Europe Misses the Mark in Cancelling American LNG

Thu, February 25, 2021

In 2020, the French government made international headlines by canceling a long-term, $7 billion contract that would have imported liquified natural gas (LNG) from the United States through Engie, an energy company partially owned by the French government.

The French government claimed the deal was canceled because U.S. LNG was ‘too dirty,’ asserting LNG imports were a major source of methane emissions. The French government justified their actions as part of the European Union’s aggressive methane reduction strategy, which is part of the European Green Deal.

However, a closer look reveals that France’s attempt to curb methane emissions by avoiding U.S. LNG could very well result in France inadvertently supporting dirtier methane emissions producers.

The reality is Europe’s appetite for natural gas is not set to cede anytime soon. If Europeans choose to disregard American LNG, they will be forced to rely on much less efficient and less clean sources of energy. France—and the rest of Europe—must continue to get its natural gas from somewhere, and in many cases, that source is Russia. Russia is a far dirtier option in both total emissions and intensity; in 2019, Russia was ranked significantly above the United States for flaring intensity, according to data from the World Bank.

In comparison, the United States currently leads the way in reducing carbon emissions while remaining a world leader in natural gas production. According to one study from International Energy Agency (IEA), U.S. energy-related CO2 emissions have declined in six of the past ten years.

President Biden’s appointee to lead the U.S. Department of Energy, former Michigan Gov. Jennifer Granholm, also recently noted her support of U.S. LNG exports.

“I believe U.S. LNG exports can have an important role to play in reducing international consumption of fuels that have greater contribution to greenhouse gas emissions,” Granholm said.

Methane emissions in the United States have fallen dramatically in recent years. According to the EIA and EPA, oil and gas methane emissions have decreased by 23% since 1990, while oil and natural gas production has increased by 49 percent and 71 percent respectively during the same time. In short, the United States is reducing methane emissions at a rate far outpacing any other natural gas producing country in the world.

Many of these reductions are thanks to smart regulations and the energy industry’s commitment to lower its carbon and methane footprints. Voluntary actions from the United States’ top natural gas producers include replacing miles of pipeline and expanding pipeline maintenance programs, participating in satellite methane detection programs, and implementing more comprehensive reporting frameworks. These programs have reduced methane emissions greatly across every basin in the United States, particularly in the Permian Basin in West Texas, with emissions falling from 4.8 million metric tons (MMT) to 4.6 MMT from 2011 to 2017 while production rose dramatically.

Companies in the United States also have an impressive track record on emissions reporting, while the many state-owned sources of gas for Europe pale in comparison. U.S. companies are required by law to report comprehensively on the quantity and intensity of their methane emissions, and some report additional data voluntarily. International suppliers do not have the same requirements, meaning that Europe may never truly know the scope of methane emissions for its other suppliers.

France would do well to consider its options when deciding on how to best move forward with expanding its growing and undeniable need for natural gas – a necessary resource to lower the region’s carbon footprint. By leveraging smart regulations and industry innovation, the United States has and will continue to significantly reduce methane emissions. Europe must get its gas from somewhere, and U.S. LNG is the cleanest, most efficient, and most secure option.