US DOE secretary says LNG study shows need for caution on 'unfettered' export approvals

A business-as-usual approach to authorizing US LNG exports is "neither sustainable nor advisable," US Energy Secretary Jennifer Granholm said on Dec. 17, as the Department of Energy released its long-awaited study on environmental and economic impacts of increased exports of the fossil fuel.

The department cast its final report as intended to inform future decisions on whether export applications are in the public interest, but it came as the Biden administration is poised to hand off those authorizations to President-elect Donald Trump, who has promised to end a "pause" on approvals. The DOE announced plans for the study alongside the permitting moratorium in January.

"Further increasing exports unconstrained would surely generate more wealth for the LNG industry, but American consumers and communities and our climate would pay the price," Granholm said.

In most scenarios the DOE considered, LNG exports already approved by the agency "are more than sufficient to meet global demand for decades to come," Granholm said.

But the report did not go as far as drawing broad conclusions about whether additional LNG exports are in or against the public interest.

The department released the study as final. DOE officials said the agency did not intend to revise the document but that it would take comments for 60 days to inform future decisions.

A leading US LNG trade group criticized the way the Biden officials characterized the study, saying "that much of the narrative from the administration on the need for a pause in LNG export authorizations and their framing of the study results runs counter to the actual findings of the report."

"The Department of Energy's US LNG export 'pause' harmed the industry and called into question the role of the United States as a global energy superpower," Charlie Riedl, the executive director of the Washington-based Center for Liquefied Natural Gas, said in a statement. "This study, which served as the justification for the pause, has yet again found that US LNG exports provide benefits that serve the public interest."

The report found that "across all scenarios, modeled US domestic natural gas supply is sufficient to meet modeled global demand for US LNG while continuing to meet domestic demand." It also modeled a $410 billion increase in US GDP by 2050 as a result of increasing LNG exports.

Granholm's consumer price concerns

But among key findings highlighted by the energy secretary was that additional "unfettered exports" would drive up wholesale domestic gas prices by about 31% and cost the average US household up to $122.54 more per year in gas and electricity bills by 2050.

That analysis was based on an assumption that the amount of US LNG operating or under construction at the end of 2023, 23.7 Bcf/d, will increase above authorized export levels to about 56.3 Bcf/d in 2050. Under this scenario, the modeled price increase works out to about $0.03/MMBtu for every Bcf/d of export capacity added beyond the December 2023 levels to reach an average $4.62/MMBtu in 2050, up from $3.53/MMBtu.

Overall energy costs to the industrial sector would go up $125 billion from 2020 to 2050, Granholm said.

The report also weighed in on whether more exports of US LNG would raise or lower greenhouse gas emissions. Granholm said the report showed additional US LNG exports would globally displace more renewables than coal.

"Assuming LNG exports were to significantly increase, the report finds that the associated direct emissions would be 1.5 gigatons per year by 2050, not considering the market effects of those exports," Granholm said. "That's roughly a quarter all the emissions the United States generates annually today."

In five scenarios examined, Granholm said higher LNG exports would lead to increased global net emissions.

The study was more nuanced, finding that "the ultimate global GHG consequences of US LNG exports depend on market effects such as changes in energy demand and the sources used to meet that demand for electricity and other uses of natural gas."

In a statement accompanying the report, Granholm also emphasized that LNG facilities tend to be concentrated in communities already facing burdens of pollution and that dramatic increases in exports could worsen pollution in areas where oil and gas are extracted and processed.

On energy security considerations, Granholm said that while US LNG has been critical for European allies the past few years, European demand is slated to decline along with efforts to cut greenhouse gas emissions.

"China's LNG imports are expected to be the highest of any country through 2050," Granholm said in the statement.

The study was welcomed by nongovernmental organizations battling further export approvals.

Tyson Slocum, director of Public Citizen's energy program, said the study will provide "needed ammunition" to intervenors in DOE export proceedings so that they can more clearly make the case that the pending export authorization is not consistent with the public interest.

"If Trump seeks to quickly and sloppily approve these, we've got standing to sue in federal court, and we've got the facts on our side," Slocum said.

Gillian Giannetti, senior attorney at the Natural Resources Defense Council, said that the DOE has put the study in the record of all the pending LNG projects.

"They are officially in the docket and are part of the record, which, of course, means that they are evidence that needs to be considered, and failure to do so or to explain why there is a justified reason not to do so is unlawful under both the Natural Gas Act and the Administrative Procedure Act," Giannetti said.