in the LNG space, as well as any secretary of Energy.
Some observers said Granholm’s three-page statement seemed to be more damaging toward LNG than findings included in the report’s summary and four appendices.
“It is interesting that the department felt compelled to attach a secretarial letter as kind of a cover memo to the series of documents that it was releasing,” said Tristan Abbey, a senior fellow at the National Center for Energy Analytics, an energy think tank.
Abbey was director for energy and environment on the National Security Council in the first Trump administration.
“I think this is an interesting move and is probably intended to mitigate what appears to be the fact that the reports themselves are in no way damning or lethal for the LNG export build-out that would continue at pace after the pause is lifted,” he added.
The second Trump administration has a range of options to respond to the study, Abbey said, including incorporating its findings into the public interest process, as well as commissioning a new study around LNG exports.
