LNG exports can power America’s economic recovery
February 26, 2015
During the darkest days of the Great Recession, one of the lone bright spots was America's energy industry. Increased oil and natural gas production powered the manufacturing renaissance that pulled our economy back from the brink.
If a recovery is going to continue, we'll need the energy sector to keep providing the power.
Today, America is the world's largest producer of natural gas. We have the resources to be a major exporter of this cleaner, more versatile fuel. It's estimated that liquefied natural gas exports can contribute up to $74 billion to America's gross domestic product by 2035. We just need Washington to provide regulatory certainty.
Liquefying and exporting natural gas requires special production and export terminals. The Department of Energy and the Federal Energy Regulatory Commission evaluate proposals by the private sector to build these facilities. While FERC has generally been timely in issuing its permits, the DOE has been less predictable. Over the past five years, it has received 38 applications to export liquefied natural gas. After a thorough review, it has found five applications to be in the national interest and has given final approval. Two more have been approved by FERC and await only the DOE's final approval. The others remain on hold.
These are complicated projects. Regulators need time to be sure each one strikes the proper balance between energy exploration and supply and other concerns, such as the environment and possible economic impacts on consumers. Once that's completed, Washington should act as quickly as possible. Potential exporters need certainty that the process is predictable and accountable before they make these multibillion-dollar investments. Needless bureaucratic delay serves no one's interests.
A faster and more transparent process for considering export permits would benefit America in at least four ways.
Recommended Stories For You
First, and most importantly, it would help create American jobs. The Cove Point export facility being built in Maryland is creating 4,000 construction jobs. It's adding another 14,600 jobs around the country, from steel workers to accountants. Manufacturers in at least 15 states contribute to the construction of LNG export terminals today. Quicker permit approvals for more terminals would increase those numbers.
Second, a streamlined process would help reduce America's trade deficit. Five years ago, President Barack Obama launched his National Export Initiative. The goal was to double American exports by now but we have fallen short of that number. Increased exports of natural gas would help us reach it. Our monthly trade deficit for December was nearly $47 billion. Independent studies have found that natural gas prices will remain low even with significant LNG exports.
Third, faster approvals would improve the energy security of our allies. Last year, Russia invaded Ukraine and seized control of Crimea — largely to get control of natural gas facilities there. We could help reduce the threat Russia poses to Europe by offering an alternative source of natural gas.
Our allies in the region have asked America to increase exports for that exact reason. David Koranyi of the Atlantic Council told the Senate Energy and Natural Resources Committee last month that large-scale U.S. LNG exports would have a "massive" effect on European natural gas markets and energy security.
Finally, increased exports of American natural gas would have significant environmental benefits around the world. Burning this cleaner fuel could help reduce air pollution, especially in growing economies where the problem is at its worst.
All of this is within our reach. In January, the House passed a bipartisan bill to get these exports moving, with the support of 41 Democrats.
We have introduced nearly identical legislation in the Senate, with six Democratic and six Republican co-sponsors. Our bill would set a reasonable deadline for LNG exports to countries that don't have free trade agreements with the United States. It requires the secretary of Energy to make a decision on an export application within 45 days after all the environmental review for the project is completed. Since the clock would start ticking only after a thorough environmental, economic and safety review has occurred, the deadlines would add no risk. The only threat would be to bureaucratic inertia.
Our bill will also set up an expedited process for legal challenges to the projects, to allow appropriate and fair oversight by the courts. Exporters would also be required to publicly disclose the countries to which the LNG is delivered, creating more transparency.
The Obama administration acknowledges meeting the deadline would not be a problem for the department. Nothing in our bill would force the Energy secretary to grant a permit if he decides the project is contrary to America's best interest. It just gives applicants a clearer view of how long that decision will take.
Political parties and members of Congress have legitimate disagreements on many issues. Where they agree, they must be willing to work together to get things done. Bringing certainty and transparency to the LNG export process is an example of how Washington can come together to find common-sense, bipartisan solutions.
America's workers, economy and allies will all benefit.