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REMEMBERING ‘FREEDOM GAS’: The Europeans’ determination to break free from Russian energy has many talking about what is, what was, and what could have been had the EU more readily embraced the “freedom gas” the Trump administration marketed over additional, cheaper Russian hydrocarbons.
The Trump-era moniker for U.S. liquefied natural gas was treated with scorn from the day it was born in a May 2019 Department of Energy press release announcing that Freeport LNG was authorized to export additional LNG volume from its Texas terminal. (Then-Energy Secretary Rick Perry had first tried out the phrase “molecules of U.S. freedom.”) Freedom gas eventually earned the title of “worst phrase of the year.”
The term hasn’t necessarily been resurrected, but the sentiment behind it is widely shared by the EU and the Biden administration, both of which view U.S. LNG as the big player in their bid to move off of Russian gas.
“Freedom gas” originator, former Deputy Secretary of Energy Mark Menezes, is among those thinking through what could have been.
Menezes, who served as under secretary of Energy during Perry’s tenure before being promoted to no. 2 under Dan Brouillette, recalled the state of play during the Trump years when the United States’ oil and gas production exploded and the administration sought to further reign over global energy markets.
“We found ourselves telling the rest of the world that, look, we are now the big producers, and the numbers back that up, and we encouraged our friends and allies to do deals with American producers,” Menezes told Jeremy. “In the past you’d have to do deals with OPEC.”
Back in time: LNG exports took off during the Trump administration. When “freedom gas” entered the scene, the volume of monthly exports had grown by more than 182% compared to the month Trump took office, according to Energy Information Administration data.
At the same time, multiple supply contracts between Russia’s Gazprom and European companies went into effect during the Trump years, and new agreements were signed, including a 2019 transit deal between Gazprom and Ukraine to ensure five years worth of supplies to Europe.
Menezes said he spent lots of time talking with European leaders, who told him the U.S. LNG was simply uneconomical compared to Russian gas, which required neither to be liquefied nor transported thousands of miles across the Atlantic.
The Europeans perhaps couldn’t have priced in a pandemic, subsequent post-pandemic inflation, and a Russian invasion of Ukraine into their calculus. But Menezes said there was enough history between them which should have dissuaded them from pursuing more deals with Russia and instead favor contracts with American companies.
“The freedom gas represented a realization by the potential European offtakers that they had a freedom to choose who they could get their energy from,” Menezes said. “It represented both freedom of choice and the fact that it’s essential to be able to do deals on energy with your friends and allies that share your values.”
The EU plan: The EU have so far avoided sanctioning natural gas transfers for what it would do to their economies, and President Joe Biden has been sympathetic to that, but the Europeans have said they plan to more quickly phase down and cut out Russian gas in response to the war.
With that, they’re banking on LNG from the U.S. and other friends to help fill their gas stores and supplement supplies in coming years.
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Jeremy Beaman (@jeremywbeaman) and Breanne Deppisch (@breanne_dep). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.
POTENTIAL BOOST FOR LNG EXPORTS FROM EX-IM: Environmentalist groups worry a new “Make More in America” financing initiative supporting export-oriented domestic manufacturing projects could lead to the financing of new LNG infrastructure, Bloomberg reports.
The Export-Import Bank, which approved the initiative today, said it “will incentivize applications in environmentally beneficial, small business and transformational export transactions (including semiconductors, biotech and biomedical products, renewable energy, and energy storage).”
The announcement doesn’t mention fossil fuels or gas, but the Biden administration has gotten behind additional LNG exports to Europe to help alleviate its energy crisis, and green group Friends of the Earth is worried that the Ex-Im project could supply funds to new LNG terminals.
“It would be a climate disaster,” said Kate DeAngelis, Friends of the Earth’s international finance program manager. “These LNG export terminals would be in place for decades.”
PUTIN WARNS AGAINST PHASING OUT RUSSIAN GAS: Russian President Vladimir Putin warned European countries against phasing out Russian gas imports, saying today that doing so will be at the detriment of their economies.
Putin said that limiting Russian gas shipments will be “quite painful for the initiators of such policies” in Europe, the AP reports, adding that “there is simply no reasonable replacement for it in Europe now.”
Putin noted that “supplies from other countries that could be sent to Europe, primarily from the United States, would cost consumers many times more.”
US WARNS ENERGY COMPANIES OF ‘RAPIDLY ADVANCING’ HACKING THREAT: The Department of Energy and U.S. intelligence agencies issued a joint alert yesterday warning energy firms about the discovery of malicious cyber tools that they said were capable of gaining “full system access” to the systems that control electricity and natural gas in the U.S.’
The actors in question “developed custom-made tools” for targeting industrial control systems and high-voltage substations in the U.S. that would “enable them to scan for, compromise, and control affected devices,” the warning said.
Though U.S. agencies did not name a nation state actor responsible for the breach, the statement comes just after Ukraine said it thwarted a sophisticated cyberattack Russian military hackers waged on its power grid that would have caused millions of people in the country to lose power. Officials said the attack was slated to begin on April 8 as Ukrainian civilians returned home from work, and took aim at several power substations in the country.
Private U.S. cybersecurity firms Mandiant and Dragos separately concluded yesterday that Russia is likely behind the malware.
In its independent analysis, Mandiant said the functionality of the malware is “consistent with the malware used in Russia’s prior physical attacks,” calling the tools “exceptionally rare and dangerous.”
GREENS BASH GAS TASK FORCE OVER FOSSIL FUEL INFRASTRUCTURE: European and American green groups want Biden and EU Commission President Ursula von der Leyen to rethink their recent decision to launch a joint task force for acquiring natural gas supplies for Europe.
Signatories, which include U.S.-based groups Oil Change International and Food & Water Watch, addressed a letter to the two leaders today taking issue with the task force’s embrace of fossil fuels and sharing regret that new facilities and pipelines could be built to support the project.
They say they are ”concerned that the framework of this agreement will lead to more fossil fuel infrastructure and fracking, while propping up fossil fuel industry scams such as carbon capture and fossil fuel-based hydrogen.”
The EU and U.S. must end financing of and exploration for fossil fuels to slow climate change, the groups write.
The White House set out a target in the March 25 announcement to get Europe at least an additional 15 billion cubic meters of LNG this calendar year from the U.S. and other sources. It also pledged to work toward providing some 50 bcm per year of additional U.S. LNG through 2030 at the least.
Notably, the announcement sets out an expectation that new gas infrastructure will be built, something environmental groups have staunchly opposed for “locking in” more fossil fuels. A paragraph commits the U.S. and EU to “efforts to reduce the greenhouse gas intensity of all new LNG infrastructure and associated pipelines, including through using clean energy to power onsite operations…”
EPRI ANNOUNCES NEW BOARD MAKEUP: The Electric Power Research Institute announced election results for its board of directors yesterday.
Stan Connally, Jr., executive vice president of Operations at Southern Company, will serve a second term as chairman of the energy R&D non-profit’s board of directors, while Portland General Electric president and CEO Maria Pope will become board first vice chair. Lisa Barton, executive vice president and chief operating officer of American Electric Power, will be EPRI’s new board second vice chair.
The Rundown
Wall Street Journal Russia’s oil industry, linchpin of economy, feels sting of Ukraine war disruptions
Euractiv As EU looks to stop Russian gas imports, Israel sees an opening
Bloomberg Electric vehicles, not luxury cars, dominate the New York auto show
Calendar
THURSDAY | APRIL 21
11:00 a.m. Woodridge, Ill. The House House Science, Space, and Technology Subcommittee on Investigations and Oversight will hold a field hearing in Illinois on electric vehicle batteries and U.S. critical minerals supply.
THURSDAY | APRIL 28
The House Science, Space and Technology Committee will hold a hearing on the findings of an intergovernmental panel report, titled, “Climate Change 2022: Mitigation of Climate Change.” Location and time TBA.
