Political resistance to fossil fuels has buffeted a U.S. LNG export industry that is mostly optimistic about increasing its shipments of record-high domestic gas output to world markets.
LNG industry supporters at the Gulf Coast Energy Forum in New Orleans expressed concern about an array of policy challenges that could raise the stakes for a sector that has long grappled with environmental opposition to gas infrastructure projects.
The challenges have included a spate of efforts led by cities on the U.S. West Coast to electrify buildings and ban new natural gas hookups. Then there is the push by some of the candidates in the Democratic presidential primary race, including U.S. Sen. Elizabeth Warren, D-Mass., for measures such as a ban on hydraulic fracturing and a hold on infrastructure that supports natural gas exports.
To counter these developments, the industry needs to do a better job of addressing environmental concerns and making the case for the role of natural gas in the energy mix, said Charlie Riedl, executive director of industry trade group Center for Liquefied Natural Gas.
"If large institutional financial banks stop funding fossil fuel companies, that's going to be a real challenge," Riedl told attendees at the beginning of the conference. "That's a conversation we have to have. If natural gas becomes the next coal, that's going to be a real challenge."
In an interview on the sidelines of the conference, Riedl pointed to changes in the gas industry's approach. These have included calls from companies within the U.S. LNG sector to the entire gas industry to make greater reductions in carbon emissions in order to promote the climate benefits of American natural gas.
But the current political climate makes it difficult for the industry and its champions to formulate a national energy strategy that leverages abundant fossil energy supplies alongside renewable energy sources. "It's possible, but it is tougher right now," said U.S. Rep. Steve Scalise, R-La.
In a sign of the partisan discord, Scalise took jabs at the clean energy goals of the Green New Deal, sponsored by Rep. Alexandria Ocasio-Cortez, D-N.Y., and Sen. Ed Markey, D-Mass., and the political opposition to natural gas pipelines in New York.
"There is a real battle in Washington ... and it has even bled into the presidential race between people who are for all of the above and for people who are just for all the above and nothing below,” Scalise said.
The increase of U.S. LNG exports has been a priority of the current administration, and the U.S. Department of Energy is exploring ways the federal government can support the financing of infrastructure for gas exports, said Joseph Uddo III, deputy assistant secretary for energy innovation and market development in the DOE's Office of International Affairs.
"It's important we get our LNG to market quickly, but we will continue to have a low cost of production, which advantages U.S. suppliers," Uddo said.
But despite the administration's advocacy for U.S. LNG exports, a protracted trade war with China, a key importer, has added to the industry's challenges. Earlier this year, China raised retaliatory tariffs on U.S. LNG to 25%. The trade war has slowed the efforts of U.S. LNG developers to commercialize new projects, Riedl said.
"What we are seeing is the interconnectivity of policy that has nothing to do with gas, impacting gas," Riedl said. "We are collateral damage."