Oceans & Forests Blog

Making sense of DOE’s insensible proposals to change LNG export decision-making procedures

Posted Jul. 29, 2014 / Posted by: Luisa Abbott Galvao

July 21, 2014, marked the close of the Department of Energy’s comment period for its proposed changes to liquefied natural gas export decision-making procedures. Along with the Sierra Club and the Americans Against Fracking coalition, Friends of the Earth submitted public comments requesting that DOE correct flaws in the environmental and economic analyses that it relies on when determining whether proposed liquefied natural gas export projects are in the public interest.

Environmental and economic evidence shows that LNG exports are not in the public interest. When greenhouse gas emissions from the extraction, processing, transportation and burning of natural gas are taken into account, LNG is worse for climate change than burning coal. Rather than streamline the process for exporting natural gas, the U.S. should be stopping the practice altogether.

DOE’s proposed changes include procedural, environmental, and economic components that are unmistakably intended to speed up construction of new LNG export facilities. Current U.S. law requires that DOE conduct a public interest determination before authorizing the construction of a new facility to export LNG to countries with which the U.S. does not have a free trade agreement. DOE currently considers applications in order of submission. After receiving conditional authorization from DOE, project sponsors must then submit project plans to the Federal Energy Regulatory Commission and undergo environmental review pursuant to the National Environmental Policy Act, before DOE can complete its public interest determination and issue a final authorization. Authorization for LNG export to nations with which there are free trade agreements requiring national treatment for trade in natural gas are automatically deemed consistent with the public interest.

The proposed changes would alter the order in which these regulatory procedures for non free trade agreement exports take place, requiring project sponsors to complete a NEPA review before submitting plans for DOE to review. The explanation for this change is that it will make the process more efficient. Requiring project sponsors to undergo NEPA review first would allow DOE to focus its resources on the most viable proposals. DOE would also be able to make more precise judgments regarding the cumulative market impacts of authorized projects. Analysts say that this will prevent the financial and political speculation that currently ensues when less viable projects are granted conditional authorization by DOE just by virtue of their order in the queue, inflating numbers of projected LNG export volumes even though many projects will never in fact come to fruition. These changes, under the guise of improving government resourcefulness, speed up the construction of fossil fuel infrastructure and distract us from needed investments in truly clean and renewable energy sources.

DOE’s proposed changes also include the incorporation of two new environmental reports prepared by DOE to inform environmental impact reviews, which fall short in critical ways. The analyses neglect to take into account the impacts of greenhouse gas emissions from increased drilling and fracking to meet export demand, as well as the degree to which the expansion of the gas industry will displace new clean energy projects. DOE also undermines estimates of methane leaked during gas production, a significant contributor to climate change. These inadequate analyses are used to justify the construction of new fossil fuel infrastructure and increased extraction when the science shows us that this is irresponsible and the global reality shows us that this is unethical.

Finally, DOE proposes updating two economic studies aimed at better understanding how increased LNG exports would affect the public interest. The first one, DOE’s 2012 LNG Export Study, assesses potential impacts that U.S. LNG exports between 6 and 12 billion cubic feet per day could have on the domestic energy market; the updated study will look at export cases between 12 and 20 Bcf/d. The administration should be not paving the way for higher volumes of LNG exports when environmental and economic evidence already makes clear that LNG exports are contrary to the public interest.

The second one, an external macroeconomic study commissioned by DOE in 2012, analyzes the impacts that increased LNG exports would have on the U.S. economy. This fundamentally flawed analysis glosses over its own projections that any benefits of increased LNG exports will not be felt across the economy and will hurt wage earners while increasing profits for natural gas producers. Yet, DOE is contracting for a new external analysis of potential economic impacts of LNG exports that will likely be premised on the same fallacious argument that corporate profits equal public interest.

This procedural overhaul reflects growing pressure by industry leaders on the U.S. government to speed up and increase LNG exports.

Bills proposed earlier this year in the House and Senate are demonstrative of this. Representative Cory Gardner (R-Co.) and Senator Mark Udall (D-Co.) sought to expand the automatic treatment currently in place for authorization of LNG exports to free trade agreement countries to World Trade Organization countries. The U.S. has free trade agreements in force with only 20 countries but 160 countries are members of the WTO, meaning approval of LNG exports would become virtually automatic. Both bills also included limits on the time frame in which DOE can conduct its public interest determinations and associated reviews. These proposals would weaken environmental and economic safeguards currently in place to protect the interests of the American people. Sacrificing these regulatory protections would mean that the U.S. would forfeit its ability to review the impacts of fossil fuel exports and to more broadly define the terms of its energy policies.

The fossil fuel industry is also pressing for automatic LNG export authorization in two trade deals the U.S. is negotiating, the Trans Pacific Partnership with Japan and 10 other Pacific Rim countries, and the Transatlantic Trade and Investment Partnership with the European Union. Demand and prices are high in both regions, particularly in Japan and in EU countries that depend heavily -- in some places almost exclusively -- on Russian gas. This is part of a larger effort to also lift the U.S. ban on crude oil exports and vastly increase U.S. fossil fuel exports to Europe across the board. A recently leaked document shows that increasing LNG and other U.S. fossil fuel exports is a top EU priority in TTIP talks. This is a recipe for increased global warming and climate disaster. The EU will not achieve energy security by locking-in carbon infrastructure and imports; it must prioritize investment in renewable energy.

A meaningful public interest determination must look comprehensively at the environmental impacts of increased gas production and also consider the inequality potentially aggravated by increasing LNG exports. Fracking is poorly regulated at federal and state levels, and is exempt from various environmental laws; in many states, companies are not required to disclose what chemicals they are pumping into the ground. President Obama should ban fracking, like various European countries are beginning to do. DOE should devote its resources and attention to sources of energy that are actually in the public interest, like wind and solar.

Image credit: LNG tank ship, Wikipedia, Creative Commons

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