Liquefied Natural Gas Exports

The Center supports liquefied natural gas (LNG) exports.  Natural gas is a very valuable commodity and the USA has plenty of it due to hydraulic fracturing.  Natural gas produces just half the carbon dioxide emissions as coal.  Since the nuclear power renaissance has stalled, natural gas will be the clean fuel of choice for electricity generation.  Although the price of natural gas is very low right now, exports should place it at a level that makes it profitable to produce it, but not so high that it significantly raises prices for ratepayers.  Japan has shut down its 52 nuclear power plants and LNG will probably be the replacement.  The United States is competing with Russia for this large new LNG market.  The Center supports free trade and LNG exports would help balance our current trade imbalance.

Opponents of exporting LNG exporting believe it could cause environmental and health hazards by ramping up exploration through hydraulic fracturing, a process that injects a mixture of chemicals, water and sand into tight rock formations to release natural gas.

Rep. Edward Markey (Mass.), the top Democrat on the House Natural Resources Committee, has been an outspoken opponent of selling more liquefied natural gas to other countries.  He fears that selling more natural gas abroad would raise costs at home.  Rep. Markey believes that if we export large quantities of natural gas that we will also export jobs in manufacturing, and threaten our economic and national security advantages from this abundant, low-cost source of domestic energy.

A recent Energy Information Administration (EIA) report found that increased exports would raise electricity bills by an average of 1 to 3 percent annually between 2015 and 2035.  The EIA report concluded that the divide between low U.S. natural gas prices and higher-priced international markets would likely narrow in the coming years. It also said investment in LNG terminals would be costly.

The manufacturing sector, which consumes large amounts of electricity, would feel the price pinch from exporting natural gas, according to the American Chemistry Council (ACC). The Chemistry Council said that although it supports free trade, exporting liquefied natural gas “could artificially inflate the price of natural gas and erode the newfound competitive advantage that U.S. chemicals companies are experiencing.”

Though firms can already export liquefied natural gas to nations with existing free trade agreements, deals with other countries require administration approval. So far, the administration has approved one non-free trade agreement export, with 12 others still under review.

DOE also has final say over exports, even to countries with which the U.S. has a free trade agreement in place. Those export projects must be deemed in the public interest to gain approval, which DOE said is generally granted to free-trade-agreement nations. Of 18 such applications, 13 have been approved, while five are pending.  (The Hill, 9/24/2012)