US DoE report busts LNG myth, says fossil gas exports are bad for consumers and the planet

A US-government commissioned report has delivered a striking take-down of the fossil gas export industry – concluding that ‘unfettered’ growth in gas exports leaves consumers facing higher energy costs, contributes to surging greenhouse gas emissions, and potentially exacerbates geopolitical tensions.

The report has major relevance for Australia – raising the same concerns cited by many Australian energy analysts and climate advocates – that surging gas exports have merely worked to enrich fossil fuel companies while leaving local communities, consumers and the climate to carry the costs.

The new report – published by the US Department of Energy (DoE) – sets out how growth in US liquified natural gas (LNG) exports impacts a range of public interest considerations, challenging fossil fuel industry arguments about whether there is any net benefit in issuing new approvals for increased LNG exports.

As outlined by US Energy Secretary Jennifer Granholm, the report reaches five key conclusions when assessing the ‘public interest’ in issuing new approvals for LNG exports; these are:

– Previously issued approvals for LNG exports are already more than sufficient to meet the forecast demand (i.e. the global market demand for US gas is already saturated).

– Further increasing the volume of US LNG exports will work to enrich fossil fuel companies but at the expense of higher gas prices for domestic consumers. The DoE describes a “triple-cost increase” for American homes and businesses, with increased gas exports leading to higher costs for domestic gas supplies, higher electricity tariffs and increased costs of locally manufactured goods.

– Increased gas production will further exacerbate the impact of pollution on communities located near gas extraction and processing facilities.

– Increased gas exports mean higher global greenhouse gas emissions, with the DoE determining that gas exports lead to higher overall emissions as they are more likely to displace global investment in renewable energy rather than replace coal.

– The global market for exported gas has changed dramatically and now presents geopolitical challenges. Demand for gas in Europe, South Korea and Japan is declining, and China is emerging as the major buyer of LNG.

A government-sourced fossil fuel industry takedown (or not)

The report found that allowing for “unfettered exports of LNG” out to 2050 would result in an increase in US wholesale domestic natural gas prices of more than 30 per cent – increasing costs for both households and businesses. Having opened up its gas market to exporters, US domestic energy users are now in competition with international buyers for the same gas, pushing prices higher.

At the same time, allowing “unfettered” growth in LNG exports would increase annual global greenhouse gas emissions by as much as 1.5 gigatons of CO₂ equivalent each year – an amount roughly triple Australia’s annual emissions.

“While some tout LNG as a means to reduce the use of coal overseas (and to date, that has been the case with some importing countries), the study put forward today shows a world in which additional U.S. LNG exports displace more renewables than coal globally,” Granholm said in a statement.

“In every scenario, increases in LNG exports would lead to increases in global net emissions – despite very aggressive assumptions in the model regarding deployment of carbon capture, utilization, and storage.”

Acknowledging the extent of the negative consequences that come with growing gas exports, the Biden Administration implemented a pause on issuing new LNG export approvals pending the findings of the DoE’s report. While that pause is set to be dispensed by the incoming Trump Administration, the report effectively dismantles the arguments for facilitating the growth in fossil gas production.

Unfortunately, the political situation in the United States means the findings of this new report may ultimately fall on willfully deaf ears. Granholm has about a month left in her role as Energy Secretary and is set to be replaced by incoming US President Donald Trump’s pick for the role, Chris Wright.

Wright currently serves as CEO of one of America’s largest fracking companies, Liberty Energy, and has been an outspoken advocate for the fossil fuel industry. There is zero chance that Wright will seek to curtail US LNG exports, having led one of the firms that has profited from the growth of fossil fuel production.

A shared Australia-US gas export story

From an Australian perspective, the preparation and release of such a report by a federal energy department is almost unfathomable. Australia’s political environment has been beset by two major parties that work in large alignment in support of a bigger gas industry, and Australian government departments have worked to reinforce that position.

Despite having a much smaller economy, Australia’s experience with exporting gas largely preceded that of the United States – Australia grew its LNG export industry much earlier, much faster and to such a large scale that – up until last year – Australia regularly exported much more LNG than the United States.

This means the current situation with respect to US LNG exports has significant parallels to that of Australia. The difference is that the United States was willing to ask the simple question: ‘whether authorisations for the export of liquefied natural gas… is consistent with the “public interest”’.

But we already know the answer to that question for the Australian context – Australians have regularly been victim to the ‘triple-cost’ burden of gas exports described by the US DoE, and the impact on greenhouse gas emissions in Australia and internationally is plain to see. The story has been repeated ten-fold – just like the US experience, growing Australian gas exports have led to higher prices for consumers and higher emissions for the planet.

The bipartisan nature of support for the gas industry has stymied any real consideration of whether it serves the interest of the Australian public or the planet more broadly.

Neither Labor nor the Coalition has been willing to ask the ‘public interest’ question in Australia. Successive Australian governments have waved through new gas projects, new gas exploration permits continue to be issued, and gas export infrastructure is being constructed, often with the aid of significant federal funding.

Dutton’s pro-fossil fuel nuclear gambit

As the next federal election looms on the not-too-distant horizon, it is perhaps a good time for voters to ask both the Albanese government and the Dutton-led opposition to assess whether the ongoing expansion of the Australian gas industry is in the ‘public interest’.

National energy policies will, yet again, feature heavily in the forthcoming election cycle, with Dutton’s plan for nuclear energy already dominating debate. I’ve previously published a breakdown of why nuclear energy is a bad choice for Australia, and that analysis remains relevant in the wake of the recent release of modelling from Frontier Economics.

Dutton’s nuclear energy gambit is really a pro-coal and pro-gas agenda in a not-so-subtle disguise. I – along with many others – confidently predict that no nuclear power stations will ever be built in Australia. But if the debate about nuclear power is allowed to rage for too long, then it will have a real impact on the pace of Australia’s decarbonisation and the phase-out of fossil fuels (arguably, this is the point of Dutton’s nuclear policy).

Dutton has already flagged an intention to revive Scott Morrison’s ‘gas-fired recovery’ policy, and his stance on fossil fuels is where attention and scrutiny really should be focused during the election campaign.

The Coalition already lost the argument about the ‘gas-fired recovery’, yielding almost a dozen seats to ‘teal’ community independents at the 2022 election. The US DoE has just delivered a useful piece of analysis to litigate that argument again.

This article was originally published on Tempests and Terawatts. Republished here with permissions. Read the original version here.