The good news is that the United States finally agreed on Friday to help Europe replace Russia as the main supplier of natural gas. The bad news is that President Biden continues to tell American gas producers that he wants to put them out of business.
It sounds crazy, but listen to Mr. Biden’s remarks on Friday. “We are going to have to make sure that families in Europe can get through this winter and the next,” he said as he announced the agreement to supply 15 billion cubic meters of gas this year, but not all from the States. -United.
But he added “at the same time, this crisis also presents an opportunity” that “will spur the investments we need to double our clean energy goals and accelerate progress towards our net-zero emissions future.”
The White House pointed to the contradiction, saying the United States “will maintain its regulatory environment.” More US LNG exports will only be allowed to the extent that they reduce emissions, for example by using “clean energy”.
It’s magical thinking. Gas liquefaction requires long-term investment and reliable supply. Facilities can’t run on intermittent renewables, and companies won’t invest billions of dollars if they think regulators will kill them once the crisis passes.
The reality today is that the United States does not have enough LNG export capacity to replace the approximately 170 billion cubic meters that Russia sends to Europe each year. Much of the 124 billion cubic meters per year of exports that the United States can technically ship are tied to long-term contracts with Asia.
But EQT CEO Toby Rice said this month he believes US gas exports could “easily” replace Russian supply within a few years, and the US has the potential to quadruple. their gas production by 2030. EQT is the largest US natural gas producer.
One of the main obstacles is the lack of pipeline capacity. Several major pipelines and LNG export projects have been abandoned in recent years amid opposition from progressive states and green groups. It can take four to five years to get a federal permit for a pipeline that can be built in six to nine months. The Trump administration has fast-tracked approvals, but Biden regulators have slow approvals.
Two requests for increased LNG exports have remained with the Department of Energy for more than two years. They were finally approved two weeks ago as the administration scrambled to get more gas to Europe. But it was too late to help this winter.
Europe has long resisted signing long-term contracts for US LNG because Russia provided cheap gas. This has hampered US investment in LNG export facilities and is one of the reasons there are 13 licensed terminals that could ship 258 billion cubic meters each year that are still not under construction. Most were approved in the Trump years.
Now Europe is finally agreeing to long-term contracts, but the administration says it opposes long-term US gas investments. Listen to no less a powerful player than Gina McCarthy, the White House National Climate Advisor, this week. US climate policy “is no longer a fight over coal. It’s a challenge for natural gas and infrastructure investments because we don’t want to invest in things that are time-bound. Because we are limited in time,” she told an American Council on Renewable Energy forum.
What sane CEO is going to invest with Mrs. McCarthy holding the sword of “limited time” above her head? There’s a reason the Department of Energy’s LNG export permits are good until 2050. It can take decades to recoup the investment.
At least, Europe finally counts with its climatic and energy follies. The European Commission pledged this week to streamline regulations to speed up LNG import projects. Germany is considering extending the life of its coal-fired power stations and the UK is embarking on oil and gas exploration in the North Sea.
Too bad the Biden administration is still living in the la-la country.
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Appeared in the March 26, 2022 print edition as “Biden’s Great Energy Contradiction.”