A meeting of Group of 7 Cabinet-level officials this weekend is setting up a geopolitical battle that could play a major role in driving the future of U.S. natural gas — and determining the emissions of the fuel globally.
The meeting in Sapporo, Japan, is a precursor to a G-7 head-of-state summit next month that could influence the trajectory of energy markets for years and help determine the international money flow toward gas projects.
On one side are developing countries that are ratcheting up calls for more global natural gas production and imports to pare down emissions from coal and bring billions of people out of poverty. On the other side are the United Nations and environmentalists, who say that new fossil fuel projects should not be built to avoid catastrophic consequences of climate change.
In the middle is the United States, which has yet to detail its full position and is under dueling pressure to both promote natural gas and cut emissions.
“The United States is one of the more fascinating players in this debate,” said Reed Blakemore, deputy director at the Atlantic Council Global Energy Center. “Obviously, the Biden administration has been walking a bit of a balance beam in regards to navigating its role as a driver of energy security through its own natural gas exports but also [maintaining] the tone of climate ambition that the Biden administration came in with two years ago.”
Blakemore predicted a G-7 process in coming weeks that delivers at least modest wins for LNG. G-7 communiqués are nonbinding but send important market signals.
Central to the debate is the Global South, a term used to describe poorer countries that are largely located south of the historically industrialized north.
From Brazil to Bangladesh, political leaders and fossil fuel executives in the region are arguing it’s now their time to capitalize on the same fossil fuel resources that propelled affluent countries in past generations to their current elevated status.
Those calls, which are applauded by the U.S. gas industry, took center stage in late March at an event in Accra, Ghana, featuring U.S. Vice President Kamala Harris and Ghanaian President Nana Akufo-Addo.
“I’ve made it known to [Harris] that Ghana is endowed with abundant natural resources, which my government is seeking to use as the basis to transform its economy,” Akufo-Addo said.
“It is this transformation that will give us the best opportunity to derive maximum benefit from our abundant natural resources,” he said, standing next to the vice president.
The fight over the future of natural gas hits on fundamental questions of equity and access as poor countries try to find the fuel to provide electricity and modern amenities. Roughly 775 million people currently live without electricity, according to an International Energy Agency (IEA) report in November 2022.
It also comes as the U.S. gas industry is eying a massive new market in the Global South, U.S. oil and gas majors such as Chevron Corp. and Exxon Mobil Corp. are expanding in Africa, with gas projects in countries like Angola, Equatorial Guinea, Nigeria, Mozambique and elsewhere.
Secretary of State Antony Blinken and Energy Secretary Jennifer Granholm will be attending the Sapporo talks.
Touted by the Japanese as an opportunity to advance the “green transformation,” the ministerial event taking place April 15-16 is a key stepping stone for the G-7 summit next month in Hiroshima, Japan, where leaders are expected to endorse the communiqué outlining G-7 strategy over the coming year.
According to a Reuters report last week, a draft statement to follow the Sapporo event includes language to “recognize the need for necessary upstream investments in LNG (liquified natural gas) and natural gas in line with our climate objectives.”
For months, the U.S. natural gas industry, led by the trade groups American Petroleum Institute and LNG Allies, have been pushing for similar language (Energywire, April 4).
The Japanese government, meanwhile, has been publicly tight-lipped about its stance on G-7 LNG policy. But in private settings, Japanese officials say they need LNG to power factories and homes. The officials also argue they’re representing the needs of the Global South.
“Our emphasis on the importance of natural gas is not only for Japan but also the Asian and African countries of the Global South,” said a source with the Japanese government, who was granted anonymity because of the sensitivity of the ongoing negotiations. “With natural gas, especially LNG, the market is so tight it’s going to be almost sold out of long-term contracts. Our main concern is how to secure LNG and how to bring down the fluctuation of the price of LNG.”
Biden, methane and the Willow project
The Biden administration is keeping its cards close to its chest on the G-7 debate.
Asked about the administration’s position on LNG language in the negotiations, a National Security Council official declined to comment, instead pointing to LNG flows to Europe.
“U.S. companies have been transparent and reliable suppliers of LNG to Europe. The increase in global LNG supplies, led by the United States, has helped European allies and partners put more gas in storage ahead of winter months,” said the official, who also declined to go on the record because of the sensitivity of the talks.
On Thursday, the Biden administration signed off on a major new project in Alaska that could export 2.55 billion cubic feet of LNG exports per day over 30 years. The Energy Department expects that LNG to go to Japan, China, South Korea and India.
In 2022, the United States exported about 300 million cubic meters per day of LNG globally, according to DOE, which predicts that U.S. exports could increase to more than 520 million cubic meters per day by 2030. The U.S. and Qatar currently are the largest LNG exporters globally.
The Department of Energy, which must sign off on all LNG exports, is also trying to create a globally recognized framework to calculate LNG emissions (Energywire, March 8). U.S. producers say they hope that DOE framework could help to elevate U.S. LNG over competitors who produce gas with higher emissions than U.S. versions.
To environmentalists, Biden’s LNG posture has been a betrayal.
“Joe Biden is trying to find a middle ground on climate, which is tricky when it comes to oil and gas because it’s pretty cut and dried. The science is very clear that the path to 1.5°C means no new fossil fuels,” said Collin Rees, U.S. program manager at the environmental group Oil Change International.
“Frankly, I think we’re seeing the failure of that leadership when it comes to building out new oil and gas,” Rees added.
The 2015 Paris Agreement calls on countries to curb greenhouse gas emissions to hold global temperature increases to 1.5 degrees Celsius above pre-industrial levels. The production of natural gas can emit methane — a potent greenhouse gas — through combustion, leaks, venting and flaring.
A recent IEA report shows that the U.S. leaked more than 16 million tons of methane in 2022, behind only Russia and China.
In 2021 at U.N. climate talks, the U.S. signed a pledge to “end new direct public support for the international unabated fossil fuel energy sector within one year of signing this statement.” The pledge, endorsed by all G-7 nations except Japan, carves out an exception to that for “limited and clearly defined circumstances.”
On Wednesday, more than 100 environmental groups, including Oil Change International, urged the Biden administration to “stand firm and lead the way for fossil-free diplomacy.”
Global climate scientists, along with the United Nations, also say new fossil fuel projects — and an embrace of natural gas in the Global South — will put the globe on an irrevocable path to far more frequent climate change-induced natural disasters, which will in turn disproportionately wreak havoc on less-equipped and more vulnerable poor countries.
While the administration burnished its climate credentials with the Inflation Reduction Act last year, U.N. officials have admonished the U.S. for actions such as approving ConocoPhillips’ Willow project on the North Slope of Alaska, which is expected to produce 600 million barrels of oil over three decades.
“These are not projects that move us in the right direction,” Stéphane Dujarric, spokesperson for the secretary-general, said last month. Supporters of Willow, such as Sen. Lisa Murkowski (R-Alaska) and Rep. Mary Peltola (D-Alaska), say it would bring jobs to Alaska.
The White House did not respond to request for comment about criticism of its LNG position.
Along with staying mum about its views on G-7 negotiations, the U.S. hasn’t told countries to not develop their own gas resources, at least not publicly.
A spokesperson for the White House declined to comment when asked whether the U.S. supports Ghana’s development of natural gas, a growing sector in the West African country where the Ghana National Gas Co. recently inked expansion plans.
‘Devastating’ consequences
Playing into the debate is the Russian war, which has killed thousands, roiled global energy markets and dramatically increased the thirst for LNG in the Global South.
After the invasion, Russia, the traditional chief supplier of fossil fuels to Europe, began toying with export volumes, and Europe instituted sanctions. Then, Europe scrambled to supplant the Russian volumes with LNG on the global spot market, paying as much as $40 per million British thermal units.
Poorer countries simply couldn’t compete with the European buyers. India, Bangladesh, Brazil and other countries pared down imports. Bangladesh, one of the poorest countries on earth, implemented blackouts due to the shortages. A state-owned Pakistani buyer said it received no bids for a $1 billion purchase tender in July.
Vijaya Ramachandran, director for Energy and Development at the not-for-profit Breakthrough Institute, says the diversions were “devastating” for the Global South. They also show the need for more LNG, she said.
“If the Japanese can get that statement [of support for LNG] the G-7 communiqué that would be a huge help to poor countries,” Ramachandran, who used to work for the World Bank, said in an interview. “Poor countries really have an energy deficit. They consume very little energy, and they desperately need more energy to grow. We’re talking fractions of what is consumed in rich countries.”
Who is responsible?
While China is the largest emitter of greenhouse gasses globally now, the U.S. historically has been in that position, leading to calls from the Global South for billions of dollars of aid to adapt, transition and recover from climate change.
Some global development experts say wealthy nations need to pony up much more aid, in the form of grants or loans, to set off a wave of major renewable projects in the Global South. This year, wealthy nations are expected to finally contribute $100 billion in climate finance, three years after a 2020 deadline.
“There are studies over the last few years showing just how insufficient $100 billion a year would be, even if it were achieved. And the real requirement is at least ten times that,” said Greg Muttitt, co-lead of Sustainable Energy Supplies at the International Institute for Sustainable Development. “The Global North has been responsible for the vast majority of the problem, so there’s the moral duty to contribute to solving it.”
While renewable deployment in the Global South has been relatively limited, it is gaining traction. A new report from the U.K.-based nonprofit Ember found that wind and solar now power 12 percent of global electricity. “Over sixty countries now generate more than 10% of their electricity from wind and solar,” the report concludes.
Vikram Singh, senior principal for the Global South at the environmental group RMI, put some of the onus on the developing countries themselves.
“I don’t want to say that Global South countries aren’t doing enough. That’s a little problematic. What they can be doing is definitely more in terms of exploring clean energy opportunities particularly on a portfolio basis that invites money that’s waiting to come into their countries,” Singh said. “It’s easy to fall back on the infrastructures and the playbooks of the last century, rather than acknowledging the new paradigm that we find ourselves in.”
“There is no amount of public money that’s going to come in and solve this problem,” he said.
Global South leaders, meanwhile, have publicly excoriated wealthy countries for pressuring a transition to renewable energy. At an energy conference in India in February, Tanzania President Samia Suluhu Hassan called on wealthy nations to “move away from hypocrisy,” according to Reuters.
All parties concede that renewable energy deployment in the Global South is a daunting challenge.
Mark Brownstein, a senior vice president of energy transition at the Environmental Defense Fund, has been working to curb methane emissions tied to natural gas development. He praised a newly announced project between the French heavyweight TotalEnergies SE and the Iraqi government to recapture flared gas in southern Iraqi oil fields.
“The degree to which oil and gas remain relevant into the future may vary from place to place. In North America and Western Europe, it’s not hard to imagine a world that is fundamentally electrified,” said Brownstein. “But what can work or will likely work in Western Europe and North America may not be what can work or likely will work in sub-Saharan Africa or in Southeast Asia.”
“The world of Paris compliance is a world where you have fundamentally reduced dependence on fossil fuels but you haven’t eliminated it everywhere and in all places,” he said.
