U.S. Winning On Climate, Economics And Freedom Thanks To Natural Gas

Friday, July 05, 2019

Dan Eberhart | Forbes | July 3, 2019

The Department of Energy recently approved additional export volumes of natural gas through the Freeport liquefied natural gas (LNG) terminal in Texas, a move that promises environmental and economic benefits for the nation.

Critics of natural gas mocked the decision and the phrasing used by the Trump administration, which said the approval would “allow for molecules of U.S. freedom to be exported to the world.”

The focus on this phrase fails to consider how beneficial the continued opening of the global LNG market is not only for the U.S. economy but for international efforts to address climate change. It also overlooks the mention the geopolitical stability benefits of having access to secure, reliable and affordable energy supplies.

With the opening of Freeport and the first shipment from the Cameron terminal in Louisiana, there are now four large-scale LNG export facilities in operation in the country. Four export terminals may not sound like a lot, but the United States was an LNG importer before Cheniere Energy exported the first LNG cargo in early 2016. The transition has been remarkable.

The United States is now exporting LNG to 35 countries today, almost double the total export destinations since President Donald Trump first entered the White House. Not only are the number of US LNG recipients growing, but so too is the total export volumes. At the beginning of 2017, exports of LNG averaged less than 1.7 billion cubic feet per day. That number has more than doubled – 53% – to over 4.2 billion cubic feet per day as of this March.

The economic benefits of the current trend are undeniable. The expanding LNG export industry is creating a market for producers and service companies like Canary, all of which is contributing to the creation of jobs and private investment. The Freeport LNG project is expected to support 3,000 engineering and construction jobs, as well as hundreds of indirect jobs, according to DOE. Each new export facility approved by the Federal Energy Regulatory Commission (FERC) brings similar economic benefits.

The shift toward using more natural gas in the electricity sector and for exports is delivering environmental benefits and putting international climate goals within reach. While President Trump shows no sign of reversing his decision to pull out of the Paris Agreement, U.S. greenhouse gas emissions are down thanks to abundant and affordable natural gas for the power sector.

The EIA’s Annual Energy Outlook for 2019 projects 8% lower emissions from electricity generation as compared to the 2018 outlook, despite increased power generation overall spurred by strong economic growth. The emission reductions are happening at the same time that oil and gas production is rising. The U.S. overtook Russia and Saudi Arabia last year to become the world’s largest producer of both crude oil and natural gas.

The activist who oppose continued use of natural gas or who label it a bridge fuel minimize its role in addressing climate change. The growth of the gas industry has facilitated the shift away from coal in power generation in the United States; a role it should play in other nations, too.

Coal has long been the most affordable and prevalent energy source, particularly in developing economies like China and India. Their expanding populations and economies require a reliable source of power that is also affordable.

The natural gas market has expanded rapidly around the world, not only because of dropping prices but because gas is a reliable and efficient source of on-demand power.

Based on greenhouse gas emitted per unit of energy burned, natural gas use reduces emissions by about half compared with coal. When that transition is enacted in the booming industrial and manufacturing sectors of Asia and Europe, the climate benefits can and are substantial. These countries are failing to meet their climate pledges under the Paris Agreement despite the commitment by many of them to transition to 100% renewable energy. They need US gas to achieve their climate goals, for their economies, and national security.

The United States has become a global leader in emissions reductions thanks to natural gas. The EIA notes that emission savings attributed to the shift to natural gas are about 63% greater than comparable savings from all other energy sources. Natural gas was responsible for preventing more than 2 billion metric tons of carbon emissions since 2005.

The growth rate of the LNG export market has been stunning, though not necessarily surprising. The massive investments needed to build the four current export facilities were made with the understanding of the appetite around the world for affordable energy. The arrow continues to point upward, with two more projects expected to begin operating by the end of 2019. Six more projects to export LNG are in the application pipeline. Export capacity is expected to more than double by the end of the year, and surpass 10 Bcf a day by 2021, according to the EIA.

The continued approval of new projects is in no small part because of the efficient process at the Federal Energy Regulatory Commission (FERC) under the Trump administration. South Korea, China and Japan have been top destinations for LNG coming from U.S. ports, and Europe has recently agreed to take more LNG.

What these foreign countries realize is that U.S. LNG is not only valuable from an economic and climate standpoint but holds geopolitical stability benefits as well. The United States is a reliable trading partner that abides by the rule of law. The same cannot be said of other energy-rich nations.

The EIA projects the United States will become a net exporter of energy before the end of next year. That is a significant achievement for a nation that once barred oil and gas exports and that has been a net importer of energy since 1953. American energy dominance is a reality thanks in no small part to the shale revolution and the sea of affordable oil and gas it’s delivered.

The fact that natural gas has improved environmental performance while maintaining allowing the country to maintain strong economic growth is the icing on the cake. Freedom molecules, indeed.