Key Takeaways
DOE has released its long-awaited study on LNG exports, which does not recommend making the export ban permanent but provides fodder to environmental opponents of natural gas production to sue the incoming Trump Administration as it intends to resume permitting LNG facilities.
President-elect Trump has promised to lift the LNG ban on permitting immediately upon assuming office, noting it will provide good jobs in construction, transportation, and energy production.
DOE had prepared another LNG export report before the politicization of the LNG issue in the lead-up to the presidential election, which was never released apparently because it concluded that there were clear benefits to LNG exports, including to the U.S. economy and national security.
The United States is endowed with enormous amounts of natural gas as well as the technology and skilled workforce to produce it cleanly and efficiently.
The Department of Energy’s study of U.S. liquified natural gas (LNG) exports was released on December 17. It did not make Biden’s nearly yearlong LNG export pause permanent but was critical of many aspects of the industry. That is, it did not say that LNG trade is not in the public interest, instead indicating that exports at some level are still within the public’s best interests. The resulting criticism, however, will make it easier for climate advocates against LNG trade and American natural gas to sue when LNG permits are approved by the Trump administration. President-Elect Donald Trump has indicated that he will end Biden’s moratorium on new export terminals on his first day in office.
The report warns that increased natural gas exports could hurt the U.S. economy by driving domestic energy prices higher and could benefit China by delivering the fuel to them at low prices. The report looks at the implications of declining demand in Europe and how LNG export plants affect the U.S. communities in which they are built. European gas demand, however, is declining in part due to high prices resulting from European nations generally prohibiting horizontal drilling and hydraulic fracturing and being overly reliant on Russian natural gas, whose supply became imperiled by that nation’s invasion of Ukraine. The DOE report considers several environmental scenarios on how LNG exports contribute to greenhouse gas emissions.
It estimates that increased exports of LNG could lead to an increase in gas and electricity bills of up to $122.54 per year by 2050. It found that higher LNG export levels are associated with higher domestic gas prices, with prices rising by around 4 percent in 2050, but noted that an increase in GDP of 0.2 percent would also result in that year. To deal with that result, the authors indicated that an increase in GDP “does not necessarily correlate with a positive effect on broader public and consumer welfare.” The report also found that increased natural gas production would increase upstream environmental impacts across water, air, and land, as well as carbon dioxide emissions. DOE Secretary Granholm warned that the current level of LNG exports was “neither sustainable or advisable,” claiming “unfettered exports” could drive up domestic gas prices by 31 percent by 2050.
Gas Prices Have Been Relatively Stable with the Current LNG Trade
The American Petroleum Institute points out that LNG exports have not caused a rise in domestic energy prices. When adjusted for inflation, U.S. residential natural gas prices between 2016 and 2023 have remained largely stable, showing little fluctuation compared to previous years. Additionally, despite U.S. LNG exports growing from virtually nothing in 2015 to roughly 200 billion cubic feet by 2019, residential natural gas prices actually decreased during this period. Thanks to the shale gas boom driven by hydraulic fracturing and horizontal drilling, U.S. natural gas production has surged by 43 percent since 2015, satisfying both domestic demand and the growing need for LNG exports. At the same time, the U.S. has emerged as a global leader in LNG exports, with shipments in 2024 projected to total 95.8 million short tons (86.8 million metric tons).
The resurgence of shale gas and stringent regulations on coal plants have led to a significant shift in U.S. electricity generation. Between 2015 and 2023, the share of natural gas in total generation has risen from 33 percent to 43 percent. However, residential electricity prices have surged by over 20 percent since the Biden administration took office, primarily due to the accelerated closure of fossil fuel plants and a push for renewable energy sources like solar and wind, which require costly backup power. Contributing factors to rising electricity rates include the growing need for investment in transmission and distribution infrastructure to connect wind and solar farms—often located far from demand centers—and the increasing costs associated with new generation technologies, such as renewable energy and battery storage. The regulatory pressure from both the Biden and previous Obama administrations to retire perfectly functional fossil fuel plants has led utilities to invest in new generation capacity, regardless of the source, including the costs of financing such investments. According to the Energy Information Administration, retail electricity prices have generally mirrored inflation over the past decade, rising by less than 1 percent in inflation-adjusted terms from 2013 to 2023 at the national level.
According to the U.S. Energy Information Administration, electricity prices tended to rise fastest in most of New England and in California, where real prices over the past decade increased by more than 2 percent on an annualized basis. California’s real electricity price rose from a little over 21 cents per kilowatt hour in 2013 to almost 30 cents per kilowatt hour in 2023, an annual average increase of 2.8 percent. New England’s real electricity price rose from a little more than 21 cents per kilowatt hour in 2013 to the highest U.S. regional price of almost 29 cents per kilowatt hour in 2023, an annual average increase of 2.6 percent. Both California and New England are big on climate change mitigation programs, having renewable portfolio standards, mandating a certain share of electricity be generated by renewables, mostly wind and solar power, and cap and trade programs that add a carbon tax to the price of fossil fuels to reduce their use. These policies drive the cost of electricity skyward.
DOE Had Already Conducted the Study in 2023
In 2023, the Biden administration’s Department of Energy conducted a study on the emissions impacts of LNG exports, only to reportedly suppress the findings before a pause on LNG approvals was imposed in January, along with a mandate for the agency to review such impacts. The study is believed to have been buried because it didn’t align with the expectations of environmental groups that support the administration, as it concluded that LNG exports were in the public interest. In response, the Government Accountability Office (GAO) filed a lawsuit under public records law to compel the Department of Energy (DOE) to release thousands of pages related to the study, which the DOE admits may fit the GAO’s request.
In June, the GAO filed a targeted FOIA request to the DOE for any LNG export studies shared by the National Energy Technology Laboratory (NETL) with the DOE’s Office of Fossil Energy and Carbon Management between January 1 and October 31, 2023. The request also sought any emails transmitting these documents. If environmental groups file lawsuits against a potential Trump administration, it’s expected that the study’s contents could be revealed during discovery, allowing the public to see the study’s findings before political interference took place.
Conclusion
Despite the political games the Biden administration is playing to attract environmentalists to funding campaigns as it did this year through the LNG pause, LNG exports are benefiting the U.S. economy, providing domestic jobs, supporting U.S. allies’ energy security, and adding to America’s global energy leadership. The DOE report released this month will allow for LNG permitting to continue, however, due to its criticisms of the industry, it will create fodder for environmentalists to sue the Trump administration, which intends to end the moratorium and continue permitting new LNG facilities whether or not the Biden administration finds favor with the industry’s benefits. The United States is endowed with enormous amounts of natural gas and the technology and skilled workforce to produce it cleanly and efficiently.
