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LNG EXPORTS AND EMISSIONS: The Biden administration’s new plan to help Europe build its gas storage and to embark a longer-term journey of supplanting Russian gas imports with U.S. liquefied natural gas is frustrating environmental groups, but proponents are arguing it’s consistent with climate change mitigation.
Government analysis has established that Russia’s natural gas production has a higher total emissions intensity than gas produced at home, a fact to which domestic industry groups have clung in promoting their product over Russian competitors.
A 2019 study from the Energy Department’s National Energy Technology Laboratory established that the lifecycle emissions associated with Russian gas are significantly higher than those of U.S. LNG.
It also calculated that U.S. LNG can achieve a range of 56% less to 1% more total emissions than coal, whereas the comparative range for Russian gas was calculated to be 41% less to 22% greater than coal.
Paul Bledsoe, who served in the White House Climate Change Task Force during the Clinton administration, had been promoting a Russia-to-U.S. fuel switching policy strategy before the war began as a means of reducing emissions, especially of methane, associated with Europe’s intake of Russian gas.
“Getting the EU off Russian gas and instead using more U.S. LNG is a net climate benefit. Full stop,” Bledsoe, now a strategic adviser with the Progressive Policy Institute, told Jeremy.
“There’s this opportunity for the EU as the largest gas importer in the world and the U.S. as a growing exporter to drive down methane emissions to the lowest level possible and begin to establish a new global standard,” he said. “That’s a huge climate opportunity.”
The Russia-EU nexus: The energy trade relationship between Russia and the EU reaches back decades and is entrenched in print and pipeline. Contractual agreements and desperate need for fuel are keeping the gas flowing.
As energy prices rose in the months before Russia invaded Ukraine, European leaders were toeing the green line which they’d established for themselves in their “Fit for 55” emissions reduction plan, and once the threat of a disruption in gas supplies began looming, they began speaking more forwardly about cutting ties with Russia — something Bledsoe said has come too late.
“The EU has been in utter denial about the climate nightmare — the climate as well as geopolitical, right — that is their gas addiction to the Kremlin,” he said. “And they’ve been in utter denial about the climate problem there to the point where, of course, the Germans were actively pursuing Nord Stream 2. So it’s taken the war to pull the scales from the eyes of Europe.”
The climate hawk case for building out new gas infrastructure: The joint gas acquisition plan inspired special rebuke from environmental groups for its acknowledgement that new gas infrastructure would be built to enable the growth of LNG to Europe, which includes a short-term commitment of 15 billion cubic meters of LNG this year and an additional 50 bcm of U.S. LNG to the EU annually through 2030.
Biden administration officials, too, at earlier times had resisted supporting the construction of new pipelines and other infrastructure to support fossil fuel development.
But Bledsoe said the characteristics of natural gas set it apart from other fossil fuels, in that the infrastructure supporting it can be crafted to support other non-hydrocarbon gasses, especially hydrogen, that governments are banking on to help shift economies away from fossil gas.
Germany is planning for this variability in the two new LNG terminals it’s building.
“There is an idea that there could be a sort of a long term transition pathway, so we should focus on making sure the infrastructure has the ability to carry hydrogen too,” Bledsoe said.
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US EXPORTS RECORD AMOUNT OF LNG IN 2021: The U.S. exported a record amount of liquefied natural gas, or LNG, in 2021, with exports increasing 50% from the previous year due largely to heightened demand from Europe and Asia, as well as the expansion of U.S. liquefaction capacity.
The dramatic shift comes as Russia’s war in Ukraine has turned the global energy industry on its head, touching off a scramble from political leaders to secure energy alternatives and reduce their dependency on Moscow––a plan that, in the short-term, has forced leaders to rely more heavily on fossil fuels.
In total, exports averaged roughly 9.7 billion cubic feet per day in 2021, according to data published by the U.S. Energy Information Administration’s Natural Gas Monthly report.
Exports to Europe also increased in March and April 2021, following a colder-than-anticipated winter that “significantly” reduced its stored natural gas supply. Europe’s low inventory also triggered higher-than anticipated U.S. exports in the fourth quarter of 2021.
The report comes days after President Joe Biden and European leaders announced a new plan to increase shipments of LNG to the E.U. amid Russia’s war in Ukraine.
That announcement capped a months-long, seismic shift that was underway in the U.S. energy industry and accelerated by Russia’s invasion of Ukraine, which sent the European Union, which depends on Moscow for 40% of its gas, scrambling to find energy alternatives. In the near term, these alternatives will almost certainly include burning more coal and importing more fossil fuels – recasting the role that some energy suppliers had been prepared to play during Biden’s presidency.
In the days since Biden’s export announcement, U.S. energy producers have cheered the move: Rystad Energy vice president Sindre Knutsson said it represents a “u-turn” from the bloc’s previous purchasing decisions. Many buyers “had stopped negotiating with U.S. developers for LNG due to ESG (environmental, social, and governance) concerns,” he said. “Now, however, it appears that energy security has trumped ESG concerns — at least temporarily.”
“We welcome the president’s focus on expanding U.S. LNG exports to our European allies during this crisis, and we applaud the administration’s continued leadership in ensuring a unified international response to maximize pressure on Russia through additional sanctions,” said API president and CEO Mike Sommers.
“Europeans have depended on Russian natural gas for far too long, threatening energy security and environmental progress,” the Marcellus Shale Coalition said on Twitter. “American natural gas is the cleanest on the planet, with a 65 percent lower methane intensity rate than Russia’s.”
Still, some Republicans argued Biden’s announcement does not go far enough. In a statement, Sen. Pat Toomey said the timeline proposed in Brussels is “too long to cripple Putin’s war machine in Ukraine.”
“In order to effectively sever his revenue stream, we must cut off Putin’s oil and gas sales globally by imposing secondary sanctions on the entirety of Russia’s financial sector,” he said.
RUSSIA’S WAR IN UKRAINE TOUCHES OFF NEW NUCLEAR FEARS: Russia’s ongoing war in Ukraine has touched off new fears in the U.S. about Russia’s supply of nuclear weapons, according to a new AP/NORC poll released today. Roughly 9 in 10 U.S. voters now say they are at least “somewhat” concerned that Putin will use nuclear weapons against Ukraine, the survey found, including a strong 60% majority who said they are “very” concerned.
Close to half of Americans also say they are now “extremely” or “very” concerned that Russia would directly target the U.S. with nuclear weapons, and 71% say they believe the invasion of Ukraine has increased the possibility of nuclear weapons being used anywhere in the world. (Read the full poll results here.)
PUTIN-DIRECTED FUEL CUTOFFS UNLIKELY: BORRELL: Russia is unlikely to interrupt its fuel exports to Europe in response to sanctions because it “needs to sell its oil and gas” to keep cash rolling in, EU Commission Vice President Josep Borrell said over the weekend.
The EU is in a precarious situation. Leaders emphasize their intent almost daily to separate from Russian fuel in response to Vladimir Putin’s incursion into Ukraine, but their special reliance on Russia is precluding a swift shutoff.
There are also contractual obligations keeping the states tethered, and a breach of those terms could be especially costly in more ways than one.
RECORD GASOLINE PRICE NOT DESTROYING DEMAND: Drivers keep driving, despite the high price of crude oil and fuel.
Total gasoline demand rose 4.7% last week and was 8% above the four week rolling average, according to GasBuddy data.
“It is my opinion that even at record levels, we are not yet seeing sizeable demand destruction,” Patrick De Haan, analyst for GasBuddy, wrote in his weekly update. “However, we are seeing price sensitive motorists move away from branded and premium brands and move towards discounters and big box stores where prices are lower.”
Both Maryland and Georgia have implemented fuel tax holidays to dent the high prices, while the California legislature and Gov. Gavin Newsom have both proposed issuing gasoline rebates for drivers.
ENVIRONMENTAL GROUPS BRING GREEN NEW DEAL INTO PLAY IN MIDTERMS: Green groups are asking congressional candidates to sign on to a newly-launched “Green New Deal Champions Pledge” and commit to pursuing policies shaped in the same vein as the eponymous 2019 proposed congressional resolution.
The 50 groups, which include Oil Change U.S. and Sunrise Movement, said the pledge campaign announced today is designed to push candidates “to champion the climate policy we need when in office” and “to hold current members accountable to a standard of support for the Green New Deal.”
The Rundown
Washington Post Ukraine’s pipelines are still carrying Russian oil to Europe
Financial Times ‘You can’t just turn on the taps’: bottlenecks hit hopes of US oil output surge
Wall Street Journal Higher prices spark fresh investor interest in oil and gas
Calendar
TUESDAY | MARCH 29
10:00 a.m. 2141 Rayburn The House Judiciary Committee will hold a hearing on oversight of the FBI’s cyber division, where questions will almost certainly include the threat of Russian cyberattacks on U.S. critical infrastructure.
2:00 p.m. 1324 Longworth The House Natural Resources Subcommittee on Water, Oceans, and Wildlife will convene to hear three bills focused on U.S. conservation efforts.
THURSDAY | MARCH 31
10:00 a.m. 366 Dirksen The Senate Energy and Natural Resources Committee will hold a hearing about domestic critical mineral supply chains.
