By Lisa Friedman and Coral Davenport
According to a letter from Energy Secretary Jennifer Granholm, which was obtained by The New York Times, continuing to export liquefied natural gas in the manner that has positioned the United States as the top gas supplier globally would raise expenses for American consumers and businesses, exacerbate pollution in vulnerable communities, and elevate global greenhouse gas emissions.
The letter is likely to be released alongside a study assessing the economic, national security, and environmental impacts of authorizing new natural gas export terminals, which the Energy Department plans to publish in the coming days. In January, President Joe Biden initiated this analysis by suspending the approval of permits for over a dozen new gas export facilities, including the largest terminal anticipated in the U.S. This suspension was welcomed by environmental advocates but incited backlash from the oil and gas sector.
Granholm indicated in the letter that the analysis revealed that the ongoing rate of gas exports was “unsustainable and imprudent.”
However, as three senior administration officials familiar with the report revealed—speaking anonymously as they were not permitted to comment on its findings—it does not furnish a basis for the federal government to issue broad denials of final permits for upcoming natural gas terminals. According to federal regulations, two agencies are tasked with the approval of LNG projects: the Federal Energy Regulatory Commission oversees site and construction approvals, while the Energy Department ascertains whether exports align with the “public interest.” Historically, the Energy Department has never rejected any company applying for such a permit.
The findings of the report could present a legal basis for parties wishing to litigate against future export terminal permits, noted the senior administration officials.
Granholm emphasized in her correspondence that subsequent administrations must evaluate each proposed initiative and address the economic and environmental concerns highlighted by the analyses. The report may require companies applying for permits to more comprehensively prove that they have addressed the greenhouse gas emissions linked to gas extraction and transportation, as well as compel future administrations to illustrate how they align new terminal approvals with the report’s conclusions.
Granholm pointed out that U.S. natural gas exports have surged threefold in the last five years and are predicted to double by 2030, with the potential for another doubling based solely on newly approved and planned terminals.
While she acknowledged that exporting LNG internationally creates “wealth for the operators of export facilities” and generates jobs along the supply chain, Granholm stated that “unrestrained exports” would result in decreased domestic gas availability, leading to a projected 30% rise in wholesale prices. Consequently, this would likely increase expenses for the average American household by more than $100 annually by 2050 and could also drive up electricity prices. For heavy manufacturing sectors, costs might rise by $125 billion, according to the report, which she cited. This could subsequently result in elevated prices for consumer goods, she noted.
Regarding climate change, Granholm asserted that new export facilities should undergo rigorous scrutiny “particularly in a world that urgently needs to cut greenhouse gas emissions.”
Under a scenario involving exports exceeding current levels, the report indicated that direct emissions could reach 1.5 gigatons per year by 2050, accounting for about a quarter of the United States’ annual emissions, making it the world’s second-largest emitter. This figure does not consider the possibility that the additional gas could replace more polluting fuels like coal.
The gas sector often contends that U.S. natural gas exports are beneficial for the climate by replacing coal, which emits more carbon dioxide when combusted. However, Granholm highlighted that the study found rising LNG exports would more likely replace renewable sources such as wind and solar than coal. The analysis modeled five scenarios and in each instance, global greenhouse gases were projected to increase, even when optimistic assumptions about carbon capture and storage technologies were made.
In light of the Russian invasion of Ukraine in 2022, U.S. LNG has become vital for European allies as they reduce reliance on Russian gas, as Granholm noted. Nonetheless, she mentioned the report indicated that demand from Europe has stabilized, peaked in Japan, and is anticipated to level off soon in South Korea. Much of the new demand is expected to come from China, she added.
The White House did not provide a response to a request for comment.
Revoking the halt on new export terminals has been a primary objective for the oil and gas sector, which has heavily financed efforts to reinstate President-elect Donald Trump to the White House. Trump has vowed to enhance fossil fuel exploration and combustion, the leading contributor to climate change. He has indicated he would endorse some permits immediately upon taking office. On Dec. 10, he stated on the social media platform X, “Any individual or corporation investing ONE BILLION DOLLARS, OR MORE, in the United States will receive entirely expedited approvals and permits, including, but not limited to, all Environmental approvals. GET READY TO ROCK!!!”
The moratorium on new permits became a contentious issue during this year’s presidential campaign.
It followed pressure from climate activists, who threatened to “punish” the Biden-Harris administration if it sanctioned the largest of the terminals, referred to as Calcasieu Pass 2. Yet the suspension rallied the oil and gas sector against the administration, generating support and $75 million in contributions for Trump’s campaign.
Over the summer, a judge mandated the Biden administration to resume the permit issuance, which led to the approval of at least one export permit. However, Republicans and those in the oil and gas industry have accused the administration of effectively maintaining the moratorium by intentionally delaying new approvals.
Both climate activists and oil lobbyists assert that the halt did impede plans for new export terminals, though it does not seem to have resulted in the cancellation of any specific projects.
